Prices are soaring for a type of corn seed suited for planting in cold climates, an indicator that corn is continuing to displace soybeans in China's far-north agricultural fringe.
A report from China's Grain and Oils News says that the price of Demeiya No. 1 corn seed has doubled from 675 yuan per bag to 1375 yuan in some areas of Heihe, a region of Heilongjiang Province that borders Russia. Each bag contains 50,000 seeds, said to be enough to plant 7.5 mu. Demeiya No. 2 and No. 3 seeds are sold by weight, and their price has risen from 18.5 yuan/500g to 22.5 yuan/500g.
Demeiya is a variety of corn developed by German seed company KWS to grow in northern climates where the growing season is short. The seed was introduced in China as result of a link-up between KWS and Kenfeng Seed, a company linked to the State farm system in Heilongjiang Province which controls large tracts of land along the border with Russia. Demeiya seed was introduced in the early 2000s, passed provincial seed evaluations in 2004 and has been marketed widely since 2007. More on Demeiya in this 2012 post.
Traditionally, only soybeans could be grown in these frigid areas near the top of the globe. The Demeiya varieties have allowed farmers to switch to corn all the way up to the Russian border.
The rising prices for Demeiya seed reflect both an increase in demand and limited supplies of the seed. People from Kenfeng Seed Co. told the reporter that officials in Heilongjiang had recommended cutting back on corn area this year because the supply of Demeiya seed was expected to be down. However, farmers in northern regions of Heilongjiang like Heihe and Bei'an are eager to plant corn, so demand is robust.
The seed is sold through two main channels: seed shops operated by Kenfeng Co. and dealers who buy the seed under contract. The company says they set the price in their shops and have not raised it, but many of the shops are out of stock. The contractors could sell the seed to others at marked-up prices. Kenfeng company officials said it was "not convenient" to give reasons for the soaring prices. An official from Heilongjiang Province's seed bureau attributed the rise in price to strong demand for the seed.
The rising Demeiya seed prices are a reflection of Chinese policies that are squeezing out soybeans and creating a massive corn stockpile. Chinese officials are supporting their corn prices at a high level and restricting corn imports. They gave up trying to support soybean prices last year. Since there are no limits on soybean imports, supporting domestic soybean prices left the government as the only buyer of the expensive beans while cheaper imported beans dominated commercial channels. This year, the support price for soybeans has been abandoned and market prices are plummeting due to massive global supplies of soybeans.
There is a "target price" subsidy for soybeans but indications are that the program is not working well. As of March 5, farmers in Heilongjiang had sold just 1.6 mmt of soybeans this year, down 60 percent from last year. Reported prices paid by traders are in the range of 4100-4200 yuan/mt, but oilseed crushers are reportedly paying 3800-3900 yuan/mt for soybeans in Heilongjiang. Imported soybeans cost less than 3000 yuan. Domestic soybeans are mostly being used for food processing, while the crushing market becomes even more dominated by imports. According to the target price program, farmers should get a subsidy based on the difference between the market price and the target price of 4800 yuan/mt. However, no one is sure how the program will operate and farmers are not confident they will get a subsidy.
A March 30 soybean market report estimates that soybean area could fall another 30 percent in major soybean-producing areas of Jiamusi and Heihe.
Meanwhile, The Wall Street Journal reports that U.S. farmers are shifting their planting in the opposite direction: from corn to soybeans. Chinese policies are certainly playing a role in the decisions of U.S. farmers this spring. Soybean exports to China are booming and corn exports have slowed to a trickle.
China's domestic policies are gradually pricing its soybean crop out of the market, encouraging unimpeded imports to dominate the soybean market. Corn prices are sustained at a high level and corn imports are limited by import quotas and the threat of GMO rejections. The northeastern provinces are becoming a giant corn and rice mono-crop--most of the corn going into government reserve bins.
If market forces were allowed to operate, China's surplus of corn would push Chinese corn prices down and reduce area planted in corn this year. Instead, authorities are preventing prices from falling and encouraging an even bigger corn crop this year.
A report from China's Grain and Oils News says that the price of Demeiya No. 1 corn seed has doubled from 675 yuan per bag to 1375 yuan in some areas of Heihe, a region of Heilongjiang Province that borders Russia. Each bag contains 50,000 seeds, said to be enough to plant 7.5 mu. Demeiya No. 2 and No. 3 seeds are sold by weight, and their price has risen from 18.5 yuan/500g to 22.5 yuan/500g.
Demeiya is a variety of corn developed by German seed company KWS to grow in northern climates where the growing season is short. The seed was introduced in China as result of a link-up between KWS and Kenfeng Seed, a company linked to the State farm system in Heilongjiang Province which controls large tracts of land along the border with Russia. Demeiya seed was introduced in the early 2000s, passed provincial seed evaluations in 2004 and has been marketed widely since 2007. More on Demeiya in this 2012 post.
Traditionally, only soybeans could be grown in these frigid areas near the top of the globe. The Demeiya varieties have allowed farmers to switch to corn all the way up to the Russian border.
The rising prices for Demeiya seed reflect both an increase in demand and limited supplies of the seed. People from Kenfeng Seed Co. told the reporter that officials in Heilongjiang had recommended cutting back on corn area this year because the supply of Demeiya seed was expected to be down. However, farmers in northern regions of Heilongjiang like Heihe and Bei'an are eager to plant corn, so demand is robust.
The seed is sold through two main channels: seed shops operated by Kenfeng Co. and dealers who buy the seed under contract. The company says they set the price in their shops and have not raised it, but many of the shops are out of stock. The contractors could sell the seed to others at marked-up prices. Kenfeng company officials said it was "not convenient" to give reasons for the soaring prices. An official from Heilongjiang Province's seed bureau attributed the rise in price to strong demand for the seed.
The rising Demeiya seed prices are a reflection of Chinese policies that are squeezing out soybeans and creating a massive corn stockpile. Chinese officials are supporting their corn prices at a high level and restricting corn imports. They gave up trying to support soybean prices last year. Since there are no limits on soybean imports, supporting domestic soybean prices left the government as the only buyer of the expensive beans while cheaper imported beans dominated commercial channels. This year, the support price for soybeans has been abandoned and market prices are plummeting due to massive global supplies of soybeans.
There is a "target price" subsidy for soybeans but indications are that the program is not working well. As of March 5, farmers in Heilongjiang had sold just 1.6 mmt of soybeans this year, down 60 percent from last year. Reported prices paid by traders are in the range of 4100-4200 yuan/mt, but oilseed crushers are reportedly paying 3800-3900 yuan/mt for soybeans in Heilongjiang. Imported soybeans cost less than 3000 yuan. Domestic soybeans are mostly being used for food processing, while the crushing market becomes even more dominated by imports. According to the target price program, farmers should get a subsidy based on the difference between the market price and the target price of 4800 yuan/mt. However, no one is sure how the program will operate and farmers are not confident they will get a subsidy.
A March 30 soybean market report estimates that soybean area could fall another 30 percent in major soybean-producing areas of Jiamusi and Heihe.
Meanwhile, The Wall Street Journal reports that U.S. farmers are shifting their planting in the opposite direction: from corn to soybeans. Chinese policies are certainly playing a role in the decisions of U.S. farmers this spring. Soybean exports to China are booming and corn exports have slowed to a trickle.
China's domestic policies are gradually pricing its soybean crop out of the market, encouraging unimpeded imports to dominate the soybean market. Corn prices are sustained at a high level and corn imports are limited by import quotas and the threat of GMO rejections. The northeastern provinces are becoming a giant corn and rice mono-crop--most of the corn going into government reserve bins.
If market forces were allowed to operate, China's surplus of corn would push Chinese corn prices down and reduce area planted in corn this year. Instead, authorities are preventing prices from falling and encouraging an even bigger corn crop this year.
Comments
I really appreciate your articles.
May I ask your contact to exchange information and ideas about the agriculture?
Best Regards
Eduardo Lima Porto