China Business Weekly staff

Xia Guoyuan, a 40-year old farmer in Xiaguanyuan Town in Hubei Province's Xiantao City, feels satisfied with his rice harvest. He was selected last year to plant genetically modified (GM) rice, able to resist pests in scientists' trial programmes, last year. Xia has now saved about 80 per cent of the pesticides.

"The output of the new (GM) rice strain is similar to those of traditional varieties, but for each mu (0.065 hectares) of new GM rice, I can save up to 80 yuan (US$9.66) in pesticide and labour costs, which are about 30 per cent of my total costs," Xia said.

All the GM rice harvested on Xia's farm was bought by scientists at the Chinese Academy of Sciences (CAS) for research.

"Many fellow villagers envy me because I was selected to plant the trial field of GM rice. If the government approves the planting of GM rice, I will offer my skills to them," Xia said.

Go ahead

Xia is totally unaware of the escalating debate on whether to commercialize GM rice between scientists and environmental groups since last December when the Ministry of Agriculture (MOA) announced it had officially launched the safety evaluation of GM rice.

So far, GM rice has not been commercialized worldwide.

According to Fang Xiangdong, director of MOA's Office of Biosafety, a biosafety committee under the MOA is assessing the biosafety of three pest-resistant Bt (Bacillus thuringiensis) rice strains and another rice strain able to resist bacterial blight. The official biosafety certificates are likely to be released early this year and then the GM rice strains must undergo up to two years of field studies before proceeding to commercialization.

Huang Jikun, director of the Agricultural Research Centre under CAS who has long been close to the MOA, said last week that the ministry is very likely to ratify the commercialization of GM rice within the year.

"In fact, many necessary experiments concerning the biosafety certificates have been previously completed and the results have been reported to the MOA. This can save time and speed up the ratification process of GM rice," Huang said.

Bt rice transplants insect-resistant genes from bacteria to rice so the crop is able to resist stem borer, a major pest for rice.

The Chinese Government approved commercialization of genetically modified cotton, tomato, pimiento and a species of morning glory in the late 1990s.

But in 2000, after China ratified an International Biodiversity Protocol and with rising international resistance to GM crops, China suspended the commercialization process of GM crops, although the research continued.

Environmental groups have launched campaigns to oppose the commercialization of GM rice.

Pang Cheung Sze, an official with Greenpeace China, argued that the risk of gene floating between GM rice and common rice is very high. If GM rice is commercialized, many traditional rice strains in China may eventually disappear.

In addition, it is very difficult to manage GM rice seeds and label the products in practice. Commercializing GM rice may equate to Chinese consumers without a choice over GM or non-GM rice, Sze said.

In 2002 China began labelling GM crops and products made from GM crops. But the rule was not well implemented until July 2003 when the authorities punished a group of soybean oil processors using GM soybeans.

Rising benefits

Jia Shirong, a renowned scientist at the Chinese Academy of Agricultural Sciences, said there was a very low risk of gene floating during his research to test the biosafety of GM rice for four years in Hainan Province.

Xu Haibin, a scientist at the China Disease Prevention and Control Centre, used GM rice to feed rats for several generations. No observable abnormal features were found.

According to Huang's research on the economic impacts of GM rice commercialization, which is based on the scenario of China's GM cotton, Bt rice - the most mature GM rice strain in China - can save farmers 70-80 per cent of pesticide use in rice fields while reducing the risk of exposure to dangerous pesticides for the farmers.

The current GM rice strains do not improve crop output. But they improvesthe efficiency to resist pests and crop disease, indirectly stimulating higher output, said Zhu Zhen, deputy director of the Bureau of Life Science and Biotechnology under the CAS.

Zhu is the chief scientist leading a research team to develop another kind of insect-resistant GM rice strain adopting a cow pea trypsin inhibitor gene, CpTi.

According to Huang's model, while reducing farmers' costs on pesticides and herbicides, adopting GM rice may cause a growth in seed price and a slight decline in grain price due to increased output. As a whole, farmers may be able to save up to 190 yuan (US$22.90) annually, per hectare planted. By 2010, technology may save the nation US$4 billion if GM rice can be commercialized in the near future.

Clive James, director of the International Service for the Acquisition of Agri-biotech Applications (ISAAA), said farmers in developing countries are becoming more and more ready to accept GM crops.

Xia' s case is an example.

"When planting traditional rice, we need to spray the crops eight times with pesticides. The work is very heavy so young labourers are needed. GM rice can save young labourers and they can go out to seek urban jobs," Xia said.

According to the latest report from the ISAAA, in 2004, global plantation of GM crops reached 81 million hectares, rising 20 per cent over 2003. In that year, developing countries surpassed developed countries in terms of plantation area of GM crops for the first time in history.

Business chances?

In a speech made to a conference last Summer, Chen Zhangliang, president of China Agricultural University, appealed to biotech company chiefs: "Invest in the upcoming GM rice now. You may receive several fold in returns!"

Guo Longbiao, a leading rice scientist with the Hangzhou-based China National Rice Research Institute, said scientists at his institutes have developed dozens of applicable strains of three kinds of GM rice. If the approval for GM rice commercialization is granted, they can be spread rapidly.

However, the current situation of GM seeding is far from optimistic.

Shenzhen-based Biocenture, a leading GM cotton seed provider, has reportedly made high profits in the past years.

Gu Dengbin, vice-president of Biocenture, said that many seed companies have pirated its GM cotton.

"Thanks to the massive unauthorized regeneration of our seeds, domestically developed GM cotton strains have surpassed the strains of US biotech giant Monsanto, but as the patent holder of the domestic GM cotton, we receive little returns," Gu said.

In 2004, China planted 3.7 million hectares of GM cotton in 2004, rising 32 per cent over the previous year and accounting for 5 per cent of the global plantation area of GM crops. It is widely believed that Monsanto's GM cotton seeds account for a little less than 50 per cent of China's total plantation areas.

However, Eddie Zhu, spokesperson for Monsanto China and a major scientist at the company, estimated that legal plantation of Monsanto's GM cotton might be just 10 per cent with the remaining parts being illegally copied.

Foreign biotech companies' business prospects are further obscured by the 2002 version of the "Catalogue for the Guidance of Industries for Foreign Investment," that banned foreign companies from conducting GM seeding in China. The regulation is continued in the 2005 version of the catalogue.

Eddie Zhu said that in practice, the ban mainly excluded newcomers instead of Monsanto, which has co-operated with Chinese partners to conduct GM cotton seeding for nearly 10 years.

"But the ban will make it difficult for Monsanto to expand to other GM crops in China," Zhu said.

Huang argued that the ban should be temporary and might be loosened due to the improving policy environment for GM crops in China. He believes the seeding market will be better regulated.

"After all, with severe competition in the sector, the price of GM crops will decline and farmers will be benefited," Huang said.

(Business Weekly 01/26/2005 page3)