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Soybean Target Price Policy Adjustment Coming

China's target price policy for soybeans will be adjusted in time for spring planting next month, according to a report by Grain and Oils News. 

The report about the subsidy reform is said to be based on information learned from the National Development and Reform Commission. Details on how the subsidy will operate have not been released yet, but the report suggests that the reform is intended to coordinate the soybean subsidy with the corn producer subsidy and encourage the shift from corn to soybeans in northeastern region. Officials say the new target price subsidy program will adhere to the principles of allowing the market to determine prices and broadening the number and type of buyers for farm commodities. 

An agricultural economist with China's Academy of Agricultural Sciences explains that the reform will address some problems with the target price policy that include: lack of control over price, high operation costs, and "moral hazard." He says the new target price policy will be "more sustainable" and "more compliant with WTO principles." 

According to the article, in 2016 Heilongjiang Province gave a subsidy of 150 yuan per mu to large-scale farmers, family farms, and farmer cooperatives that shifted crop area from corn to soybeans. The subsidy was focused on soybean-producing regions. 

The soybean association official explains that farmers are more inclined to plant soybeans this year due to the decline in corn prices. While Heilongjiang reportedly shifted 6.5 million mu of land from corn to soybeans last year, the profitability of soybeans still lags behind that of corn and the official suggests that more incentive to switch crops from corn to soybeans is needed. He doesn't explain how the target price policy adjustment will provide that incentive. Details are expected before next month's spring planting.
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