August 29, 2013
China's Sinograin probes subsidy violation of rapeseed crushers
China Grain Reserves Corp. (Sinograin) is investigating whether local crushers profited by selling oil processed from cheaper imported rapeseed instead from domestic supplies as Beijing's subsidy programme stipulates.
The probe underscores the potential for manipulation of China's farm products stockpiling programme, where a minimum purchase price set by Beijing to support farmers has caused local prices to be artificially higher than international prices.
To profit more from the subsidies, local crushers have sold edible oils processed from imported rapeseed to Sinograin, the state reserve agency, as overseas supplies were cheaper.
Margins to process imported seeds were more than RMB300 (US$49) per tonne while they were below RMB100 (US$16) per tonne to crush domestic seeds with Beijing's subsidies. Without the subsidies, crushers would be making losses processing domestic seeds, officials at crushing organisations said.
Sinograin has sent inspection teams to major rapeseed-growing provinces of Sichuan, Hunan and Hubei to investigate the allegations, it said on its website, adding that it would deal with any violations severely.
Beijing this year pledged to pay RMB5,100 (US$830) per tonne to farmers and buy five million tonnes of domestic rapeseed, which is allocated to crushers with subsidies to process into edible oil.
The price was about 18% higher than imports, which were quoted at around US$703/tonne for August imports. Imported rapeseed oil in China was quoted at about US$1,273/tonne in July, about 13% lower than the domestic physical price.
Local media, which first reported the alleged rapeseed irregularities, did not identify the crushers involved. China Oil and Food Corporation (COFCO), which owns the country's largest crushing capacity, denied that its crushers have been involved.
China imports rapeseed from Canada and Australia. Imports in the first seven months of the year rose 15% to 1.77 million tonnes, while rapeseed oil imports jumped 73% to 1.07 million tonnes, according to official customs data.