State Council announces reforms to stimulate seed industry

On 25 Dec. 2013, the State Council of the People's Republic of China issued an announcement on its portal, titled "Opinions on Deepening the Reform of Crop Seed System to Increase Innovation Capability" (the Opinions). The statement is expected to mature into specific guidelines for the future development of China's seed industry.

The Opinions emphasize the following aspects: allowing complete market determination in resource allocation; providing support to seed enterprises by introducing talented workforce, technology and resources; protecting the legitimate interests and rights of scientists over their inventions and creations; improving companies' innovation capabilities; and establishing a commercial breeding system.

Six measures proposed by the Opinions

To strengthen seed enterprises' leadership in technological innovation

Seed enterprises are encouraged to increase investments in R&D and establish joint-stock R&D institutes; scientific research institutes and institutions of higher learning (including universities and colleges) deemed of public interest shall be separated from seed enterprises established by them by the end of 2015, and other scientific research institutes shall be gradually transformed into enterprises (after reforms, the researchers' years of work in their original institutes shall be counted towards their pensions); new innovation platforms of seed industrial technology, such as national and provincial technical research centers, enterprise technical centers, and key laboratories, will be preferentially established in seed enterprises qualified for operating in the breeding, production and promotion fronts; among others.

To stimulate researchers' enthusiasm

Breeding materials, techniques, new varieties, and technological achievements in general developed by research centers and other institutions of public interest (including universities and colleges) with the use of national funds, are eligible to apply for intellectual property rights, and may be assigned monetary value and count as investment shares in seed enterprises; public trading platforms for technological achievements in the industry will be established; regulations for the transactions will be enacted, with private deals prohibited; cooperation between research institutes and enterprises is to receive full support; and researchers are encouraged to join enterprises and engage in commercial breeding; among others.

To intensify efforts to tackle problems in national crop breeding

Five-year plans for the breeding of major crops, such as rice, corn, rapeseed, soybean and vegetables will be designed. The aim is to improve the industry's scientific and technological innovation capabilities, by achieving core breakthroughs in key areas, such as germplasm, new varieties and the efficient propagation of seeds; the country shall help further companies' commercial breeding through various research programs and special projects, and attract social capital to participate in and emphatically foster seed enterprises that incorporate the three levels, breeding, production and promotion; research and breeding platforms shall be created, cooperation between enterprises and research institutes shall be closely established; and so on.

To improve basic and public interest research

Study fields related to the seed industry shall be strengthened; research centers and institutions of higher learning shall receive support to engage in basic and public interest research in areas such as breeding theory, general technology, and innovation of seeds, with the aim of developing modern molecular breeding technologies and methods, and creating new cultivars featuring high resistance, quality and yield; national research funds for these objectives shall be increased, while investments in the commercial breeding of hybrid rice, hybrid corn, hybrid rapeseed, hybrid cotton and vegetables conducted by research institutes and universities shall be gradually decreased; the preparation for and conduction of a national medium-to-long term plan for germplasm conservation and utilization of crops and forests shall be accelerated; and so on.

To accelerate the construction of seed production facilities

Policy support to major seed production facilities shall be increased and infrastructure for the construction of seed and seedling production facilities shall be laid down; a series of policies shall be implemented, such as insurance on seed production, subsidies on fine wood seeds and seedlings, and awards for major grain crop seed producing counties; the transfer of land-use rights to large seed producers and farmer cooperatives through land shares and land lease shall be promoted; among others.

The news sourced from Seed China News released by CCM in January.

Table of Contents of Seed China News 1401:

Key events in China's seed industry in 2013, part 1

State Council announces reforms to stimulate seed industry

Five changes in the Examination and Approval Measures for Main Crop

Origin reports profit growth in FY2013

Heilongjiang tomato seed market improving

Oversupply of hybrid rice seeds to continue in 2014

Terminal sales: new marketing trend for corn seeds

Beijing Shenzhou: space mutation breeding to boost agricultural development

Heilongjiang soybean market still depressed in 2013

Autumn planting of rapeseed in Anhui in 2013/2014

Seed China News, a monthly publication issued by CCM at the end of every month, mainly covers a diversity of topics, including market dynamic, company dynamic, crops, seed market, etc. With the latest news in seed industry and in-depth analysis on government direction and market competition, Seed China News can provide you with valid information which would help you make rational decisions in investment, production, marketing, etc.

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Arysta LifeScience partnership training Brazilian farmers for proper use of agrochemicals

Apply Well Program, developed by the partnership of Arysta LifeScience and the Agronomic Institute of Campinas, achieved the milestone of 30,000 people trained and 800 farms visited in 2012.
 
The program performs a roaming training and assistance to farmers throughout Brazil and has been present in 20 Brazilian states. The goal is to help Brazilian farmers training in the correct use of pesticides, thus avoiding environmental damage and contamination of food.
 
With the success of two units of training furniture, called Tech Furniture, which are laboratories mounted in vans that carry out more than 300 activities per year throughout the Brazilian territory, Apply Well Program won the 3rd training unit to begin activities in 2013.
 
Besides professional training, the program also evaluates sprayers, collecting data on the status of the equipment, which enables Apply Well Program to launch a database with unprecedented information about the quality of sprayers in Brazil.

On Feb. 8, 2013, the Mato Grosso Soybean and Cron Producers Association (Aprosoja) announced that about 28.5% of the area planted with soybean has been harvested in Mato Grosso do Sul and the soybean harvest in the 2012/13 season will end by March 15, 2013.
 
According to the data from the the National Supply Company (Conab), Mato Grosso do Sul planted a total of 2.017 million ha. of soybean in the season of 2012/13, which is 11.1% greater than 1.815 million ha. in the same period of 2011/12. In addition, thanks to the favorable weather condition in this state, it's expected that the production of soybean will witness a significant growth of 30.7%, increasing from 4.628 million tonnes in 2011/12 to 6.051 million tonnes in 2012/13.

Crop Protection South America Monthly Report is a monthly publication released by CCM’s. It offers timely update and close follow up of South America's various kind of Crop market dynamics, analyze the market data and trends. Major columns include companies' current dynamics and market situation, a close watch of government policies and regional dynamics.

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Main expansion cases of domestic pesticide enterprieses in 2012

While entering the second year of the 12th Five-Year Plan, domestic pesticide industry has gradually shown a sign of slight recovery in 2012. Followed the direction of Pesticide Industrial Policy and 12th Five-Year Plan for Pesticide Industry, M&A and expansion cases among domestic pesticide enterprises have also witnessed growth, according to Crop Protection China News 1301 issued by CCM.

 

Except for the acquisition cases, the Ministry of Industry and Information Technology of China (MIIT) has approved 8 batches containing 13 merger cases in 2012, involving 26 domestic pesticide enterprises.

 

In this issue, CCM will list main cases of M&A and some external expansion that took place in domestic pesticide industry in 2012.

1. Sinochem & Jiangsu Yangnong

Sinochem International Corporation (Sinochem), one of the largest state-owned chemical groups in China, announced on 21 Feb., 2012 that it intends to invest less than USD259.37 million in Jiangsu Yangnong Chemical Group Co., Ltd. (Yangnong Group), a large chemical group in Jiangsu Province, as a strategic investor. The transaction will make Sinochem the second largest share holder in the group which also means that Sinochem will benefit a lot by enhancing its R&D and industrial transforming capacity, enriching production lines and improving industrial chain from the group ascribed to its powerful industrial base and high-efficient synergy value with the fine chemical engineering and farm chemical businesses. On the other hand, Yangnong Group and Jiangsu Yangnong Chemical Co., Ltd., (Jiangsu Yangnong), a leading pyrethroid insecticide player in China and a listed pesticide subsidiary of Yangnong Group respectively, will get more financial support to expand business in both domestic market and oversea market.

 

On 9 Dec., 2012, Jiangsu Yangnong announced to set up a new pesticide production subsidiary in Rudong County, Jiangsu Province, with a total investment of USD28.52 million. The new subsidiary was planned to be mainly engaged in the production and sales of pesticides and pesticide intermediates, fine chemicals, etc.

2. Huapont

On 24 March, 2012, aiming to further expand its pesticide business, Chongqing Huapont Pharm Co., Ltd. (Huapont), a listed pharmaceutical company in China, planned to raise USD144.76 million through non-public offering of A shares for the construction of four new projects, namely a construction project of a new R&D base, construction project of 600t/a azoxystrobin, 900t/a sulcotrione/mesotrione and 3,500t/a pesticide formulations, a medicine formulation technical innovation project and a circulating fund supplementation project. 

 

On 8 May, 2012, Huapont announced to conduct its first acquisition in 2012. It planned to purchase 49% equities of Hebei Wanquan Hongyu Chemical Co., Ltd. (Wanquan Hongyu), a large herbicide producer in Hebei Province with main products of 37% clethodim TK and metamitron TC.

 

Later on, Huapont continued to expand in domestic pesticide industry. It announced on 24 Aug., 2012 to acquire 58.26% equity of Hangzhou Qingfeng Agro-chemical Co., Ltd. (Hangzhou Qingfeng), a large pesticide enterprise in Zhejiang Province, with a total investment of USD9.16 million. Till then, Huapong started to set foot in agrochemical formulation industry.

3. Noposion

Shenzhen Noposion Agrochemical Co., Ltd. (Noposion), a leading pesticide formulation company in China, announced on 23 March, 2012 that it plans to increase the registered capital of Shandong Qutii Machine Co., Ltd. (Shandong Qutii), an agricultural machinery subsidiary of Noposion, by co-investing USD3.17 million with Maruyama Manufacturing Company Inc. (Maruyama), a large agricultural machinery corporation in Japan.

4. Nanjing Redsun

Nanjing Redsun Co., Ltd. (Nanjing Redsun), a leading pyridine pesticide producer in China, announced on 24 April, 2012 that it planned to set up a brand new pesticide subsidiary in Chongqing City, China, with a total investment of USD21.59 million. 

The new subsidiary will be mainly engaged in the production and sales of pesticides, pesticide packages, and pesticide intermediates (such as pyridine, 2-methyl pyridine and 3-methyl pyridine). And the foundation of it was aiming at the expansion of current pesticide businesses and cultivation of new economic growth points for Nanjing Redsun.

5. Anhui Huilong

Aiming to expand its business in other provinces, Anhui Huilong Agricultural Means of Production Group Co., Ltd. (Anhui Huilong), a listed agricultural chain management enterprise in Anhui Province, announced on 23 May, 2012 that it will invest USD5.65 million (RMB35.76 million) to establish two new companies, namely Anhui Huilong Agricultural Means of Production Group Agricultural Science and Technology Co., Ltd. (AHAMPGAST) and Guangdong Huilong Agricultural Means of Production Co., Ltd. (Guangdong Huilong). 

 

Right after releasing its expansion strategy in Guangdong Province, Anhui Huilong planned to kick off its further expansion in South China. On 13 June, 2012, Anhui Huilong announced to acquire 60% equities of Hainan Agricultural Means of Production Co., Ltd. (HAMP), one of the largest agricultural means of production companies in Hainan Province, with USD12.37 million.

6. ABA Chemicals

On 2 June, 2012, ABA Chemicals Corporation (ABA Chemicals), a listed pesticide intermediate and pharmaceutical intermediate producer in China, announced to co-found a pesticide subsidiary with Jiangsu Jiannong Agrochemical Co., Ltd. (Jiangsu Jiannong), a private pesticide producer in Jiangsu Province, with a total investment of USD15.8 million. After the foundation of the new company, ABA Chemicals will be formally involved in domestic pesticide industry.

7. Zhejiang Wynca

Zhejiang Wynca Chemical Inudustry Group Co., Ltd. (Zhejiang Wynca), one of the largest glyphosate producers in China, announced to set foot in seed industry on 5 May, 2012 by acquiring 51% equities of Shandong Xinfeng Seed Co., Ltd. (Shandong Xinfeng), a large seed enterprise in Shandong Province, with a total investment of about USD10.74 million. 

 

8. Shandong Lubei

In order to exploit the Association of Southeast Asian Nations (ASEAN) market, Shandong Lubei Enterprise Group General Company (Shandong Lubei), a big corporation which produces aluminum oxide, titanium dioxide, chemical fertilizer and so on, planned to construct a pesticide formulation factory in Myanmar.

 

On June 21, 2012, a delegation from Shandong Lubei went to Myanmar for inspection and visit. Shandong Lubei was invited by the Myanmar Ministry of Agriculture to construct a pesticide factory for herbicide, insecticide and plant growth regulator production in Myanmar.

 

9. Nantong Jiangshan

Nantong Jiangshan Agrochemical & Chemicals Co., Ltd. (Nantong Jiangshan), a listed pesticide manufacturer in China, announced on 20 Nov., 2012 that it plans to acquire 90% equities of Ladda Group Holdings Co., Ltd. (Ladda Group), a large agrochemical enterprise in Thailand, at a cost of less than USD33.39 million. And after completing the transaction, Nantong Jiangshan will further invest USD3.9 million in Ladda Group as an operation fund, then its controlling equity percentage of Ladda Group will reach 91%.

 

In addition to all the acquisition cases, some pesticide enterprises sold their subsidiaries aiming to be in accordance with their overall strategies.

 

Hailir Group & Nantong Jiangshan

Aiming to pull up the profit margin of net assets in a short time for its IPO, Hailir Pesticides and Chemicals Group (Hailir Group), a state-appointed pesticide formulation manufacturer in China, planned to peel off some relatively inferior assets. It announced on 6 March, 2012 to sell out all equities of its pesticide technical subsidiary, namely Qingdao KYX Chemical Co., Ltd. (Qingdao KYX). 

 

Owing to the high relocation fees, Nantong Jiangshan announced on 1 June, 2012 that it planned to launch an equity transfer of all the shares of Nantong Dongchang Chemical Industrial Co., Ltd. (Nantong Dongchang), a large chemical producer, that it holds, about 28.05 million shares accounting for 67.79% of the total equity of Nantong Dongchang. Nantong Dongchang was forced to relocate within 2012 according to the relocation policy of local government and the relocation fees reached to USD2.59 million which would be self-financed.

Table contents of Crop Protection China News 1301:

Main expansion cases of domestic pesticide enterprieses in 2012

First standard for commodity supervision and sampling inspection released

China brews soybean industrial policy adjustment

China needs to attach importance to regulate on pesticide adjuvants in extra small package

Pyridine price rises, paraquat follows

Nutrichem gains GLP certification from OECD

Performance prediction of main domestic pesticide companies in 2012

Jiangsu Huifeng to set foot in seed industry

Crop Protection China News, a monthly publication issued by CCM on 31^st, offers timely update and close follow-up of China’s crop protection industry dynamics. It also provides you with professional features articles, keeping you aware of the latest industrial development, import and export analysis, and market data. 

About CCM

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For more information, please visit http://www.cnchemicals.com.

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China's first Agricultural Insurance Regulations issued

Investment in agricultural industry has been hot in recent years, and modern agriculture is also considered to be a potential investment field. Based on the current situation of China's modern agricultural industry, it's suggested that more capital and highly advanced management are needed for building some famous brands and increasing the industrial concentration.

On 12 Nov., 2012, China's first law for agricultural insurance, Agricultural Insurance Regulations (Regulations), was formally issued after the soliciting of public opinions for half a year. Besides, the Regulations shall be effective as of March 1, 2013, according to an announcement published by the Legislative Affairs Office of the State Council (LAOSC).

Agricultural insurances can be divided into planting industry insurance, breeding insurance and forest insurance basing on agriculture category. Among which, planting industry insurance refers to the business of providing insurance to grain crops and industrial crops. That is to say, rice, wheat, soybean, sorghum, corn, cotton, tobacco, tea, mulberry, sugarcane, herbs, vegetables, etc. are underwritten by the insurance.

The Regulations mainly aims to regulate agricultural insurance activities, protect the lawful rights and interests of the parties to the contract for agricultural insurance, enhance the capability to withstand risks during agricultural production and help agricultural insurance develop well.

Crop Protection China News is a monthly publication released by CCM. It offers timely update and close follow-up of China’s various kind of crop market dynamics, analyze the market data and trends. And the major columns include companies' current dynamics and market situation, a close watch of government policies and regional dynamics. If you want to know more about Crop Protection China News, you can contact us.

About CCM

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Q3 financial reports of domestic listed pesticide enterprises

Domestic listed pesticide enterprises in China gradually released their 2012 Q3 financial reports (July to Sept. 2012) before the end of Oct. 2012, showing the good performances made by most of them in this period, according to CCM’s November issue of Crop Protection China News.

So far, there are 19 listed enterprises which are mainly engaged in the business of pesticide in China (Actually there were 21 in 2011, but among which two successfully launched reorganization in H1 2012 and changed their main business into mining, namely Shandong Dacheng Pesticide Co., Ltd. and Shandong Huayang Technology Co., Ltd.). Summed up the Q3 performances of all the 19 listed enterprises, the total revenue in Q3 2012 reached over USD1.56 billion, up 31.19% over Q3 2011 and the total net profit gained a considerable growth of 118.13% over Q3 2011, reaching USD76.89 million.

 

Only two of these 19 listed enterprises suffered deficits in this period, namely Shandong Shengli Co., Ltd. and Zhejiang Qianjiang Biochemical Co., Ltd., with respective loss of USD4.36 million and 0.64 million.

The top three companies in terms of revenue: Nanjing Redsun, Zhejiang Wynca and Huapont Nanjing Redsun Co., Ltd. (Nanjing Redsun), Zhejiang Wynca Chemical Industry Group Co., Ltd. (Zhejiang Wynca) and Chongqing Huapont Pharm. Co., Ltd. (Huapont) still ranked as the top three by revenue in this period as what they did in H1 2012.

Nanjing Redsun's revenue and net profit in this period continued to surge, reaching USD253.53 million and USD12.06 million, up 41.87% and 14,868.33% over those in Q3 2011. The company kept announcing that this year's performance has no comparability with that of last year because of the reorganization with Nanjing First Pesticide Group Co., Ltd. (NFP Group) it successfully completed in Sept. 2011. The performances of the three subsidiaries of NFP Group, namely Nanjing Redsun Biochemicals Co., Ltd., Anhui Guoxing Biochemical Co., Ltd. and Nanjing Redsun International Trade Co., Ltd., have been counted into the total revenue and net profit of Nanjing Redsun in this period.

Zhejiang Wynca, as the pesticide enterprise which retained No. 1 with its pesticide revenue in 2011 in the list of 2012 China Top 100 Pesticide Manufacturers, was seen as the second largest revenue gainer in Q3 2012. By summing up the revenue in H1 2012, Zhejiang Wynca may lose the title of No. 1 domestic pesticide manufacturer in 2012.

Actually, Zhejiang Wynca has witnessed deficit in H1 2012, losing about USD4.38 million. However, as the price of its main pesticide product, namely glyphosate, continued to grow in Q3 2012, the company turned deficit into profit. The revenue and net profit of the company in this period reached USD249 million and USD5.64 million respectively. The company also predicted in its Q3 financial report that its net profit in 2012 may enjoy a 50% growth over that in 2011.

Huapont ever as a famous pharmaceuticals production company in China has earned its reputation in domestic pesticide industry by its pesticide subsidiary, namely Nutrichem Laboratory Co., Ltd. Although pharmaceuticals is still one of its main business, it should be counted in the list of domestic pesticide enterprise because of its expanding pesticide business. In H1 2012, the pesticide revenue of Huapont already surpassed the revenue of pharmaceuticals business, accounting for 77.3% of its total revenue in this period. Even though Huapont didn't reveal the detailed performance data of its pesticide business in Q3 financial report, it is still believed that pesticide business was also the largest contributor to its performance in this period.

Other listed pesticide enterprises also witnessed good growths in this period while comparing with its performance in the same period of last year, even though some of them gained little profit. The Q3 revenue from Nanjing Redsun is 27 times larger than that of ABA Chemicals Corporation, the listed pesticide enterprise in the last place of the list. However, the large growth of the adding up revenue and net profit of all these listed pesticide enterprises in Q3 2012 is still comforted and it has also shown the gradual recovery in domestic pesticide industry.

Source: Crop Protection China News 1221

http://www.cnchemicals.com/Newsletter/NewsletterDetail_16.html

Content of Crop Protection China News 1221：

Q3 financial reports of domestic listed pesticide enterprises

New round of domestic soybean purchasing battle starts

Pesticide enterprises pay close attention to pesticide-fertilizers

Pesticide intermediates industry scale enlarging but profit slipping

China to largely promote biological crop protection technology

12th Five-Year Plan of Hazardous Waste Pollution Management released

Shandong takes lead in simplifying pesticides I&E procedures

Hubei Sanonda's reorganization aborts

Hebei Veyong's involving in coal chemical business denied

Crop Protection China News, a monthly publication issued by CCM on 15^th&31^th of every month, offers timely update and close follow-up of China’s Crop Protection industry dynamics, analyzes market data and finds out factors influencing market development

About CCM

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.

Please visit http://www.cnchemicals.com for more information

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Find Hot News in AgriChina Investor 1208

Published on the 31^th every month, AgriChina Investor is a monthly publication released by CCM. It covers sections of investment environment, investment dynamics, market watch, industry discovery, expert view and market review etc. AgriChina Investor will focus on the economic situation, governmental policy, financial capital flow, key players' dynamics, big events and hot issues etc. in agriculture industry. Providing the most comprehensive information about the capital investment dynamics and market dynamics, this newsletter can make you clear about the investment environments in China's agriculture industry.

Following are headline news of the latest issue of AgriChina Investor 1208:

Tiantang Guigu invests in pig breeding industry

Tiantang Guigu is cooperating with Dakang Pasture to acquire and integrate pig farms.

Sunner Development to triple broiler chicken capacity in future 5 years

Sunner Development plans to expand its broiler chicken breeding and slaughtering capacity to 750 million per year in the future five years.

Three pesticide companies proceeding with IPO

Three pesticide companies, namely Jiangsu Sevencontinent, Limin Chemical and Sichuan Guoguang, are on their way of IPO.

Zhejiang's private capital rushes into agricultural industry

Zhejiang's private capital has been rushing into agricultural industry.

NDRC's new policy may hard to control edible oil price

NDRC recently issued a price reporting policy for edible oil, aiming to strengthen the price adjustment. However, its effect is estimated to be unsatisfying.

China to revise Rural Land Contract Law

China is planning to revise the Rural Land Contract Law to boost land transaction.

China releases 12th Five-Year National Program for Rural Economic Development

China released the 12th Five-Year National Program for Rural Economic Development in early Aug. 2012.

China's grain import this year may exceed the high level in 2004

China's grain import increased sharply by 283.7% year on year in H1 2012, and the total grain import this year may exceed the high import level in 2004.

Armyworm's impact on corn production to be limited

Many corn planting areas in China have been facing a threat from the most serious armyworm occurrence in 10 years since Aug. Fortunately, the pest has been under control at present and its impact on the corn production this year is limited.

Rising soybean price lifts breeding cost

Rising soybean price has elevated breeding cost, and some farmers have suffered loss in pig breeding.

Low gain in agricultural production causes land abandonment

Low gain in agricultural production has caused land abandonment in China.

Agricultural insurance needs further promotion in China

Agricultural insurance needs further promotion in China.

Income gap among rural households reportedly extends

Income gap among rural households reportedly extends.

China's soybean import hits a new high in first seven months of 2012

China's soybean import hits a new high in first seven months of 2012.

Unused import quota of agricultural produces to be redistributed

Unused import quota of agricultural produces shall be redistributed.

Qingdao bonded area witnesses cotton overstock

Qingdao bonded area witnesses cotton overstock.

China's pesticide technical output increases by 21.70% in H1 2012

China's pesticide technical output increases by 21.70% in H1 2012.

MOA warns blind capacity expansion of ordinary wheat flour processing

MOA warns blind capacity expansion of ordinary wheat flour processing.

World Bank grants loan for Guangdong's agricultural pollution control

World Bank grants loan for Guangdong's agricultural pollution control.

Guangdong Tiandi Food to explore market outside Guangdong

Guangdong Tiandi Food is to explore market outside Guangdong.

About CCM

As a leading market research consulting company in China with more than 10-year-experience, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer. For more information, please visit http://www.cnchemicals.com.

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High Reliance on Imported Soybean Affects China's Edible Oil Security

According to statistics from China Customs, in the first half of 2012, China imported 29.05 million tonnes of soybean, up 29.05% over H1 2011. Since the planting area of soybean in China has decreased this year, it's estimated that China's import of soybean will set a new record in 2012, and the high growth of import volume in H1 2012 is a signal, according to CCM’s July issue of AgriChina Investor.

Soybean is a major source of edible oil in China. With the increasing demand for edible oil from urban residents and the declining planting area of soybean, China's import of soybean has been increasing year by year over the past decade.

 

Since 2003, China has surpassed the European Union and become the largest soybean importer in the world. In 2010, China's soybean import volume hit a historic high of 54.80 million tonnes. In 2011, it decreased slightly by 3.9% to 52.64 million tonnes. The import volume of soybean in China climbed by 90% from 2004 to 2010.

 

According to the data from China's National Grain and Oils Information Center, the annual consumption volume of edible oil in China reached 20.5kg per person in 2011. 

 

China mainly imports soybean from the U.S., Brazil and Argentina, where the GMO soybeans are planted the most extensively. The U.S., a country with the largest planting areas of soybean in the world, has supplied about a quarter of its soybean output to China.

 

Imported soybean now accounts for about 80% of China's total soybean consumption. Compared with more than 50 million tonnes of imported soybean every year, China's domestic output of soybean has been about 12 million tonnes per year in recent years.

 

Driven by the increasing urbanization rate and hence the increasing demand from urban residents in China, China's soybean import volume is expected to maintain an uptrend in the next 10 to 15 years. According to a forecast from the U.S. Department of Agriculture, China's import volume of soybean is expected to go up by 62% to 90 million tonnes per year over the next 10 years. 

 

China's soybean growing industry has been greatly affected by the increasing import volume of soybean. As imported soybean has advantages in cost (because of high farming efficiency in major soybean planting countries) and high oil yield (because of the adoption of GMO seed; but GMO soybean is prohibited to be planted in China), domestic soybean growing industry is beaten by imported product, and many Chinese farmers are unwilling to grow soybean.

 

The decreasing output of domestic soybean and the increasing soybean import also impact China's oil crushing industry. It was reported that more than 80% of the soybean oil crushers in Heilongjiang Province, China's largest soybean production base, have closed down due to the decline in both planting area and output of soybean in the region in 2011, and many of the soybean oil producers have been relocated to coastal areas and begun to use imported soybean as their raw materials. 

 

The heavy reliance on imported soybean brings great risks to the food security of China and the price stability of edible oil. Now many foreign companies have extended and integrated the industrial chain of soybean in China, thus dominating the pricing rights of China's edible oil market; more than 75% market share of soybean oil market in China is controlled by overseas brands. Most price rise of edible oil in the end market in recent years are initiated by overseas companies. Edible oil's price, which is included in China's CPI contributing factor, is highly related to society sustainability.

 

As soybean is not included in grain in Chinese government's statistical system, the high reliance on soybean import may be ignored if focus is only put on China's grain sufficiency rate. Many experts suggest that grain security-related governmental departments in China should concern more about the soybean import.

Source: AgriChina Investor 1207

http://www.cnchemicals.com/Newsletter/NewsletterDetail_192.html

Content of AgriChina Investor 1207:

Chuying Agro-Pastoral's rapid expansion faces challenges

Shenzhen Jinxinnong invests in capital preservation financing product

Arla Foods strengthens its presence in China

Muyuan Foodstuff's IPO approved

Big buyers increase in domestic crop protection market

U.S. drought not to push up China's grain price

China's cotton import volume up 130.2% in H1 2012

Brief introduction to China's direct subsidies for farmers

High reliance on imported soybean affects China's edible oil security

Investment in leisure agriculture to become hot in China

Why companies in other industries set foot in agricultural business?

Chinese farmers often experience poor sales of agricultural produces

Guangdong Dahuanong to accelerate aquaculture vaccine commercialization

Minsheng Banking opens financial centers for tea and fishery

Imp.&exp. value of China's agricultural produces up 18.4% in Jan.-May 2012

Flood may drag down China's autumn grain yield

……

AgriChina Investor, periodically published on 25^th every month, offers timely update and close follow up of agriculture investment in China, analyzing market data and trends, as well as related policies. Major columns include investment environment, investment dynamics, market watcher, market review etc.

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