January 25, 2006

 

Foreign companies buy into China's soy market as imports increase
 

 

As much as a third of China's soybean processing capacity is now in foreign hands with one company alone having a quarter of the market, Cheng Guoqiang, a researcher with the Beijing-based State Council Development Research Centre said to the People's Daily.

 

Archer Daniels Midland Company (ADM), an agro-giant in the United States, is now said to have gained a quarter of the soybean market as more foreign companies are buying up Chinese soybean processing facilities. 

 

At the same time, Chinese soybean imports have been escalating. Soybean imports have been topping the 20 million-tonne level for three years running to reach 25 million tonnes last year. Such levels are way above domestic soybean output of 16 million tonnes a year, according to Cheng.

 

Unlike other countries, these events were taking place without any public debate. One factor is that public participation in decision-making is still new to many Chinese. As the world's largest importer of GM soybeans, China does not even have a say on the market price, Cheng said.

 

Plans are underway to examine how China could be less reliant on foreign soybeans.

 

Some experts believe China would have had enough to meet domestic demand if it had not exported its non-GM soybean to regions such as the European Union, Japan and South Korea, where consumers have a strong aversion to GM food. In Japan, the price of non-GM soybean can be 5 to 10 percent higher than that of the GM product.

 

China's ministry of agriculture had announced plans in 2003 to develop China's north-east into the world's largest non-GM soybean production center, in hopes of gaining the Asian and European market.

 

A major challenge is whether China can keep its non-GM soybean free from contamination. China forbids any GM soybean to be grown on Chinese soil. However, with so much GM soybean imported, whether China manages to keep a GM-free soybean zone remains a question, said Chang Ruzhen from the Institute of Crop Germplasm Resources.

 

Chinese researchers have found that GM soybean can contaminate non-GM cultivated soybeans and wild soybeans through pollination. A 2004 Greenpeace report also pointed out that once contamination occurs, it would be very hard to control.

 

Another plan in the works is for China to research its own GM soybean to counter the foreign imports. Some research is already underway in north-east China.

 

A third plan involves setting up an industry association similar to the American Soybean Association to increase China's bargaining power in international negotiations.