September 21, 2009

Soy output in Heilongjiang, China's largest soy-growing area, will fall by about 3 million tonnes this year, partly due to an early frost in recent days, the chairman of the area's top soy crusher said Friday (September 18).

 

Tian Renli, chairman and general manager of Jiusan Oils and Grains Industry Group Corp Ltd, said he expected Heilongjiang's output to fall to about 5 million tonnes due to frost in some areas of Heihe and Qiqihar.

 

Tian's forecast for Heilongjiang's harvest suggests China's overall soy harvest may be lower than expected. The China National Grains and Oils Centre said it expects a harvest of 14.5 million tonnes, down from 15.5 million tonnes in 2008.

 

This year China saw record import of soy because of a government stockpiling campaign that offered farmers a fixed price for their beans, opening the window to imports when international market prices fell.

 

The stockpiling campaign, which aimed to help farmers, ended up by drawing criticism for attracting huge imports from the United States and Latin America.

 

According to Tian, "stockpiling is not the solution… the government is stockpiling the problem, not resolving the problem."

 

On Thursday, a government researcher lamented that US farmers were dumping soy on the Chinese market, suggesting that China could target soy as a way of hitting back at punitive US tariffs on Chinese tyre imports.

 

Analysts gave the claim little credence but Tian said it was not fantasy.

 

Using soy, he said, would be the most effective tool to take revenge on the United States, but the Chinese government will consider its long term interests. Some people think that China relies on imports but actually China right now holds a large amount of soy stocks, Tian added.

 

Tian said Jiusan wanted the government to give crushers incentives to crush Chinese soy, which might dissuade them from buying so many imports.

 

The government has adopted subsidy programmes to support the local rapeseed and corn crops, and officials have previously told Reuters a similar offer would be extended to some soy crushers in Heilongjiang, with a subsidy of 200 yuan (US$29.28) per tonne.

 

Tian said nothing had been finalised and it was too late.

 

Even with a 200 yuan subsidy, Tian said soy crushers will still be making 200 yuan in losses, because the soymeal and soyoil prices are all falling.

 

He also expected planting costs would be higher next year, so the government should offer farmers a higher price for the coming harvest to protect their interests.

 

Zhang Lichen, Jiusan's assistant general manager, said Heilongjiang's government planned to support farmers by asking them to reduce soy acreage in favour of corn, which yielded better profits last year.

 

Next year's soy acreage will shrink, he said, without giving details.

 

One state farmer from Beian, a major soy growing county in the west of the province, told Reuters he planned to shift 2 million mu (130,000 hectares) of soy acreage to corn production.

 

The Jiusan executives said soy crushing in Heilongjiang was shut down as all the crushers were waiting for the new harvest. Shut downs are normal before the new harvest but this year the suspension was longer because the government had bought so much of last year's crop, they said.

 

Tian said he had another three plants in coastal areas, crushing imported beans, which would help offset the lack of income from the company's two plants in Heilongjiang.

 

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