April 15, 2009

Dumping is suspected as a chill has fallen over the local soy market of Heilongjiang Province, the main soy production region in China, with more and more genetically-modified soy are imported, according to the Heilongjiang Soybean Association (HSA) executive secretary-general Wu Liqiang.

 

Statistics from China's customs indicate the volume of imported soy reached 37 million tonnes in 2008, 21-percent more than in 2007. The imports had a value of US$22 billion, an increase of 90 percent compared with the previous year.

 

This year, 6.3 million tonne of soy were imported during the first two months, a year-on-year increase of 15 percent, with a value of US$2.5 billion, a year-on-year decrease of 16 percent.

 

Wu said this indicates that prices are falling in response to an ever-increasing volume of imports, adding that a tonne of imported soy is selling upwards from RMB2,900 in the port of Dalian, which is effectively the production cost in the exporting countries, hence suspected of dumping.

 

In the first two months of this year the volume of imported soy increased sharply to 269,000 tonnes in Heilongjiang, which means a year-on-year increase of over 6,000 percent. However, exports are moving in the opposite direction with only 1,879 tonnes, a year-on-year decrease of 93 percent.

 

Wu noted that most of the soy processing companies in the province have almost closed down production and none of them has plans to purchase soy, adding that over 3 million tonnes harvested last year still remain with the farmers unsold.

 

He said that if the situation continues, the soy industry of Heilongjiang, from planting through oil processing, even to production of soy products will totally collapse.

 

HSA sent signals for help in late 2008 and the provincial government has been carrying out an investigation into the issue.

 

Since the second half of 2008, the price of imported soy has fallen steadily from RMB3,000 to around RMB2,900 per tonne. Hence, the price of provincial soy has dropped from RMB6.10 in last July to RMB3 per kilogramme in October, a decline of more than 50 percent.

 

In spite of the state reserve purchase of 4.53 million tonnes of soy at the price of RMB3.7 per kilogramme in Heilongjiang, farmers still face great pressure.

 

Some farmers told the local media that the state reserve purchasing price of RMB3.7 per kilogramme yields little profit to them due to increased land contract fees as well as transport and drying costs.

 

The oil & fat enterprises in Heilongjiang continued to purchase local non-genetically modified soy rather than imported transgenic ones, which became a routine.

 

However, they are now caught in the same web of startlingly low imported prices, the higher state reserve purchasing price and a shortage of supply among farmers.

 

Local soy processing company director Chang Wenbo said that with the market price of soy in the province, processors are making a loss, as a result companies have to suspend production.

 

Foreign-funded companies are now eyeing Heilongjiang for great profits, placing a great threat on its national soy industry.

 

According to HSA, for the past two months, imported genetically modified soyoil has captured 80 percent market share in Heilongjiang, while the local non-genetically modified soyoil occupies less than 20 percent and this figure continues to fall.

                          

US$1 = RMB6.826 (Apr 15)