December 15, 2003

 

 

China Farmers Switch to Soy

 

With China phasing out grain price support systems under obligations to the World Trade Organization, more and more farmers are turning to soy as an increasingly attractive alternative over grains.

 

Many are switching to growing soy, the so-called "miracle crop" which promises better revenues.

 

However, Beijing is worried about its food security and is now stressing the importance of increasing both agricultural production and farmers' incomes.

 

China has been reducing the size of a grains stockpile amassed in the late 1990s, as harvests have been disappointing in recent years.

 

Since 2000, China's annual grain consumption of about 480 million tons has outpaced production of around 455 million tons, state media say. However, the size of state stocks is a closely guarded secret.

 

Government Backs Grain

 

Beijing has stressed the need to raise grain output after domestic grain prices jumped in October for the first time in six years. The government, aware of a growing income gap between the urban and rural populations, also wants to boost farm revenues. 

 

Industry sources say this will not be easy. Chinese corn farmers rely on traditional methods and lack modern technology, limiting yield per acre to about half of their U.S. peers. Many would rather seek city jobs to make ends meet.

 

Soy - An Increasing Attractive Alternative

 

While many farmers are heading for the city in search of prosperity, others are pinning their hopes on soybeans, especially in Heilongjiang -- a province bordering Russia that is as big as Sweden and is China's top soy-growing province.

 

China is already the world's biggest importer of soybeans, mostly used for animal feed and vegetable oil, and demand is likely to remain strong as living standards rise, boosting meat consumption.

 

Chinese authorities have encouraged farmers to grow more and better quality soybeans to ensure supplies for an expanding crushing industry and to cut down on expensive imports.

 

Soybean output reached a record of 16.5 million tons last year, against 13.2 million to 13.5 million in 1998. This year's output is estimated at 16 million; while imports are heading for 20 million, almost double those of 2002.

 

Corn output is seen at 113 million tons this year, down from 121 million in 2002 and 133 million in 1998.

 

"We are the top soy growing area. And soy is our future," said Jin Yaofu, a government official in Suihua city, 95 miles north of the provincial capital Harbin.

 

Some corn farmers have switched to soy. But progress has been slow as many farmers did not have the required knowledge.

 

The government is not only trying to take market share from genetically modified (GM) soy shipped from the United States, Brazil or Argentina but hopes to exploit a lucrative niche market for non-GM soybeans in countries such as Japan, South Korea or even Europe.

 

China is the only one of the world's top soy producers that has not opened the door to growing transgenic soy. Heilongjiang has already seen buyers from as far away as Europe, where consumers are willing to pay for food safety.

 

"Growing soybeans has been great," said farmer Yu Zhong Cheng from Jinhe village. "It matures early. Crushers come and snatch the beans. Prices have been good."

 

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