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China's over-reliance on foreign soybeans worries farmers (2)


12:52, March 16, 2013

Over the years, transnational grain businesses have controlled the pricing power of soybeans that are exported to China. They also construct soybean processing plants in China, according to the political advisors.

"Once they drive out or merge Chinese cooking oil processing companies, transnational grain businesses will fully dominate the Chinese soybean industry," said Zhao.

Wang Xiaoyu estimated that in the future, global demand for soybean oil and soybean-based feed will maintain a trend of continuous growth. Since there are many uncertainties regarding global soybean output and potential demand, China, a major soybean importer, faces greater risk in the market.

Industry officials say that China, with its limited arable land, cannot ensure self-sufficiency in soybean supplies. It will still have to depend on soybean imports in the future.

Chen Xiwen, deputy director of the office of the leading group on rural work under the Central Committee of the Communist Party of China (CPC), said China has no choice but to continue soybean imports.

"It is inevitable for China to import some GM farm produce for quite a long period of time," Chen said at a March 7 press conference, when responding to a question about widespread concerns over GM soybean import.

As a result, policymakers face a dilemma. If the government restricts soybean imports, China will not have enough soybeans. But if it does not close the import gate, the domestic soybean industry will have slim hopes.

Hong said a solution would involve developing non-GM domestic soybeans.

Although a global consensus on the safety of GM soybeans has yet to be reached, food made from non-GM soybeans are priced higher than those of GM soybeans in many areas such as Japan and Europe, said Hong.

In China, however, the two varieties sell at similar prices, since non-GM soybean products are not sufficiently recognized on the Chinese market.

Wang said China has not stipulated compulsory identification for GM products and consumers who are ready to pay more for non-GM food cannot make choice.

"We may learn from the practice of labeling organic food with certification marks," Wang said.

Zhao Yusen proposed a solution for farmers to stay growing soybeans.

"The government may improve the pricing mechanism and offer a minimum protective price for domestic soybeans. It may look to futures market prices in March each year to adjust the minimum protective price," said Zhao.

"China may also set up protection zones for non-GM soybeans and display the competitiveness of domestic soybeans," said Zhao.

Industry officials believe the government should work to encourage soybean processing plants to buy and process domestic soybeans.

One solution would involve extending state subsidies to domestic soybean processing plants, using import prices as targets. China may also change tax policies to encourage leading enterprises to purchase domestic soybeans.

To reduce the country's soybean processing overcapacity, industry officials said the government should restrict domestic and foreign companies from constructing new processing plants or expand existing plants used to process imported soybeans in order to make more room for domestic soybeans.

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