Report summary:
Focus this week: the new seed law will be officially implemented on March 1, 2022
On December 24, the 32nd meeting of the Standing Committee of the 13th National People's Congress adopted the decision to amend the seed law of the people's Republic of China. After the amendment, it further encouraged breeding innovation, promoted the combination of production, learning and research, added relevant provisions on practical derived varieties, and improved the protection of variety rights.
The advancement of China's seed industry modernization urgently needs policy support
1) The scale of China's seed industry market exceeds 100 billion, but the industry concentration is still low. According to the report on the development of China's crop seed industry, the scale of China's seed market in 2019 was 118.8 billion yuan, ranking second in the world; However, the industry concentration is low, Cr5 is only 12%, which is as high as 52% compared with the global seed industry market. 2) The breeding industry has encountered a development bottleneck, and the speed of variety replacement has slowed down significantly. High quality raw materials can greatly improve the success rate of breeding. The high-quality germplasm resources of China's main crops have encountered the bottleneck of development and utilization. The germplasm resource bank is not fully used, so it is difficult to cultivate more excellent innovative varieties. On the other hand, due to the insufficient protection of variety rights in terms of policy, the phenomenon of counterfeiting and Deck Cards occurs from time to time, the innovation will of seed companies is seriously damaged, and the variety breakthrough is stagnant. The replacement cycle of rice varieties is up to 10 years, and the top 5 varieties of maize have not changed for many years.
There are 19 amendments to the new seed law, the core purpose of which is to crack down on infringement and encourage innovation
1) From the production of breeding materials to the harvest of materials, the whole chain protects the right of new plant varieties. Drawing on international practices, the newly revised seed law expands the protection scope and protection section of the right to new plant varieties, extends the protection scope from the breeding materials of authorized varieties to the harvesting materials, and extends the protection links to production, reproduction and processing for reproduction, offering for sale, sales, import, export, storage, etc. 2) The system of substantial derived varieties (EDV) shall be added to strengthen the protection of original innovation. In order to solve the serious problem of seed homogenization from the source, it is clear that substantial derived varieties can apply for the right of new plant varieties and can be authorized. However, when they are used for commercial purposes, they shall obtain the consent of the owner of the right of new plant varieties of the original varieties. In the International Union for the protection of new plant varieties Among the 77 members of UPOV, 68 have implemented this system. 3) intensify the crackdown on fake and inferior seeds and improve the tort compensation system. In order to improve the deterrence against violations of new plant variety rights, the new seed law has increased the amount of punitive damages. The amount of fines for the production and operation of fake seeds has been increased from "more than 10000 yuan to less than 100000 yuan" "More than 50000 yuan but less than 500000 yuan"; The amount of fines for the production and operation of inferior seeds will be increased from "5000 yuan to 50000 yuan" to "20000 yuan to 100000 yuan". 4) The protection of germplasm resources shall be strengthened, and the cultivated land in the advantageous seed breeding base shall be classified as permanent basic farmland. Agricultural germplasm resources are strategic resources to ensure national food security and important Shenzhen Agricultural Products Group Co.Ltd(000061) supply. They are the material basis for the original innovation of agricultural science and technology and the development of modern seed industry. The revised seed law specifically refers to the collection of rare, endangered, endemic resources and characteristic local varieties in the provisions of the state's planned general survey, collection, sorting, identification, registration, preservation, exchange and utilization of germplasm resources.
Investment advice
In November this year, the Ministry of agriculture and rural areas has publicly solicited opinions on the revised draft of the three supporting rules and regulations of the seed law, expanded the scope of variety application to genetically modified varieties at the regulatory level for the first time, and listed the specific documents required for the approval of genetically modified varieties. In the medium and long term, the commercialization policy of genetically modified seeds is expected to be promoted in an orderly manner. The revision and implementation of the new seed law will further strengthen the protection of germplasm resources from the perspective of law, which will significantly improve the innovation accumulation of seed companies in the future, so as to better protect the new transgenic varieties that will be implemented in the future. Continue to pay attention to high-quality seed enterprises ( Yuan Longping High-Tech Agriculture Co.Ltd(000998) , Winall Hi-Tech Seed Co.Ltd(300087) ) with leading scientific research strength and GM first mover advantage. In the future, they will fully benefit from the double dividends of "cycle" and "growth", and the market share is expected to be further improved.
Risk statement
Shenzhen Agricultural Products Group Co.Ltd(000061) risk of large price fluctuation, extreme weather risk, policy uncertainty risk, etc.
