Tuesday, October 25, 2011

China's Corn Deep-processing Industry Probably Remain being Restrained in 2012

According to the information from the 5th International Corn Industry Conference (the 5th ICIC), held on 22 Sept. 2011 in Changchun City, Jilin Province, China's corn deep-processing industry may still be restrained by governmental policy in 2012, even for a longer time, according to CCM’s October issue of Corn Products China News.

Firstly, corn's consumption volume in deep-processing industry accounts for over 26% of its total consumption volume in 2011. According to Guidance about Promoting the Healthy Development of Corn Deep-processing Industry (the Guidance) published in 2007, the proportion of corn consumption in deep-processing industry among its total consumption shall be less than 26%. However, according to Mr. Sun, secretary general of China Starch Industry Association, corn's consumption volume in deep-processing industry in 2010 reached about 52 million tonnes, accounting for 28.9% approximately in corn's total consumption. Moreover, he estimated that the proportion in 2011 might get higher. Thus, the government will keep regulating and restricting the corn deep-processing industry in order to reduce the proportion to the object proportion in 2012.

Secondly, China's corn witnesses a little short supply situation. In terms of Mr. Fan, deputy general manager of COFCO Agri-Trading & Logistics Limited, corn's output in 2011 is estimated to reach 181.5 million tonnes, and its consumption volume will reach 181.3 million tonnes and the number will probably get higher in 2012. Since the country needs to replenish its national stock, corn's supply and demand relation is predicted to be tight in 2012.

Besides Mr. Li, director of National Animal Husbandry Service and vice chairman/secretary general of China Feed Industry Association, said in the 5th ICIC: if corn's yield per unit couldn't increase significantly in the next five years, the gap between corn's supply and demand in China would reach 15 million tonnes in 2015. But according to the 12th Five-Year Plan of the Development of National Farming, domestic supply of corn, wheat and rice shall completely satisfy their demand at home by 2015. In order to achieve the goal, Chinese government shall focus on how to increase corn's supply and curb its demand. Unfortunately, deep-processing industry is always the target to be restrained first.

Mr. Li also revealed that the government should strengthen the supervision over deep-processing industry, especially fuel alcohol industry using corn as feedstock, which consumes about 5 million tonnes of corn per year currently. He also suggested that foreign enterprises should be restrained to enter into the corn deep-processing industry, otherwise corn's consumption volume will surge.

Based on the above reasons, it's believed that corn deep-processing industry would be probably restrained to step further in 2012. Mr. Sun disclosed that Ministry of Environmental Protection of China (MEP) would carry out environmental examinations on starch, starch sugar, alcohol and organic acid manufacturers, but detailed examination methods will be separately announced by MEP in the future. After the examinations, MEP will disclose the lists of the qualified manufacturers, and the unlisted ones are not allowed to engage in corn deep-production. Besides, MEP will reject any environmental assessment for any new projects, including the reconstructed or expanded ones, refuse to take any application for environmental examination or provide any certificates of compliance for unlisted manufacturers.

In order to facilitate healthy development of the corn deep-processing industry, especially starch industry, Mr. Sun considered the following measures shall be taken in the future.

1 Capacity expansion and duplicate construction at low levels must be put under rigorous control. The mode of capacity expansion must be shifted toward quality and efficiency improvement.

2 Extend industrial chain and develop products with high added values. Varieties of products with high added value must be increased, and the proportion of products with low added value must be reduced so as to avoid disorderly competitions caused by similar product structures.

3 Raise the threshold and limit the access to the industry.

4 Backward production capacity represented by small enterprises must be limited, while advanced production capacity represented by large enterprises should be encouraged. Enterprises with high consumption, huge deficit and poor environmental performance should be shut down to maximize utilization of resources.

5 Investment in science and technology must be increased, and a scientific system integrating industry and research institutes should be established to encourage independent innovation and ensure healthy development of the industry.

6 More attention should be paid to the bio-industry.

Source: Corn Product China News 1110

Content of Corn Products China News 1110:
Both PLA's import and export volumes witness increases in 2011
Fast development in China's HFCS industry
Chinese corn products Imp. & Exp. analysis in August 2011
Domestic threonine price has seen a downtrend since Aug. 2011
Domestic corn starch price heads down in Oct. 2011
China's corn deep-processing industry probably remain being restrained in 2012
Domestic VC industry may face a new regulation
The 12th Five-Year Plan of feed industry comes out
Star Lake Bioscience to improve lysine's production technology
7.5%-12.4%, final determination of the anti-subsidy duty on EU's potato starch
Corn price in China drops in Oct. 2011
Analysis into corn's trade pattern in China

Corn Products China News, a monthly publication issued by CCM International on 20th of every month, reveals the driving force of news stories and deeply analyzes the influence of trends and dynamics on domestic and international corn deep processing industry.

For more information about Corn Product China News, please contact us at

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

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