October 22, 2003
China's Biggest Corn Producer Jilin Turns Corn Into Fuel to Ease Pollution
Jilin province, home to China's first car factory and also its biggest corn producer, is putting corn and cars together in a project to ease China's problem of exploding pollution ahead of the 2008 Beijing Olympic Games.
Like many other agriculture giants such as Brazil, the United States, and India, the northeast province is using its huge farm surplus to make organic fuel that cuts pollution, and reduces dependency on petroleum imports at the same time.
Industry sources say, China, which is the world's fastest growing car and energy market, could extend the use of ethanol gasoline throughout the country by 2005 if initial exploratory steps are successful.
An Olympics shrouded in smog is not a scene China wants to show the world, but that is what it will look like, unless the traffic pollution in major cities is brought under control.
Turning grains into fuel also allows the government to continue to subsidize agriculture outside its obligations under the World Trade Organization (WTO), avoiding more social unrest from farmers who are now exposed to global competition.
Jilin Fuel plant is one of four Chinese ethanol plants under construction, including one in neighboring Heilongjiang, one in the eastern province Anhui, and another in wheat-producing Henan.
"Such projects are viable only in grain-producing areas," Liu Yi, technical department manager told Reuters at the plant in the outskirts of Jilin city, from where the hills of the province's vast corn fields roll off far away and out of sight.
Jilin, which is three times the size of Austria, accounts for more than 10% of China's annual corn output of about 120 million tons, the second biggest after the United States. It takes about three tons of corn to produce one ton of ethanol.
Jilin Fuel will purchase corn from farmers and store it in silos at the sprawling complex. The air here is filled with a sweet smell, similar to a brewery, as it conducts test runs.
The plant cost 1.94 billion yuan (about $235 million) and is equipped with its own power generators as well as water treatment facilities, still a rarity for China.
Jilin Fuel Ethanol, a joint venture between the China National Petroleum Corp (CNPC), China Resources Enterprises Ltd and Jilin Grain Group (JGG), is to convert 900,000 tons of corn into 300,000 tons of fuel ethanol each year. It plans to double its capacity to 600,000 tons after that.
China Pull Back From Grain Exports
Recently, China has been trying to pull back from grain export markets because it cannot continue to pay out the export subsidies it used to under WTO trade rules.
"To help the fuel ethanol company is to help improve farmers income, restructure the old agriculture system and help maintain social stability," Hong Hu, governor of Jilin province, said. "It's a top government agenda item."
Over the past decade, China accumulated massive grains stocks due to its policy of food security but these are now costing a fortune in storage fees, and are depressing prices of new crop, which hurts farmers.
Just in Jilin alone, there is already an estimated of over 20 million tons of corn in stock.
