China raises alert on heavy foreign soy investment

The General Administration of Customs (GAC) in China has warned against the increasing control of foreign traders over the local soy industry.

Experts are urging the government for intensified support for the domestic soy market against large capital flow.

Wilmar International is the major shareholder of Arawana, a household name of edible oil in the country. The company has reportedly bought soy worth US$3 billion in China's north-based major soy region in August last year. The company however didn't confirm the news.

Wilmar's yearend report showed that its sales in China took up more than 50 percent of the total revenue in 2007, expanding more than 200 percent year-on-year to US$8.48 billion.

Li Guoxiang, researcher on rural development with the Chinese Academy of Social Sciences said foreign grade traders are controlling edible oil prices, hence affecting the interests of domestic grain companies and farmers.

Statistics showed 64 of the 97 major edible oil companies in China have overseas capitals.

Li said the government should interfere in the country's grain market to support not only large grain companies but also take actions on small and medium sized companies, such as making more loans.

Xu Xianglin, an expert on rural issues at the Party School of the Communist Party of China Central Committee, also urged the government to keep a cautious watch over the presence of foreign capitals in domestic grain circulations. This is to avoid foreign traders buying the bulk of the country's grain stocks and entirely, its food reserves.