Top Biz News

Soybean farmers facing grim harvest

By Wang Xu (China Daily)
Updated: 2006-08-24 16:45

Cargill, the world's largest agribusiness, opened its largest oilseed crushing plant in Nantong of East China's Jiangsu Province this July. Besides this US$60-million investment, the company has already established two crushing facilities in Dongguan, in South China's Guangdong Province.

The US-based agribusiness expects the new venture will help increase its market share in China to 15 per cent from its current 10 per cent. Cargill had invested over US$500 million in China by the end of July.

Archer Daniels Midland Co (ADM), another leading soybean agribusiness from the United States, plans to acquire 30 per cent of Dalian Huanong Group Ltd, a soybean processor with an annual capacity of two million tons. So far, ADM has invested in 13 crushing companies in China, putting its total crushing capacity at 15 million tons each year.

"By dominating the crushing sector, international agribusinesses could sell more foreign soybeans, which are often distributed by their foreign subsidiaries," said an industry insider, who asked not to be named. "Now, almost all the foreign joint-venture companies insist on using imported soybeans, buying just a small proportion of domestic beans as a stand-by."

The four international agribusinesses have almost total control of soybean production in South America and are constantly searching for new markets for their products, according to the source.

Since 2002, China has been a net importer of soybeans. And the nation's soybean import volume reached 26.5 million tons in 2005, well exceeding its domestic output of around 16 million tons a year.

In comparison, the nation's soybean production has decreased from 18 million tons in 2004 to 16 million tons in 2005.

"China's total soybean demand is around 35 million to 40 million tons," said Ding Shengjun, an expert with the Academy of State Administration of Grain. "The cheap soybean imports have already grabbed the market share of domestic ones and hurt the domestic soybean sector."