The conventional view is that imported commodities compete head-to-head with domestic commodities. Inside China, the domestic soybean industry is often described as having been devastated by unfair competition from imports. The soybean industry is often held up as a scary example of what can happen if imports are allowed to take over the market.
An article from the May issue of China’s Agricultural Outlook magazine written by an analyst from China's feed industry association reveals a more nuanced view of China's soybean market. It has become largely segmented--non-GMO domestic beans are now mostly used for making soy-based foods while vegetable oil and soy meal are made almost exclusively from imported beans. Domestic and imported soybeans don't exactly compete head-to-head; each fills a niche in the market.
Food use of soybeans to make foods like tofu, soymilk, and protein powder (mostly using domestic beans that are non-GMO) is now 9 mmt, up from 7 mmt in 2002. The article says that food use accounted for about 50% of domestic soybean use in 2000 but is now up to 62%.
The balance sheet in the article shows that crushing of domestic soybeans (to make vegetable oil) fell from a peak of 8.88 mmt in 2002 to 4 mmt in 2009 (and just 2 mmt 2008 when support prices choked off demand for domestic beans).
In contrast, the article says that imported soybeans now account for 92% of crushing to make vegetable oil and soymeal.
The article says China’s soybean protein isolate production capacity was 495,000 mt in 2009, up 22.5% from the previous year. Included is Heilongjiang exports of 14,312 mt. The article continues, "Soybean protein powder mainly is exported to the U.S., Europe and Southeast Asia. Sales are good and supply can’t meet demand. The domestic market is also flourishing, especially for non-GMO soybean powder, soymilk powder…In 2009 some Heilongjiang companies were converting their factories or expanding into soybean powder production."
The diversion of Chinese soybeans to food uses doesn't mean that Chinese companies have abandoned soybean crushing. On the contrary, Chinese companies are adding soybean crushing capacity at a feverish pace. A post on this blog several months ago discussed a strategic plan to build Chinese vegetable oil companies that can compete with multinationals.
According to the article, in 2009, national crushing capacity increased 10 mmt, of which 8 mmt was by "central" enterprises (COFCO, Sinograin?), as well as foreign-invested enterprises building plants in coastal and inland areas. The article reports that some private companies in Heilongjiang also opened plants in coastal areas of Liaoning. At the end of 2008 China’s soybean crushing capacity had surpassed 87 mmt, but slightly less than half of this capacity is utilized (based on crush of 41.5 mmt).
The article sheds some light on why soybean imports are so big. The article reports that domestic oilseed production was down in 2009: soybeans down 6.7%, peanuts down 5.6%, cottonseed down 6.6%. Only rapeseed was up 11.6%.
The article says, “In 2010, oilseed production stagnated, [and] soybean oil and rape oil were [relatively low] due to effects of import limitation policies [italics added]. So to meet the rising demand for vegetable oil, 2010 imports of soybean set a record.
An article from the May issue of China’s Agricultural Outlook magazine written by an analyst from China's feed industry association reveals a more nuanced view of China's soybean market. It has become largely segmented--non-GMO domestic beans are now mostly used for making soy-based foods while vegetable oil and soy meal are made almost exclusively from imported beans. Domestic and imported soybeans don't exactly compete head-to-head; each fills a niche in the market.
Food use of soybeans to make foods like tofu, soymilk, and protein powder (mostly using domestic beans that are non-GMO) is now 9 mmt, up from 7 mmt in 2002. The article says that food use accounted for about 50% of domestic soybean use in 2000 but is now up to 62%.
The balance sheet in the article shows that crushing of domestic soybeans (to make vegetable oil) fell from a peak of 8.88 mmt in 2002 to 4 mmt in 2009 (and just 2 mmt 2008 when support prices choked off demand for domestic beans).
In contrast, the article says that imported soybeans now account for 92% of crushing to make vegetable oil and soymeal.
The article says China’s soybean protein isolate production capacity was 495,000 mt in 2009, up 22.5% from the previous year. Included is Heilongjiang exports of 14,312 mt. The article continues, "Soybean protein powder mainly is exported to the U.S., Europe and Southeast Asia. Sales are good and supply can’t meet demand. The domestic market is also flourishing, especially for non-GMO soybean powder, soymilk powder…In 2009 some Heilongjiang companies were converting their factories or expanding into soybean powder production."
The diversion of Chinese soybeans to food uses doesn't mean that Chinese companies have abandoned soybean crushing. On the contrary, Chinese companies are adding soybean crushing capacity at a feverish pace. A post on this blog several months ago discussed a strategic plan to build Chinese vegetable oil companies that can compete with multinationals.
According to the article, in 2009, national crushing capacity increased 10 mmt, of which 8 mmt was by "central" enterprises (COFCO, Sinograin?), as well as foreign-invested enterprises building plants in coastal and inland areas. The article reports that some private companies in Heilongjiang also opened plants in coastal areas of Liaoning. At the end of 2008 China’s soybean crushing capacity had surpassed 87 mmt, but slightly less than half of this capacity is utilized (based on crush of 41.5 mmt).
The article sheds some light on why soybean imports are so big. The article reports that domestic oilseed production was down in 2009: soybeans down 6.7%, peanuts down 5.6%, cottonseed down 6.6%. Only rapeseed was up 11.6%.
The article says, “In 2010, oilseed production stagnated, [and] soybean oil and rape oil were [relatively low] due to effects of import limitation policies [italics added]. So to meet the rising demand for vegetable oil, 2010 imports of soybean set a record.
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