ICS Occasional Papers

Syngenta, a Swiss seeds and pesticides manufacturing group, one of the largest in Europe and a world leader, is all set to be acquired by ChemChina, a Chinese state-owned enterprise for a record US$43 billion. One of the largest and boldest attempts to date by a Chinese firm to invest in a business abroad, it is believed to be part of China’s comprehensive strategy to ensure food security for its population in the age of climate change, shrinking and polluted open and ground water resources, degrading land quality and increasing demand for high protein foods. Syngenta’s acquisition, with its technological superiority in seed production and state-of-the-art technologies in crop protection chemicals, is potentially beneficial to China in facing challenges to its food security. Both the US and Europe approved the merger plans after considering its implications for their national security and in terms of competition. Though the merger in the agrochemical industry space is not new – the industry has been seeing consolidation with the top five companies controlling 75 per cent of the industry – acquisition by a Chinese state-owned entity raises a number of questions. No doubt, it will benefit food security-conscious China but it can also have implications for food sovereignty and security in the region.  India particularly has reasons to take a long-term view of this acquisition. The entry of genetically modified foods, changing dynamics in negotiating positions in the WTO on matters related to agriculture and increased agricultural imports from China may be some of the issues that may need to be considered over the long haul.