April 30, 2008

 

China frets on increased shift from corn to soy planting

 

 

China's government is worrying on the more aggressive shift of farmers from corn to soy planting, as global soy prices become more attractive.

 

Soy acreage in China is expected to rise by 20 percent.

 

Signs are suggesting that China, the world's top soy importer, is planting more soy at the expense of corn, especially in the top soy-producing province of Heilongjiang, experts said.

 

The China National Grain and Oils Information Centre (CNGOIC) said this month the country's 2008 corn acreage will likely shrink by 2.3 percent to 27.40 million hectares, while soy acreages would rise 9.2 percent to 9.50 million hectares.

 

China's grain self-sufficiency policy has worked so far, but will not do so for much longer, said Trusted Sources UK Ltd in a report.

 

The report added that of the various grains, including rice and wheat, corn production faced the largest challenge.

 

Domestic soy is priced around US$715 per tonne, more than three times corn, which costs about US$214.

 

Furthermore, industry experts say farmers need twice as much fertiliser for corn compared with soy, which cancels out corn's yield of about 5 tonnes per hectare, well above about the 2 tonnes for soy.

 

To secure grain supply, Beijing has raised direct subsidies to grain farmers, banned exports of corn and wheat and raised floor prices for the grains.

 

In its latest efforts, Beijing constrained exports of fertiliser by adding extra tariffs last week after surges in domestic prices.

 

It is also allocating US$430 million to help farmers get enough water for grain production.

 

Analysts in China said Beijing is most worried about corn because domestic demand from the feed and corn processing industry is on the increase, while its reserves have come down to levels below wheat or rice.