Top Biz News

Soybean farmers facing grim harvest

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

For Sun Xiuhua, a farmer in Northeast China's Heilongjiang Province, this year's harvest of her 1,000-acre soybean farm is no cause for celebration.

The farm is Sun and her family's main source of income. But soybean prices have dropped by more than one-third in the past two years, making it barely profitable to grow.

"If the soybean price doesn't pick up, we just can't grow it next year," said Sun, adding that she doesn't have a back-up plan.

Soybean consumption has more than doubled in China in the past 10 years; however, local farmers have suffered rather than benefited from a boom over the previous two years that's seen cheaper imported soybeans posing a threat that could push domestic growers out of the market.

Meanwhile, industry insiders say international agribusinesses' control of China's soybean crushing industry raises concern over the monopoly of foreign companies on the country's soybean sector.

China opened its soybean market in 1995  long before its World Trade Organization (WTO) entry in 2001. With no quota but a symbolic tariff of around 3 per cent, soybean imports have soared from 800,000 tons in 1995 to 26.5 million tons in 2005.

With China's entry to the WTO in 2001, foreign agribusinesses began expanding in the nation's soybean crushing sector, no longer content to just supply one of the world's largest soybean markets.

Relying on their deep pockets, foreign agribusinesses have embarked on a buying spree in China since 2004, acquiring stakes in the nation's major soybean crushing companies.

Foreign agribusinesses now own stakes in 64 out of the 97 soybean crushing companies still operating in China. The total capacity of China's soybean crushing companies stands at 70 million tons each year, but overcapacity has left half of the companies idle.

The world's four largest agribusinesses  Cargill, ADM, Bunge Ltd, and Louis Dreyfus  control 40 per cent of China's soybean crushing capacity. And they appear to have no intention of slowing their expansion in the sector.