Monday, November 11, 2019

China Subsidizes Soybean Revitalization

"Imports are cheaper; so why is the government spending 17 billion yuan to subsidize soybean-planting?" was the title of a recent article in No. 1 Business News (Di Yi Caijing). The article didn't really answer the question, but a few calculations show that increase in subsidies paid to increase soybean output this year is almost equal to their purchase price. Moreover, the price is dropping as the market for Chinese soybeans appears to be saturated.

In the article, China's Ministry of Agriculture and Rural Affairs lauded success of the "soybean revitalization plan" ordered up by this year's "Number 1 Document." The Ministry expects this year's soybean output to increase to 17.2 million metric tons (mmt) from last year's 16 mmt. The plan's objective was to reduce reliance on imported soybeans by 1 percentage point in 2020 and another percentage point by 2022. The Ministry projects a slight increase in imports from 83.1 mmt in 2018/19 to 84 mmt in 2019/20, but the Ministry projects a slight decrease in soybean consumption in 2019/20 to ensure that the increased self-sufficiency target is met. (Actually, the Ministry's decrease in soybean consumption of less than 1 percent still seems over-optimistic in view of the large reduction in the number of swine due to African swine fever.)

The marginal subsidy cost of increasing soybean output is even more outrageous. A Ministry official attributed the increase in China's soybean output to soybean producer subsidies of 17 billion yuan (about $2.4 billion) and 80 million yuan (about $11.4 million) in transfer payments made to soybean-producing counties. That works out to nearly 1,000 yuan (about $140) in subsidies per metric ton produced.

At the current average purchase price for soybeans the crop would be worth 58.8 billion yuan, so the 17 billion yuan in subsidies equal 29 percent of the value of this year's soybean crop.

This year's soybean subsidy works out to an average of 1875 yuan ($268) per hectare, 125 yuan per mu, or $109 per acre. The subsidy payment is made only in northeastern provinces, so the national average is much lower than the subsidy levels in the northeast. According to another article, the average soybean subsidy in northeastern provinces averaged more than 300 yuan per mu in 2018 and was as high as 560 yuan/mu in parts of Jilin Province. (It is unclear what soybean subsidies are paid in regions outside the northeast.)

The Ministry of Agriculture and Rural Affairs official said this year's soybean subsidies were increased by 4 billion yuan from last year. That means the Chinese government spent an additional 4 billion yuan to increase soybean output by 1.2 mmt, which represents a subsidy price tag of 3,333 yuan ($476) per additional metric ton. That's 97 percent of the current farm gate price of 3,421 yuan ($489) per metric ton. The average landed value of imported soybeans (before tariffs and taxes) during 2018/19 was 2821 yuan ($408) per metric ton. The cost of imported soybeans would be 3,130 yuan/mt with the 1-percent tariff and 10-percent VAT.

The market for the additional soybeans is weak. Nearly all domestic soybeans are used for food processing, and the National Grain and Oils Information Center estimates that only 2 mmt of domestic Chinese soybeans will be used by crushing plants to make oil and meal in 2019/20. According to one market report last week, the increase in soybeans available is putting downward pressure on prices. The government's grain reserve corporation, Sinograin, has been buying up soybeans to prop up the price, but another report says prices per metric ton have nevertheless fallen about 40 yuan to 60 yuan since new soybeans started coming on the market in Heilongjiang Province. Analysts worry that a commitment to purchase more U.S. soybeans could put further downward pressure on prices.

The futures price for domestic soybeans has been trading at about 5-to-15 percent below year-ago prices. In October last year Sinograin went into the market to buy soybeans when the price was 3800 yuan but the price soon crashed anyway. The average price fell to 3150 yuan in December 2018--a 17-percent decline. The futures price now--in November 2019--is teetering at 3380 yuan, slightly below year-ago prices. Will the price crash again this year?
Closing prices at Dalian commodity exchange. 
No. 1 soybean contract for non-GMO soybeans delivered in northeast China.

Officials also emphasize the importance of diversifying soybean imports. However, China purchased 74 percent of its imported  soybeans from Brazil during 2018/19, up from 48.5 percent in 2016/17--that does not sound like diversification. No. 1 Business News says that China can control trade to ensure a steady supply via foreign investment, cooperation, and other measures. Officials acknowledge that most soybeans are grown on the American continent but say the "one belt one road" initiative can help diversify by promoting production in regions suited for growing soybeans such as Russian, Ukraine, Kazakhstan, and Africa. However, China's soybean imports from belt and road countries were stagnant in 2018/19 and they together supplied less than 1 percent of China's soybean imports.

3 comments:

  1. Heilongjiang Province is ONLY NON-GMO soybeans, which are worth a lot more than CANCER-CAUSING GMO soybeans. Bayer/Monsanto is now being sued up from 14,300 to 42,700 GMO CANCER VICTIM'S LITIGATION. The first 3 cases won judgements of $80 Million, a second judgement of $80 Million, & a third judgement of $1,055 million! ( ONE BILLION 55 MILLION USA DOLLARS. )
    Cancer medicine & chemotherapy costs $400,000. Per year. NON-GMO & ORGANIC IS A LOT CHEAPER & PAINLESSLY HEALTHIER!
    Heilongjiang Province's exclusive ( NON-GMO Yanglin Soybean Group ) processes TWO MILLION TONS PER YEAR OF ALL NON-GMO soybeans. Thank goodness for Yanglin Soybean's NON-GMO healthier wholesome nutrition. Toxic Glyphosate GMO has been refused in dozens & dozens of countries worldwide already; recently announced by Thailand. The USA EPA is all Trump puppet political appointees who have no credentials who have engaged in a war on science & regulations for the benefit of greedy corporations.NON-GMO IS BOOMING! Dalian Commodity Exchange proves NON-GMO #1 soybean futures are 3772 RMB/ton today. Also, Dalian numbers prove that #1 NON-GMO soybeans are being imported MORE than toxic GMO #2 soybeans. Only #1 NON-GMO soybeans are allowed for human onsumption in China, as China is way smarter than chump trump's circus of con games & his 13,000+ documented LIES by New York Times, Wash Post, & Politico, et al.
    ( Heilongjiang Province's exclusive ONLY NON-GMO ALLOWED soybeans ) IS WORTH SUBSIDIZING!
    Nobody desires to eat toxic glyphosate GMO pesticide causing CANCERS, which are poisonous, as proven in USA court already.
    PROOF POSITIVE! Eat only NON-GMO & Organic foods to avoid deadly cancers. NON-GMO is preferred worldwide.

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  2. China has imported a cumulative total of over 900 million metric tons of GMO soybeans since 2000, nearly all grown with glyphosate in the U.S., Brazil, and Argentina. That's over 600 KG per person.
    Meanwhile, China's cancer epidemic is in "cancer villages" where people ate non-GMO food poisoned with heavy metals and chemicals from Chinese industry.

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  3. Glyphosate Herbicides NOW BANNED OR RESTRICTED IN 19 COUNTRIES!
    Following the recent bans on the use of glyphosate-based herbicides by cities and institutions in the U.S., including Key West, Los Angeles, the University of California and Miami, research proves countries around the world have banned or restricted the use of the world’s most used herbicide.
    May 18, 2019
    This research has led to the discovery that there is a growing swell of government level support worldwide for bans on glyphosate-based herbicides for both health and environmental reasons.
    19 countries have now banned or restricted the use of this carcinogenic herbicide.
    Africa:
    Malawi: Malawi’s Ministry of Agriculture, Irrigation and Water Development announced the suspension of import permits for glyphosate in April 2019.
    Asia:
    Thailand: Thailand’s National Hazardous Substances Committee voted to ban glyphosate and chemicals paraquat and chlorpyrifos from December 2019
    Vietnam: Vietnam announced that it banned the import of all glyphosate-based herbicides with in March 2019 following a cancer trial verdict from San Francisco
    Sri Lanka: In 2015 a full import ban on all glyphosate-based herbicides was put in place by the then newly elected President Maithripala Sirisena. This ban was partly lifted in July 2018 but only for use on tea and rubber plantations.
    Six Middle Eastern countries banned the import and use of glyphosate-based herbicides in coordination with each other in 2015 and 2016:
    Oman
    Saudi Arabia
    Kuwait
    United Arab Emirates
    Bahrain
    Qatar
    Central America:
    Bermuda: Bermuda’s Environment Minister Cole Simons confirmed the ban on glyphosate-based herbicides at a public meeting in January 2017.
    St Vincent and the Grenadines: In August 2018 Agriculture Minister Saboto Caesar called on all stakeholders to be understanding of the new suspension on glyphosate-based herbicides “in light of the nation’s quest to promote a safe working environment and good agricultural health and food safety practices.”
    Europe:
    Austria: In July 2019 the Austrian Parliament voted in favor of banning glyphosate completely in the country.
    Belgium: In October 2018 the ban on the sale of broad-spectrum herbicides (including glyphosate) to non-professional users entered in to force across Belgium.
    Czech Republic: In 2018 the Czech Republic put strict restrictions on the use of glyphosate and banned pre-harvest spraying; “These substances (glyphosate-based herbicides) will only be employed in cases when no other efficient method can be used,” Agriculture Minister Miroslav Toman said.
    Denmark: In July 2018, the Danish government implemented new rules banning the use of glyphosate on all post-emergent crops to avoid residues on foods.
    France: In 2017 France banned the use of glyphosate and all other pesticides in public green spaces. In November 2018 President Macron said he would take all measures necessary to ensure that glyphosate-based herbicides are banned in France as soon as an alternative is available and at the latest within three years. However, he has since stated that this deadline may only be 80% met.
    Italy: In August 2016 Italy’s Ministry of Health banned the use of glyphosate in public areas and also as a pre-harvest spray.
    The Netherlands: From the end of 2015 the sale of glyphosate-based herbicides has been banned to all non-business entities.”
    Glyphosate causes multiple CANCERS. Cancer plaintiff victims from Glyphosate SUING BAYER has more than doubled since just July 2019.
    More than 42,000 plaintiffs have joined lawsuits against German chemical giant Bayer, blaming the company’s glyphosate-based weedkiller for their cancer.
    The number of plaintiffs, largely brought by US citizens, is now at 42,700 — more than double the 18,400 reported in the middle of July, Bayer announced on Wednesday.

    In 2015, the World Health Organization’s International Agency for Research on Cancer (IARC) said glyphosate, the world’s most commonly used herbicide, was “probably carcinogenic to humans.”
    End quote.
    PROOF POSITIVE!

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