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Soybean farmers facing grim harvest
Cargill, the world's largest agribusiness, opened its largest oilseed crushing plant in Nantong of East China's Jiangsu Province this July. Besides this US$60-million investment, the company has already established two crushing facilities in Dongguan, in South China's Guangdong Province.
The US-based agribusiness expects the new venture will help increase its market share in China to 15 per cent from its current 10 per cent. Cargill had invested over US$500 million in China by the end of July.
Archer Daniels Midland Co (ADM), another leading soybean agribusiness from the United States, plans to acquire 30 per cent of Dalian Huanong Group Ltd, a soybean processor with an annual capacity of two million tons. So far, ADM has invested in 13 crushing companies in China, putting its total crushing capacity at 15 million tons each year.
"By dominating the crushing sector, international agribusinesses could sell more foreign soybeans, which are often distributed by their foreign subsidiaries," said an industry insider, who asked not to be named. "Now, almost all the foreign joint-venture companies insist on using imported soybeans, buying just a small proportion of domestic beans as a stand-by."
The four international agribusinesses have almost total control of soybean production in South America and are constantly searching for new markets for their products, according to the source.
Since 2002, China has been a net importer of soybeans. And the nation's soybean import volume reached 26.5 million tons in 2005, well exceeding its domestic output of around 16 million tons a year.
In comparison, the nation's soybean production has decreased from 18 million tons in 2004 to 16 million tons in 2005.
"China's total soybean demand is around 35 million to 40 million tons," said Ding Shengjun, an expert with the Academy of State Administration of Grain. "The cheap soybean imports have already grabbed the market share of domestic ones and hurt the domestic soybean sector."
Genetically modified (GM) soybeans from the United States, which are heavily subsidized by the US government, now hold the largest market share of China's soybean imports and have been pushing down prices in recent years. Soybean prices in China have dropped from 3,000 yuan (US$375) per ton in late 2004 to around 2,400 yuan (US$300) per ton now, said Ding.
According to Sun Xiuhua, the cost of growing one acre of soybeans is around 240 yuan (US$30), including spending on seeds, fuel and pesticides. But with the sale price of soybeans dropping to 1.8 yuan (23 US cents) per kilogram, she can only get 270 yuan (US$34) for the sale of 150 kilograms of soybeans harvested from one acre of land.
Sun harvested 150 tons of soybeans from her 1,000-acre farm in Heilongjiang Province last year, but had only sold 50 tons by the end of July. Industry insiders said more than 20 per cent of China's soybean output last year remained unsold at the end of July, two months before harvest season.
"The soybean sector is at risk of being wholly controlled by foreign companies, and the government should take measures to address the problem," said Wang Lianzheng, former minister of agriculture, on the sidelines of an industry forum held in July.
A number of other experts echoed Wang's remark, suggesting the government adopt a series of favourable incentives to soybean farmers and domestic agribusinesses to save China's soybean sector. They also called on local governments to bring in stricter supervision of imported GM soybeans to protect local farmers who rely mainly on natural soybeans.
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