March 26, 2007

China forms soy association to consolidate purchases

Consolidated soy purchases, with an aim towards the safeguarding of the interests of China's soy producers and related enterprises, would be the primary objective of China's Soybean Association, inaugurated last weekend, a spokesman from the association said.

The association was four years in the making, with the State Council giving its blessings and the Ministry of Civil Affairs giving its approval in October 2006. Preparatory meetings were held in Beijing in January, with plans for the official establishment of the association in late March.

With international agri-giants such as Cargill, Bunge, ADM and Louis Dreyfus having substantial interest in China's soy industry and controlling more than 80 percent of China's soy crushing and soy import activity, China's local soybean industry was facing a challenge much greater than it ever did.

According to a spokesman, China's Soy Association would look for ways to implement a consolidated purchasing system to protect local producers and related industries.

As China's soy industry increasingly comes under the influence of foreign companies, its domestic crushers have all but disappeared. Chinese companies would lose out in the competition with foreign companies as China's companies acting unilaterally pay higher prices when purchasing soy from the US or South America. Consolidated buying by the China Soy Association would allow groups to come together to gain the best prices, thereby protecting the interests of the Chinese companies.