corn.jpgA bit outside EngagingChina's usual territory, but we thought it worth flagging Syngenta's acquisition of a 49% stake in Sanbei Seed, a leading Chinese corn seeds company.

The Swiss agricultural biotech company, formed in 2000 by Novaris and Zeneca, says the deal is driven by China's “changing agronomic trends and shifting food patterns.”

Syngenta is hoping that higher-yielding seeds will allow China to square the circle by producing more corn from less land.

The backdrop to the story is the competing demands placed on land. Arable land shrunk by 8m hectares between 1999 and 2005, and the ministry of agriculture predicts that through 2010, the total grain-producing land area will decrease by 0.18% annually.

That may not sound much, but with 1.3bn mouths to feed, the country has an understandable obsession with guaranteeing its food supplies and grain production is seen as central to that goal.

In addition to being used as food, 72% of China's corn goes to feed animals — one of the side-effects of China's affluence is that the population is no longer happy to subsist on rice but wants more meat in its diet.

But China's arable land is under threat. As well as the all-too-obvious encroachment that development has made in many regions, China is concerned that land previously used for grain production may be turned over to producing cash crops, or more worryingly, fuel crops.

The country wants to substantially raise the share of ethanol and other cleaner fuels during the current Five-Year Plan, which runs to 2010. If arable land is turned over to growing biomass for fuel production, China risks becoming a net importer of corn, so the government is emphasising the use of forest land and waste land in preference to grain-producing land for biomass.

For example, PetroChina, the state-owned energy company, plans to build more than 2m tonnes of forest bio-energy ethanol production capacity a year, and account for more than 40% of national capacity by 2010.

More on China's biofuels dilemma in this story