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Source: CHINA.ORG.CN

Dumping suspected as soybean crisis hits Heilongjiang

Published: 14 Apr 2009 18:55:24 PST

A chill has fallen over the local soybean market of Heilongjiang Province, the main soybean production region in China, as more and more genetically-modified soybeans are imported. Dumping is suspected, according to Wu Liqiang, executive secretary-general of the Heilongjiang Soybean Association (HSA).

Statistics from China's customs indicate the volume of imported soybeans reached 37 million tons in 2008, 21 percent more than in 2007. The imports had a value of US$22 billion, an increase of 90 percent compared with the previous year. This year, 6.3 million ton of soybeans were imported during the first two months, a year-on-year increase of 15 percent, with a value of US$2.5 billion, a year-on-year decrease of 16 percent.

"This indicates that prices are falling in response to an ever-increasing volume of imports. A ton of imported soybeans is selling upwards from 2,900 yuan in the port of Dalian, which is effectively the production cost in the exporting countries. They are hence suspected of dumping," said Wu.

SOS: More imports, less exports

In the first two months of this year the volume of imported soybeans increased sharply to 269,000 tons in Heilongjiang Province, which means a year-on-year increase of over 6,000 percent. However, exports are moving in the opposite direction – only 1,879 tons, a year-on-year decrease of 93 percent.

"The 68 large-scale soybean processing companies in Heilongjiang have almost closed down production, and none of them plans to purchase soybeans. Even worse, over 3 million tons, harvested last year, remain with the farmers unsold," Wu told China Economic Weekly. "If this situation continues, the soybean industry of Heilongjiang, from planting through oil processing, even to production of soybean products, will totally collapse."

The Heilongjiang Soybean Association sent signals for help in late 2008 and the provincial government has been carrying out an investigation into the issue.

Farmers: Difficult to sell soybeans

Since the second half of 2008, the price of imported soybeans has fallen steadily from 3,000 yuan to around 2,900 yuan per ton. Hence, the price of provincial soybeans has dropped from 6.1 yuan in last July to 3 yuan per kilogram in October, a decline of more than 50 percent.

In spite of the state reserve purchase of 4.53 million ton of soybeans at the price of 3.7 yuan per kilogram in Heilongjiang Province, farmers still face great pressure.

"Sales to the state reserve are subject to higher quality standards. Fresh undried beans often fail to meet the standard. Moreover, the limited quotas make very little difference to us," complained Zhang Xin, a farmer from Zhaoguang Township, Bei'an City.

"If soybeans are not taken up by the state reserve, we have to sell them at a lower price of about 3.2 yuan per kilo."

Some farmers told the China Economic Weekly that the state reserve purchasing price of 3.7 yuan per kilo yields little profit to them due to increased land contract fees as well as transport and drying costs. Presently, farmers are even more dissatisfied with the market price of 3.3 yuan per kilo.

Oil&fat enterprises stop production and purchasing

For years, the oil&fat enterprises in Heilongjiang continued to purchase local non-genetically modified soybeans rather than imported transgenic ones, which became a routine. However, they are now caught in the same web of startlingly low imported prices, the higher state reserve purchasing price, a shortage of supply among farmers, and the blow struck by coastal oil plants in south China.

"Our break-even point is 3.3 yuan per kilo," said Chang Wenbo, director of a local soybean processing company. "At the market price of soybeans in Heilongjiang we are losing money, with the result that we have had to suspend production. In spite of that, our fixed costs continue to run at over 100,000 yuan per month. If this continues, the enterprise will face the threat of bankruptcy."

"Soybeans are not available on the market at the price of 3.3 yuan per kilo," said Wu. "The processing companies will lose money if they buy at the price of 3.7 yuan per kilo, taking into account the state reserve purchasing price. Therefore, almost all the provincial oil & fat enterprises are neither buying nor producing."

Foreign-funded companies are now eyeing Heilongjiang for great profits, placing a great threat on its national soybean industry.

According to the Heilongjiang Soybean Association, for the past two months, the imported genetically modified soybean oil has captured 80 percent market share in Heilongjiang, while the local non-genetically modified soybean oil occupies less than 20 percent and this figure continues to fall.



 

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