Imports still trounce China domestic soy crop

World soy prices may have increased but prices in China remain low, forcing farmers to shift to other crops despite government measures to help them compete with the cheaper imports.

 

 

Farmer Liu Hui said he has turned into corn due to much lower prices of soy and few farmers are now planting the crop.

 

Farmers say imported soy has been sold up to RMB1,000 (US$146.41) per tonne cheaper than domestic ones over the past years which makes it hard for them to cover costs. And storing crops for later sales is not an option.

 

Another farmer revealed that selling of last year's soy was not yet done because the prices were so low few were willing to sell. However, the farmer said it is harder to sell at a reasonable price, as a great deal of what they stored has gone bad.

 

The US is China's biggest soy importer and farmers can receive US$59.10 of government subsidies for every tonne of soy.  The subsidy is equivalent to RMB400, which is precisely the average price gap between domestic and imported soy.

 

The price advantage has greatly helped imports grab a larger slice of the market.

 

Yang Baolong, Deputy GM, Jiusan Oils & Grains Industrial Group, said China imported more than 37 million tonnes of soy in 2008 but the figure is expected to top 42 million tonnes this year.

 

Figures show that US exports of soy to China are now the third largest, after aircraft and semiconductors. In contrast, soy from Heilongjiang Province, which used to be sold as far as south China's Guangdong Province, are only sold and used within the province.

 

Insiders warn that if the trend continues, China will not be able to maintain any weight when it comes to setting prices in the industry.