Over-reliance on foreign soybeans worries farmers
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E-mail Xinhua, March 16, 2013
Chinese soybean farmers have urged the government to come to their rescue as they are grappling with an influx of cheaper, genetically-modified (GM) soybeans from overseas.
They expressed worries that over-reliance on soybean imports -- as high as 80 percent -- could put the country's cooking oil and animal feed industries, which use soybeans as major material, in despair.
"The Chinese soybean industry suffering from shrinking planting areas is at the crossroads of life and death," said Sun Bin, a farmer from northeastern province of Heilongjiang.
China has become increasingly dependent on soybean imports and foreign capital is dominating the Chinese soybean market, said Sun, also one of nearly 3,000 lawmakers who are in Beijing for the annual session of the National People's Congress (NPC).
Heilongjiang accounts for about one-third of China's annual soybean output. The province's soybean planting area, however, slumped significantly from 4.7 million hectares in 2009 to 2.53 million hectares in 2012.
During the period, farmers in the province planted more corn, which has a higher yield and is more profitable.
"When farmers can earn 4,000 yuan (635 U.S. dollars) more from a hectare of corn than from soybeans, who is willing to plant soybeans?" said Qu Fa, another farmer from Heilongjiang.
Aggravating the woes of soybean farmers, soybean processing plants were reluctant to buy domestic soybeans.
At present, imported soybeans sell at 4,400 yuan per tonne, while domestic soybeans are priced at 4,600 yuan per tonne, said Wang Xiaoyu, deputy secretary-general of the Heilongjiang Soybean Association.
Soybean farmers in the province have been caught between the hammer and the anvil, Wang said.
FOREIGN HANDS
Cheap imported soybeans have led China to become a net importer of soybeans.
In the mid-1990s, China opened up its soybean market to import more soybeans to satisfy greater domestic demand for cooking oil.
In order to comply with World Trade Organization rules, China fully opened its soybean market in 2001. Soybeans from overseas flocked to the Chinese market and for the first time, soybean imports exceeded 20 million tonnes in 2003, surpassing domestic output. Since then, China's soybean imports have increased year after year.
China imported 58.38 million tonnes of GM soybeans last year, mostly from the United States, Brazil and Argentina, because the country produced about 14 million tonnes of soybeans while the demand exceeds 70 million tonnes annually.
Imports accounted for around 80 percent of the country's soybean consumption last year, said Hong Yuanshu, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), top political advisory body of China.
"Hitting the Chinese soybean market with low-priced GM soybeans is part of a strategy used by transnational grain businesses to monopolize the Chinese soybean industry," said Zhao Yusen, another member of the CPPCC National Committee.
Over the years, transnational grain businesses have controlled the pricing power of soybeans that are exported to China. They also construct soybean processing plants in China, according to the political advisors.
"Once they drive out or merge Chinese cooking oil processing companies, transnational grain businesses will fully dominate the Chinese soybean industry," said Zhao.
Wang Xiaoyu estimated that in the future, global demand for soybean oil and soybean-based feed will maintain a trend of continuous growth. Since there are many uncertainties regarding global soybean output and potential demand, China, a major soybean importer, faces greater risk in the market.
Industry officials say that China, with its limited arable land, cannot ensure self-sufficiency in soybean supplies. It will still have to depend on soybean imports in the future.
Chen Xiwen, deputy director of the office of the leading group on rural work under the Central Committee of the Communist Party of China (CPC), said China has no choice but to continue soybean imports.
"It is inevitable for China to import some GM farm produce for quite a long period of time," Chen said at a March 7 press conference, when responding to a question about widespread concerns over GM soybean import.
As a result, policymakers face a dilemma. If the government restricts soybean imports, China will not have enough soybeans. But if it does not close the import gate, the domestic soybean industry will have slim hopes.
Hong said a solution would involve developing non-GM domestic soybeans.
Although a global consensus on the safety of GM soybeans has yet to be reached, food made from non-GM soybeans are priced higher than those of GM soybeans in many areas such as Japan and Europe, said Hong.
In China, however, the two varieties sell at similar prices, since non-GM soybean products are not sufficiently recognized on the Chinese market.
Wang said China has not stipulated compulsory identification for GM products and consumers who are ready to pay more for non-GM food cannot make choice.
"We may learn from the practice of labeling organic food with certification marks," Wang said.
Zhao Yusen proposed a solution for farmers to stay growing soybeans.
"The government may improve the pricing mechanism and offer a minimum protective price for domestic soybeans. It may look to futures market prices in March each year to adjust the minimum protective price," said Zhao.
"China may also set up protection zones for non-GM soybeans and display the competitiveness of domestic soybeans," said Zhao.
Industry officials believe the government should work to encourage soybean processing plants to buy and process domestic soybeans.
One solution would involve extending state subsidies to domestic soybean processing plants, using import prices as targets. China may also change tax policies to encourage leading enterprises to purchase domestic soybeans.
To reduce the country's soybean processing overcapacity, industry officials said the government should restrict domestic and foreign companies from constructing new processing plants or expand existing plants used to process imported soybeans in order to make more room for domestic soybeans. Endit
