China faces a perpetual struggle to feed its population of 1.4 billion, the largest in the world.
With an aging rural society, a limited supply of quality arable land and a continuing shift in young people from the countryside to the cities, China's farmers are under pressure to increase yields.
ChemChina's $43 billion offer for the pesticides and seeds producer Syngenta provides a ticket to do just that, and it gives the Swiss company the chance to expand sales. The Chinese seed and crop-protection market is valued at about $10.6 billion a year, Syngenta reckons.
Jeremy Redenius, a chemicals analyst at Sanford Bernstein, says large Western agricultural chemical companies have made only limited inroads into the country because the large number of local suppliers makes the market highly competitive.
In 2015, the Asia-Pacific region accounted for 14 percent of Syngenta's sales:
Data on calorie availability show the gap between China and western diets has narrowed significantly over the past two decades:
As Chinese people have become wealthier, their diets have shifted away from grains toward animal protein:
To produce all that protein, China needs animal feed. It has become the world's top soybean importer, for example.
China's farming industry is also compelled to increase crop yields. To do that, it relies on large quantities of fertilizer:
Buying Syngenta gives ChemChina access to genetically modified crop technology that could help cut the country's dependence on fertilizer, a known pollutant.
With calorie consumption already approaching Western levels in China, however, Redenius doesn't expect a further boom in food demand. China's population growth is also waning:
That should help give China's farmers a break -- but it also means ChemChina will have to work hard to justify the price it's paying.
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