Saturday, May 5, 2018

China Soybean Planting "Emergency" Declared

Two Chinese provinces issued orders to increase soybean planting this spring with promises of a big subsidy. It is unclear whether the "emergency" is a potential shrinkage of soybean imports from the United States or low soybean prices that threaten to derail China's multi-year effort to shift land from corn to soybeans.

Jilin Province issued a "circular on 2018 soybean planting task"《关于下达2018年全省大豆种植面积任务的通知》to township governments ordering local officials to expand soybean planting, and warning them that they must raise their "awareness and political standing" to decisively complete the task. Local officials were told to email their soybean plan to provincial officials by May 2. On April 28, Changchun municipality issued an "emergency notice on implementing the 2018 soybean planting task《关于迅速落实2018年大豆种植面积任务的紧急通知》which emphasized that "expanding soybean area is an important political task in agricultural production." Heilongjiang Province also issued an "emergency" circular to expand soybean planting this year.

The Jilin circular issued to Shuangliao District officials (see below) promises subsidies of 350 yuan per mu ($813 per hectare or nearly $344 per acre). A meeting convened by the vice mayor of Heihe City in Heilongjiang promised a 200-yuan/mu soybean producer subsidy and a 150-yuan subsidy for switching from corn to soybeans--the same as the 350-yuan subsidy /mu in Jilin. (Heihe's corn subsidy is 100 yuan/mu.)

Market prices for soybeans in Heilongjiang now range from 3.3 to 3.6 yuan/kg. With a yield of 140 kg/mu, the 350-yuan subsidy would add 70-to-75 percent to the 462-to-504 yuan/mu gross income per mu from growing soybeans. The subsidy is also roughly equal to the average rent for land in northeastern China.

"circular on 2018 soybean planting task" issued to
local governments in Jilin Province's Shuangliao municipality.
Academy of Social Sciences Agricultural Economist Li Guoxiang told NBD News that the provincial soybean-planting campaigns are a continuation of the 5-year "supply side structural adjustment" program to shift land from corn to alternative crops as well as an effort to reduce reliance on soybean imports.

The big subsidies could have been prompted by the late realization that market conditions have severely eroded the profitability of soybeans for Chinese farmers: domestic soybean prices are down and corn prices are up. The monthly Ministry of Agriculture commodity market report released April 18 revealed that soybean prices in Heilongjiang Province are down 9.2 percent from a year ago, while corn prices in the province are up 12-to-18 percent from a year ago. National Bureau of Statistics farm producer price indexes show a similar pattern of rising corn prices and falling soybean prices from 2017 to 2018. These price movements seem likely to prompt farmers to switch from soybeans to corn, thus bringing the "supply side structural adjustment" program to a screeching halt in its third year.
Changchun emergency notice says expanding
soybean planting is an important political task.
Meeting in Heihe City promised subsidies of 200 yuan and 150 yuan for growing soybeans.

1 comment:

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~Guardian News today!
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Thank you for a wonderful article & your wonderful journalism research!