Monday, November 30, 2009

More Subsidies for China's Northeastern Grain/Soybeans

As the 2009 harvest finishes, China's northeastern region has a glut of grain coming on the market, so the central government has announced another round of subsidies to bribe companies to buy the grain at minimum prices.

The Farmers Daily announced on November 30 that minimum price procurement policies for northeastern soybeans and corn will be continued. Companies can get a subsidy for each kilogram of soybeans they process, and companies in other parts of the country can get subsidies to transport corn or japonica rice out of the northeastern region.

This year, corn's temporary reserve purchase price will be 0.76 yuan/jin in Inner Mongolia and Liaoning, 0.75 yuan/jin in Jilin, and 0.74 yuan in Heilongjiang. The soybean temporary reserve purchase price will be 1.87 yuan/jin [3740 yuan/mt, up from 3700 yuan last year]. The purchase period is December 1, 2009 to April 30, 2010.

The notice said the peoples’ government in the northeastern provinces chose soybean crushing enterprises with relatively large scale, relatively good reputation, statistically standardized according to national regulations to purchase newly-produced 2009 soybeans from farmers. They can organize the purchase, crushing, and sale of soybeans themselves and bear their own profits and losses.

The central finance ministry authorized one-time subsidies of .08 yuan/jin [160 yuan per metric ton] to offset costs for designated soybean crushers and Sinograin Co. The central finance ministry designated soybean crushers with capacity and actual purchasing and processing quantities according to the actual soybean rotation situation in the northeast. The subsidy period will be December 1, 2009 to April 30, 2010.

The notice proposed that southern grain-consuming provinces purchase corn from the northeastern provinces to stock up on reserves and enterprise inventories and maintain feed supply according to the requirements of the governors’ grain responsibility system. Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Hubei, Hunan, Guangdong, Hainan, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, and Tibet local grain reserve companies and feed processing enterprises should, under the leadership of their provincial governments jointly set up purchases of 2009 corn from the northeast. From December 1, 2009 to April 30, 2010, they can purchase corn at the minimum price, and will be eligible to receive a one-time subsidy of .035 yuan/jin [70 yuan/mt] subsidy based on the amount of corn they actually transport from the northeast to their own province before June 30, 2010.

The notice proposed that after 2009 japonica rice comes on the market, the central finance ministry will continue giving a subsidy for transportation costs at half the 2008 amount to companies that transport japonica rice outside of the northeastern region between December 1, 2009 and April 30, 2010.

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