April 12, 2012

 

Chinese farmers to plant largest corn land on record

 

 

The farmers in China are set to widen the corn area over 2% in 2012 to hit its biggest spread ever, despite a growth rate flat with 2011, as record local prices and grain subsidies by Beijing cut into soy acreages.

 

The lower soy acreage will ensure imports by China, the world's top buyer of the oilseed, stay robust while a better corn harvest will improve supply.

 

China is the world's second largest consumer of corn, of which it has been a net importer since 2009, after demand growth outpaced production.

 

"We expect corn acreage will no doubt increase at the same percentage as last year," said one analyst with official think-tank the China National Grain and Oils Information Center (CNGOIC).

 

China's total corn acreage rose 2% to a record 33.15 million hectares in 2011, while soy acreage fell 10.2% to 7.65 million hectares, official figures show.

 

"Local governments are encouraging farmers to increase grains acreage and the expansion will surely take away acreage for others, like soy and cotton," said the analyst, who declined to be identified, as he is not authorised to talk to the media.

 

Beijing, gripped by food security concerns, will continue to give farmers subsidies to plant rice, corn and wheat, suggesting grain harvests will rise for a ninth straight year since the incentives began in 2003, if the weather stays favourable.

 

The central government has agreed to increase farmers' grain subsides by 14% this year to RMB160.6 billion (US$25.5 billion), after a rise of 17% in 2011.

 

A survey in March by the government of Heilongjiang province, the country's largest corn grower in the northeast, showed the corn acreage would hit a record six million hectares in 2012, or a rise of 7% from last year.

 

"More than half of the farmers in the cooperative will shift to corn from soy this year because corn last year had given very good returns," Chen Yangui, head of the Heilongjiang Qiqihar Soybean Association in the country's northeast, told Reuters.

 

"Corn was popular and sold immediately after it was harvested."

 

Farmers last year made RMB1,000 (US$160) per mu of corn, an area equivalent to 0.06 hectare, far higher than the RMB600 (US$95) earned from the same unit of soy, Chen said.

 

Farmers in northern Heilongjiang are growing more early-maturing corn seeds, which can mature within 110 days and escape early frost frequent at harvest there, he added.

 

The soy acreage in Heilongjiang, which produces 40% of China's soy, would fall by a fifth this year, in its third year of decrease in a row, said Wang Xiaoyu, deputy secretary general of the Heilongjiang Soybean Association.

 

In the neighbouring province of Jilin, the second largest corn-growing region, farmer Fu Yanming said he would double his corn acreage this year.

 

Some 34% of farmland in the northeast, the country's corn belt, is experiencing dry weather, the China National Grain and Oils Information Center said.

 

March rain had not helped break the drought, a key factor that threatens to delay planting, the agriculture ministry said.

 

Although some farmers told Reuters they had access to irrigation, they worry over rising planting costs.

 

"I hope the corn prices next year could be as high as last year, which can cover the rising planting costs," said Fu in Jilin.

 

Domestic physical corn prices at the largest port of Dalian hit a record of RMB2,480 (US$393) per tonne before harvest in October. The rise eased before rebounding last month to RMB2,440 (US$386) on tight domestic supply.

 

Hilongjian's Chen said farmers had to pay 20% more to rent land from other farmers, besides increases of 10% in fertiliser and seeds prices.