China food security: why counterfeit seeds are stalling innovation in the agricultural sector

“This is a variety introduced from the Netherlands. It’s sweeter, softer and juicier,” said the vegetable vendor in central Shanghai.

“You may see sellers in other places also claiming to have such tomatoes, but I can assure you mine are authentic.”

It is unclear how many bogus tomato varieties are doing the rounds in Chinese markets, but Ling’s sales pitch touches on a thorny problem for China’s government, seed companies and farmers.

Stopping the circulation of counterfeit seeds has been a priority for the Ministry of Agriculture and Rural Affairs since 2021, when it launched a “market clean-up” in conjunction with the government’s “seed industry revitalisation plan”.

More than 800 crop seeds registered with authorities have been cancelled in the past two years for being copies of popular breeds, the ministry said in a statement in February.

China’s government is calling for a biotechnology breakthrough in the seed industry to improve food security, an issue that has gained urgency amid worsening ties with the United States and its allies – many of which are important food exporters – and Russia’s invasion of Ukraine.

The sector is highly fragmented and its track record in commercialising seed innovations is weak, according to experts.

China has established a system that grants intellectual property rights to new varieties called New Plant Variety (NPV) rights.

In 2021, the government took a major step by improving protection of NPV rights for breeders through an amended seed law that introduced the concept of Essentially Derived Varieties (EDV), which are deemed lacking innovation.

“There have been calls for innovation and entrepreneurship in nearly every sector in China, and in the seed sector, such calls seem to be more urgent,” said Yuan Jia, an associate professor specialising in intellectual property law from the Law School of Sichuan University.

In a national conference on agriculture at the end of last year, President Xi Jinping called seed breeding one of the two “crucial points” in agricultural production for China, the world’s most populous nation and biggest food importer.

The reality is that a large amount of low-quality and counterfeit seeds dominate the Chinese market, Yuan said, which has influenced agricultural productivity and harmed domestic seed innovation.

“If counterfeit seeds prevail and such a trend is not stopped, then owners of seed technologies get less reward from innovation, which will affect development of the entire sector,” he said.

Shen Ruogang, deputy general manager of Shanghai Wells Seed, said the industry was dominated by thousands of smaller breeders who have not bothered to invest in independent research.

“They would look out for popular varieties, resorting to third or even fourth-hand seeds if they can’t find first or second-hand ones. So you may find 10 different names for one variety in the market,” said Shen, whose company primarily breeds vegetable seeds.

There are more than 7,300 crop seed breeders in China, but only about 100 of them are capable of independent research and development, the state-owned China Newsweek magazine reported last year.

Among them, only 15 have net assets of more than 1 billion yuan (US$145.3 million), Song Weibo, general manager of state-owned China National Seed Group, was quoted as saying.

Shen said there had been some improvement since the launch of the clean-up, but no major change. “The Chinese market is huge, and the government seldom takes the initiative in fighting a particular fake seed,” he said. “Plus, Chinese farmers are mostly incapable of telling what’s substandard.”

His company, listed by the agricultural ministry as a state-supported crop breeder last year, has increased investment in research and development in response to the government call for innovation, he said.

In an attempt to consolidate the industry, the ministry issued a “national seed industry formation” list of 69 businesses in the crop sector, 86 in the livestock and poultry sector, and 121 in aquaculture.

“With government support and NPV rights, we’re assured that we’ll win if we launch lawsuits against infringement,” Shen said. “So leading companies are generally more enthusiastic in pursuing their own technologies as their commercial benefits are guaranteed.

“As a vegetable breeder, we were asked to enhance the quality of vegetables to rival those from abroad, which often taste better and are resistant to transport losses. For example, domestically bred spring onions and broccoli may lose their leaves during transport, but imported ones don’t.”

China saw a deficit of 350 million yuan in crop seed trade in 2021, mainly driven by the demand for vegetables, according to figures from the agriculture ministry.

While China enjoys some advantage in rice and wheat, oilseed crops including corn and soybeans also lag far behind global leaders.

Yields of both crops are only about 60 per cent of those growing in the United States, officials from Hubei province’s seed administration said in a recently published article.

To encourage development of better yielding seeds, Beijing has improved protection of plant breeders’ rights to meet international standards via an amendment to its seed law that went into effect in March last year.

One major change under the law is to introduce the concept of EDVs, namely a variety that is predominantly derived from another.

The new provision, in line with requirements by most European countries and North America, prescribes that a company cannot commercialise an EDV before obtaining consent from the intellectual property right holder of the initial variety.

Until now, the prevalence of EDVs has been a major weak link in China’s seed industry, but authorities are trying to create an innovation-friendly environment by discouraging breeders from only making minor changes to original varieties, said Yang Shuxing, an associate professor who focuses on intellectual property rights in the agricultural sector at the China Agricultural University.

He used the analogy of a novel produced by a renowned author and a sequel written by a little-known writer.

“Which do you think is better, Demi-Gods and Semi-Devils by Louis Cha or its sequel by a nobody?” he said, referencing a famous Chinese chivalry novel.

“The latter has its uniqueness but it lacks creativity compared with the former.

“Farmers who buy EDVs might find them OK in the field, or even better in yield, so EDVs are not banned. But if a firm wants to develop them, it needs to pay a sum of money to the owner of the original variety now. With this rule, it may find this is unworthy and shift to independent research instead.”

Many Chinese seed companies that depended on EDVs opposed the amendment, Yang said, “but it will bring tremendous benefits to the sector in the long term”.

There are already signs of improved awareness among breeders, according to official numbers.

The number of new disputes filed under the NPV law at courts across China has risen significantly in the past decade, according to China Intellectual Property News, a newspaper under the National Intellectual Property Administration.

There was an annual increase of 13.5 per cent between 2013-21, with 549 cases filed in 2021, a jump of more than 88 per cent from the previous year, it said.

Wang Ming, a researcher at the Administration and Management Institute under the agriculture ministry, said the increase showed people are seeking more protection for their rights because they have realised their commercial value.

However, most applications in recent years for new intellectual property rights of plant varieties and agricultural patents were from academic institutions, and commercialising these remained a problem, said a policy adviser who spoke on condition of anonymity.

“Many people feel their jobs are done once a scientific research project is completed. They don’t care if these findings can be brought into the market, as long as they’ve received the funding and bylines for the research paper,” he said.

“Some firms send people to attend seminars on research findings made by universities … after some time, you may find that your new technology suddenly appears in the market.

“It costs a big sum for an academic institution to claim compensation. And the profits a company makes from stealing the technology are way higher than the fine it may receive.

“The cost of breaking the law is so low that they certainly are willing to steal. This has led to the reluctance of researchers at universities to work with businesses.”

China needs a third-party platform to commercialise seed innovations and more stable staff in laboratories so that more time can be devoted to long-term research projects, he said.

Yuan, from Sichuan university, said the global seed industry is dominated by global giants and China has small firms that lack research capability and funding for innovation.

He said the industry needs mergers and acquisitions so that resources can be concentrated in research and development (R&D).

“You cannot compete with others in the long run without independent R&D capacity,” he said.

However, chances for overseas acquisitions will be small considering the geopolitical tensions between China and the West, he said. “You may be able to afford it but whether they want to sell it to you is a question,” Yuan said.

China’s expansion in the global seed sector was marked by a few high-profile acquisitions years ago, including ChemChina’s purchase of top agricultural chemical producer Syngenta in 2016, and the takeover of Dow Chemical’s corn seed business in Brazil by Citic Agri Fund, which is associated with seed firm Longping High-Tech in 2017.