China orders farmers to grow more soybeans despite deal to buy more produce from US

Officials have ordered farmers to grow more soybeans even though Donald Trump has claimed China will buy ‘as much as our farmers can produce’

PUBLISHED : Wednesday, 23 May, 2018, 8:01am
UPDATED : Wednesday, 23 May, 2018, 10:35pm

Local authorities in China are encouraging their farmers to grow more soybeans despite the country’s agreement to buy more agricultural products from the United States.

Soybeans make up around two thirds of America’s agricultural exports to China and Donald Trump welcomed the promise from Beijing – as part of the deal to avert a trade war – as “one of the best things to happen to our farmers in many years”.

The US president also tweeted that China “will purchase from our Great American Farmers practically as much as our Farmers can produce”.

Although the immediate threat of a trade war has receded, planners are still keen to diversify the country’s supplies of soybeans to reduce their reliance on one or two importers.

China, the world’s largest soybean importer, relied on imports for 87 per cent of domestic consumption last year and steady supplies are vital for the country’s huge pork industry.

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It is now stepping up its efforts to grow more soybeans, although there is a long way to go before China can meaningfully cut its reliance on imports.

Farmers in China’s major soybean growing regions, including the northeastern provinces of Heilongjiang and Jilin, were told at the end of April to increase the areas of land devoted to growing the crop for the spring.

The order followed the Chinese Ministry of Commerce’s threat to impose 25 per cent tariffs on US soybeans – which is now unlikely to become a reality after the agreement between the two sides in Washington.

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According to an urgent notice issued by the agricultural authority in Changchun, the provincial capital of Jilin, all districts and towns must try every possible way to increase the area of soybean planting as a “political priority” and provide daily feedback about soybean plantation after April 29.

Authorities in Heilongjiang and Inner Mongolia have issued similar directives, calling upon farmers to grow more soybeans.

A farmer surnamed Zhao from Huachuan in Heilongjiang told the South China Morning Post last week that farmers in his town were answering the government calls and the plantation area this year was about a third bigger than last year’s.

“We also care about international news,” said Zhao.

“Why we must eat US soybeans but not the ones planted by ourselves?”

According to Chinese customs data, China imported 95.54 million tonnes of soybeans in 2017, an increase of 14.8 per cent from 2016. Of those imports, about half came from Brazil and a third from the US.

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China’s domestic soybean output was 14.3 million tonnes in 2017, although this marked a 14.3 per cent increase on the previous year’s production.

However, the impact of large-scale imports from the US and South America on the market means China has to subsidise its farmers.

China this year grants about 200 yuan (US$31) to farmers for every mu of soybean farms (1 hectare = 15 mu), nearly double the subsidy for corn fields.

China’s agriculture ministry said last week that China plans to boost soybean plantation by at least 10 million mu this year to 127 million mu.

Although the effort to boost domestic supplies was partly in response to the threatened trade war, there are other long-term reasons behind the drive to diversify supplies, Fu Zhenzhen, a senior researcher at Orient Agribusiness, a Beijing-based consultant, said.

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Such is the scale of the demand that China will need soybeans from multiple sources, and Fu said: “Diversifying sources of import will be the right solution.

“Apart from South America, Russia and Ukraine are also potential options.”

According to Russia’s agriculture agency Rosselkhoznadzor, from last July to Mid-May, China bought 850,000 tonnes of soybeans from Russia, a record amount that was more than double the figure for the previous year.