August 7, 2009

China's State Council has recently decided to subsidise those corn processing companies with production capacities of more than 100,000 tonnes and located within China's main agricultural region.

 

Inside sources of fine corn processing companies revealed that the funds will be dedicated to starch, alcohol, medicine and other fine corn products in Jilin, Liaoning, Heilongjiang and Inner Mongolia.

 

Companies that participate in the state corn reserve auction will receive a subsidy of RMB105 (US$15) per tonne.

 

The earlier auctions drew lukewarm response from the corn processing companies due to the delay of the subsidy. During the three auctions held in northeast China during July, the trading ratio at each event was below 50 percent.

 

Meanwhile, an industry expert explained that the conditions required for the subsidy are rather strict. The period of validity only lasts for four months from August to November. The rules also stipulated that companies should deposit RMB150 (US$22) per tonne in promise to spend on production and not distribution. Furthermore, they can only receive the funds after processing has completed.