Origin Agritech diverged with outgoing US Agriculture Secretary Tom Vilsack in restating its faith in China's commitment to genetically modified seed – even as it unveiled "another challenging year" in the market, sending its shares lower.
Beijing-based Origin Agritech, the developer of the first biotech seed type cleared by China's agriculture ministry, placed among "exciting opportunities" the prospects for the country's genetically modified seeds market.
"Based on China's 13th five-year plan, we continue to believe that the Chinese government is committed to the commercialisation of agricultural biotechnology as part of the larger effort to modernise agriculture," said Bill Niebur, the Origin chief executive.
China's 13th Five-Year Plan for National Science and Technology Innovation, released in August, revealed a push to commercialise genetically modified cotton, corn and soybean seed, in an effort to boost productivity, besides introducing a system for evaluating such products on safety grounds.
The move followed comments by President Xi Jinping a year ago terming biotech as a "new technology, and a new industry with bright prospects".
In an apparent boost to domestic seed groups, he underlined the potential for "indigenous innovation", besides the need to guarantee safety.
"That is, we shall be bold in research, but cautious in commercialisation."
However, Mr Vilsack in November, after a meeting of a joint China-US trade group, said that China was dragging its heels on setting up a transparent process for approving GM seeds.
"Although China has made some progress, it has not fully implemented commitments on agricultural biotechnology that it made to the US which date back as far as September 2015," Mr Vilsack said.
"Lack of progress on biotech issues will continue to add years to the process of commercialising them, will slow innovation and set back global efforts to address food security and climate change."
Origin Agritech revealed its comments as it unveiled a near-quintupling in losses for the year to the end of September, to 65.6m renminbi ($9.82m), from 13.8m renminbi a year before.
"The seed industry in China experienced another challenging year," the group said.
Revenues fell by 11.0% to 335.3m renminbi ($50.2m), a decline "mainly due to lower sales volume for corn and rice seeds, as a result of market oversupply", besides increasing competition and a drop in corn sowings "in the high single digits" in percentage terms.
"Market share for corn held flat with last year" despite the drop in Chinese sowings, which comes amid government reforms aimed at stemming overproduction, and reducing inventories swollen by a previous policy of guaranteed corn prices top farmers.
In fact, corn seed revenues, which fell by 7.6% to 331.3m renminbi, fared better than those for rice seed, which dropped by one-third to 19.7m renminbi, while those from canola slumped by 45% to 8.7m renminbi.
"Due to continued decline of rice and canola seed sales and increased competition, the company is phasing out of these product lines in 2017," the group said.
Separately on Tuesday, Origin Agritech unveiled a deal with DuPont's Pioneer seed giant to sell non-GM seed in the US, starting with the forthcoming spring sowing season.
"We look forward to offering these products to US farmers through a novel, digitally-enabled route to market," Dr Niebur said.
Christine Bobst, Origin's North America business director, said: "We are looking forward to serving the non-GM/organic markets in new and different ways as we pursue a full slate of agricultural products, technology and service offerings."
Origin Agritech shares, which are listed on the Nasdaq exchange, tumbled 9.8% to $2.13 in lunchtime deals.
Agrimoney has published an in-depth report on Chinese agriculture, China 2017: Agricultural Deregulation and Its Global Impact. More information at www.agrimoneyresearchreports.com
By Mike Verdin