Interview: poor farmers need skills, not aid - Syngenta CEO

The looming food crisis threatening poor nations underscores the need for subsistence farmers to sharpen their business skills rather than rely on aid to avoid future calamities, said Mike Mack, Chief Executive of Syngenta AG, one of the worlds largest crop protection and seed makers.

With more than 900 million people around the globe suffering from hunger, genetically modified food is also needed to feed the worlds population, which is expected to rise to 9 billion in 2050 from 6.5 billion now, he said in an interview.

Macks comments come amid a warning from the United Nations Food and Agricultural Organization of new global food shortages as prices for wheat, corn and rice neared record levels of 2008 after a series of crop failures caused by bad weather.

"Too many growers dont have vibrant businesses as farmers," Mack said. "Some of the people think that, oh no, we have to give more food to the malnourished people and they go into what is traditionally an aid mind ... Its my view that this is absolutely not the problem."

"The problem is, there are hundreds of millions of farmers, who today are not commercially successful and who can barely feed themselves and have a very hard time to feed their community," Mack said. "We have to value farming as a business as opposed to just value farming for what we can take of it."

Some of the problems responsible for the huge number of malnourished people are structural, as many farmers around the world lack property rights and have little incentive to invest in their lands. But basic farming skills used in Asia and Africa are also often too rudimentary to have success chances, he said.

Crop rotation--practiced in Europe since the Middle Ages to maintain the quality of the soil--isnt common outside the West. This is because many poor farmers have scarce capacity to plan ahead and tend to overuse their parcels rather than rotate crops.

Among these efforts, Syngenta's Foundation for Sustainable Agriculture is reaching out to farmers in Asia and Africa, where it is selling small sachets of crop protection products at low prices. Such smallholder projects have generated some $30 million in sales last year.

The foundation is also helping farmers use improved techniques and cooperates with insurers to protect farmers against droughts and floods. The company has spent some $20 million in 2009 amid these efforts.

Non-governmental organizations such as Greenpeace criticize this approach. They say this form of help is a veiled attempt of large seed and crop protection manufacturers to make farmers dependent on designed and patented products. Many of the novel seeds, Greenpeace says, can often only be used during one season and need to be bought a new every year, creating a lucrative market for companies such as Syngenta.

But not using them has consequences.

"If you dont use good quality seed, and I am not talking here necessarily about genetically modified seed, then the yields of this farmer are going to be low," Mack said.
According to CropLife International, a research group backed by industry leaders such as Sumitomo Chemical Co Ltd (4005.TO) and DuPont Co (DD), the use of crop protection can limit harvest losses by half, helping keep food prices stable. The organization also says that patent protections are necessary as the cost for a new product can be as high as $200 million.

Switzerland-based Syngenta, which was created 10 years ago out of the merger between Novartis AGs (NVS) and AstraZenecas (AZN) agrochemicals business, has developed into an industry leader with around $11 billion in annual sales, ahead of competitors such as Monsanto Co (MON) of the U.S. and Germanys Bayer AG ( BAYN.XE).

The recent surge in wheat prices in the wake of droughts in Russia as well as the food crisis of 2008 that triggered a wave of riots in several dozen countries, has helped the Basel-based firm lift prices for seeds and crops after years of sluggish price developments. But the rush into these soft commodities was speculative and not driven by an actual drop in production, Mack said.

"Actually, the pile of corn had remained the same during the 2008 crisis. What had changed was that future prices were rising and that many aid organizations simply didnt have enough funds to buy what they needed."

"The problem, hence, wasnt biological--rather, ensuing trade disruptions triggered the problem," he said.

A trade-induced crisis scenario could repeat itself.

The UNs warning about a potential new crisis came as the body said that the cost of importing food is set to surpass $1 trillion in 2010. This could fuel food price inflation and hit the worlds poorest, who are dependent on aid.

The high cost of imports is partly due to trade restriction, as countries such as Russia and Ukraine have imposed wheat export bans, according to the UN, which recently warned that world food production will need to rise by 70% over coming decades to feed the worlds a population in 2050.

Part of the remedy could come through reducing trade barriers. But improving farming skills is essential for solving the food crisis, while the use of bioengineered plants is important to improve productivity, Mack said, noting that genetically modified foods have led to economic gains of some $44 billion since their introduction in 1996.

Source: Dow Jones Newswires