Monday, November 12, 2018

China Soybean Subsidy Boosted

The soybean subsidy in China's largest soybean-producing province has been nearly doubled this year and the corn subsidy has been slashed as officials try to engineer a shift in acreage from corn to soybeans.

Grain and Oils News reported last week that the Heilongjiang Provincial Government raised the soybean subsidy payment to 320 yuan per mu this year from 173 yuan last year. The corn subsidy was cut to just 25 yuan per mu from 133 yuan last year. This year's soybean subsidy would equal about $280 per acre and the corn subsidy would be about $22 per acre at the current exchange rate. Subsidy funds will be issued to county agricultural bureaus who are supposed to distribute payments to farmers within 15 days.

Heilongjiang Province soybean and corn subsidies, 2017-18
Yuan per mu
Source: Grain and Oils News.

Grain and Oils News proclaims that the higher subsidy for soybeans has stimulated more soybean production. This is puzzling since the amount of the subsidy is being announced after farmers have already harvested their soybeans, about 6 months after they decided what to plant. In May, Chinese propaganda announced that soybean subsidy payments would be 200-to-210 yuan per mu. Also during spring planting "emergency measures" were announced which promised subsidies of 350 yuan per mu in some localities that included a 150-yuan "crop rotation subsidy" payment for shifting land from corn to soybeans.
Which subsidy will this plot of land qualify for?
A crop tour of Heilongjiang last month reported an interview with a farmer who calculated that corn would be more profitable than soybeans unless the soybean subsidy was 350 yuan per mu (the farmer expected the corn subsidy to be 120 yuan per mu). The crop tour participants did not detect an increase in soybean plantings this year. They heard there was not much change in soybean-corn planting on State farms along the Russian border; there was an increase in corn prompted by rising corn prices last year; and some local officials encouraged farmers to convert land to rice paddies.

According to calculations reported by Grain and Oils News, the 320-yuan subsidy is equivalent to 1.33 yuan per 500g of soybeans produced. This nearly doubles income from soybeans which currently fetch a price of 1.6 to 1.7 yuan per 500g (roughly $12.50 to $13.70 per bushel). A county soybean association official said a price of 3 yuan/500g (about $23/bu.) for soybeans would induce farmers to grow more soybeans.

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