The China Grain Net site carried an article about a feed conference held in Guangzhou where speakers fretted about industrial users competing with feed mills for a tight supply of corn. This article noted that industrial use of corn has grown despite the National Development and Reform Commission's 2006 order for a slowdown. After that, projects were canceled or scrapped and there has been no new capacity added.
The NDRC order didn't stop the industry from expanding production. Demand rose sharply last year as food, pharmaceutical, paper, and textile industries grew in double digits. Exports of starch and other corn products also were up. In 2010, domestic processing consumption was about 45 mmt, accounting for 28% of corn consumption, beyond the planned target of 26%.
An expert at the conference said demand for corn industrial products could easily grow 12%-15% annually, but the supply of corn will be a brake on the industry's growth. In the 12th five-year plan there are provisions to slow down the growth of corn processing industries.
The general manager of Sinograin, China's company responsible for holding grain reserves, had complained at the National Peoples Congress that manufacturers of industrial products like alcohol, starch, and monosodium glutamate are expanding their use of corn too quickly, threatening grain security. He said China's grain reserves are overall quite high, except for corn reserves which are an issue. He called for controls on industrial growth.
In the same article, an official with COFCO--one of the biggest producers of corn industrial products--offers a different view. He argues that industrial products still consume a relatively small share of corn that doesn't threaten grain security. He points out that they are making products that are daily necessities for consumers. They add value and nutritional value to corn, and these products use corn more efficiently than does consuming corn as raw grain.
So basically, the Sinograin official wants to put priority on buying corn to stash away in warehouses, while the COFCO official wants to use corn to make products people want to consume. This debate crystalizes the "grain security" issue: pay bureaucrats to store grain or let companies make food for consumers. Who is promoting "food security" here?
The COFCO official also points out that the plan to curb the industry's growth will produce a reshuffling that will create opportunities for companies that have access to cash and technology (like COFCO).
The NDRC order didn't stop the industry from expanding production. Demand rose sharply last year as food, pharmaceutical, paper, and textile industries grew in double digits. Exports of starch and other corn products also were up. In 2010, domestic processing consumption was about 45 mmt, accounting for 28% of corn consumption, beyond the planned target of 26%.
An expert at the conference said demand for corn industrial products could easily grow 12%-15% annually, but the supply of corn will be a brake on the industry's growth. In the 12th five-year plan there are provisions to slow down the growth of corn processing industries.
The general manager of Sinograin, China's company responsible for holding grain reserves, had complained at the National Peoples Congress that manufacturers of industrial products like alcohol, starch, and monosodium glutamate are expanding their use of corn too quickly, threatening grain security. He said China's grain reserves are overall quite high, except for corn reserves which are an issue. He called for controls on industrial growth.
In the same article, an official with COFCO--one of the biggest producers of corn industrial products--offers a different view. He argues that industrial products still consume a relatively small share of corn that doesn't threaten grain security. He points out that they are making products that are daily necessities for consumers. They add value and nutritional value to corn, and these products use corn more efficiently than does consuming corn as raw grain.
So basically, the Sinograin official wants to put priority on buying corn to stash away in warehouses, while the COFCO official wants to use corn to make products people want to consume. This debate crystalizes the "grain security" issue: pay bureaucrats to store grain or let companies make food for consumers. Who is promoting "food security" here?
The COFCO official also points out that the plan to curb the industry's growth will produce a reshuffling that will create opportunities for companies that have access to cash and technology (like COFCO).
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