U.S. Agribusiness Industry Feels Ripple Effect of Tumultuous Agrochemical Markets in China, India
2020 has brought major changes in the world’s top agrochemical-producing nations, writes Jackie Pucci at CropLife. It’s important to keep an eye on what these could mean for U.S. ag players.
Syngenta and the Sanctions Question
One bit of news caught the eye of the ag industry over the summer, when the U.S. Department of Defense added both Sinochem and ChemChina to its list of entities it considers “Communist Chinese military companies” operating directly or indirectly in the United States.
How the designation will ultimately play out in terms of impact on Syngenta’s massive U.S. presence is uncertain — but it will be important to keep watch in the coming months.
Syngenta, of course, was purchased by Chinese state-owned ChemChina for $43 billion in 2016; earlier in 2020, ChemChina and Sinochem announced they were consolidating agricultural assets into the new Syngenta Group holding company. A merger between ChemChina and Sinochem is in progress, the successful completion of which would easily catapult it to world’s largest agricultural player in terms of size.
More than 97% of Syngenta’s business is outside China. In the first half of 2020 alone, the company posted $1.5 billion in crop protection sales and $478 million in seed sales in North America — its largest sales region just behind Europe/Africa/Middle East.
As a Bloomberg report noted, the Defense Department’s designation gives the White House broad powers to impose crippling sanctions on any company doing business with them. Bloomberg noted that, “if sanctions were imposed, nothing less than full separation from SinoChemChina would be sufficient to preserve it from ruin.”
“It’s a bark, not a bite, if sanctions (to include prohibition from doing business in the U.S.) don’t follow,” according to Axios, quoting a former (unnamed) senior intelligence official.
The list, which was required as part of the 1999 National Defense Authorization Act but was not previously assembled, includes a couple dozen entities such as telecom giant Huawei, China Railway Construction Corp., China Telecommunications Corp., and Hikvision, which was blacklisted by the U.S. in October 2019 for building surveillance tools that aided in the oppression of Uighur Muslims in Xinjiang.
The Department of Defense, explaining its listing of such companies, said it is “determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.”
Get The Newsletter Today!
