Monsanto Co. (MON), the world's leading producer of genetically modified seeds, is setting up a genomic research center in China, a country that has been struggling between exorcizing due prudence in growth and consumption of GM crops and rising domestic food demand against shrinking acreage.

"We're doing it right now. The country has a tremendous scientist pool," said the company's executive vice president, Gerald Steiner.

He added that Monsanto will look to the government to seek the best way to proceed.

China, one of the world's biggest consumers of major agricultural commodities, has been cautious in adopting GM technologies in crops that are consumed as food, such as rice, with debate dragging on for years.

However, it has been widely growing genetically modified cotton, given its vast demand from the textile and apparel industries and very high dependence on imports.

The world's most populous country is also the biggest buyer of soybeans from the U.S., Brazil and Argentina, which are mostly genetically modified, for processing into feedmeal for animals. The imports account for more than 70% of the country's total annual soybean consumption.

"The Chinese government has announced very significant investments in biotechnology research in the country's universities and institutes," so they aren't against genetically modified crops, said Steiner.

 
   Expecting Growth In Asia, America

Given the traditionally anti-GM stance of European countries, Steiner said the company would go "where we're needed," when asked which countries Monsanto would be focusing on to either market its products or seek mergers and acquisition opportunities.

Besides the U.S., the list includes Vietnam, India and Indonesia, as well as Canada, Brazil, Mexico and Argentina.

Relatively high global food prices are a wake-up call to the world that if countries want to increase their agricultural output, "it takes consistent long-term investment in crop productivity," he said.

The St. Louis-based company launched an initiative in June last year to double crop yields in corn, soybeans and cotton by 2030 while reducing the required water and fertilizer.

To double the yields, biotech will be one of the major contributors, he said.

"This is going to take lots of investment from us, so it's important that we can form the right relationship with governments. Otherwise, they aren't a good financial bet," said Steiner.

Company Web site: www.monsanto.com

-By Helen Sun, Dow Jones Newswires; (65) 6415-4086; helen.sun@dowjones.com