April 10, 2018

China's feed sector can weather US soybean tariffs' impact, New Hope chair says


China's New Hope Group and the country's animal feed industry can obtain more soybeans from Brazil, Russia, India and Argentina if Chinese tariffs are imposed on US soybeans, the company's chairman and founder, Liu Yonghao said.

In fact, China's feed sector could even weather consequences arising from the 25% additional tariff by diversifying its sources, increasing domestic output and modifying feed formulas, Liu added.

In an interview during the Boao Forum, he opined that a trade war is not good for the US and China as the latter "imports a third of its soybeans from the US." Emphasising a need for continual friendly relations with US farmers, Liu hoped that "negotiations will result in a win-win resolution."

Another way for the industry to overcome the impact of the soybean tariffs is to reduce the soy content and replace it with other ingredients.

"I think the likelihood of a major price spike is not large. China has a lot of inventory and our feed formula can be adjusted," Liu said. "China can also increase domestic soybean production and reduce corn production."

China imported some 60% of all soybeans traded worldwide, acquiring just over half its needs or some 51 million tonnes from Brazil last year and 33 million tonnes from the US.

The country's total soybean import amounted to over US$12 billion in 2017. 

- South China Morning Post