China to continue grain imports

Tapping global agricultural market will pay off, experts say

Farmers in the United States will continue to be big beneficiaries of China's surging demand for international agricultural products this year, soybeans, corn and meat in particular.

"China's policies have pushed the country to purchase more agricultural products from the US, and this trend will be maintained over the next several years," said Peng Yufa, a researcher at Beijing-based Chinese Academy of Agricultural Sciences.

The US became China's biggest supplier for agricultural products in 2013, shipping $23.5 billion worth of grain, meat, fruit and dairy products to China, according to the US Department of Agriculture.

Peng said China's subsidies on seeds and fertilizer, guaranteed minimum government purchase prices and technical support encouraged farmers in its main rice and soybean-producing regions to plant more staple grains over the past several years.

"Moreover, higher domestic prices for corn and rice further cut into planting of soybeans and naturally opened a door for the rush of imported US soybeans," said Zhang Xiaoping, director for China at the US Soybean Export Council.

Last year, China imported 84 million metric tons of agricultural products from the world market, including 14 million tons of corn, wheat and rice, about 2.6 percent of the nation's total domestic cereal output. The country's soybean imports rose 8.6 percent year-on-year to 63.38 metric million tons, mainly from the US and Brazil, and accounted for more than 80 percent of China's domestic demand.

The USDA predicted that China will continue to be the US' top agricultural export market in 2014, taking an estimated $25 billion of its agricultural products.

More than 124 million metric tons of corn and 11.7 million tons of wheat were consumed by Chinese livestock in 2013, showing a 5 percent and 7.2 percent increase, respectively, from the previous year, according to the Beijing-based China Feed Industry Association.

"Rising US corn and wheat imports can help China enhance its grain security and make sure the country will have enough arable land to grow vegetables and fruit," said Xu Xiaoqing, head of the agricultural economics department of the State Council's Development Research Center.

Chen Xiwen, deputy chief of the Central Rural Work Leading Group, said China seeks to cooperate with large agricultural trade partners that have abundant agricultural resources and a desire to become more globalized.

"To ensure a high self-sufficiency rate for staple grain output, and to gradually adjust China's developing agricultural structure, increasing imports of certain agricultural products from the international market can make up for domestic shortages for the time being," Chen said.

"It also buys time to improve the quality of China's farmland, which has been contaminated by heavy metals and polluted water, for sustainable development," he added.

The Chinese government is preparing new solutions to upgrade the nation's agricultural sector this year, including setting up new standards for high-yield farmland and reinforcing protection of agricultural resources and the environment.

Hu Hanping, director of Nanchang-based Jiangxi Academy of Agricultural Sciences, warned that China is still having a problem propping up domestic oilseed prices because the country purchases a large amount of soybeans and vegetable oils internationally.

China lowered tariffs on imported commodities and agricultural products, including cotton, grain and edible oil, when the country joined the World Trade Organization in 2001. This policy has raised the domestic price of farm products above international market prices.

To further ensure the income for domestic farmers, China introduced floor prices in 2006 and appointed public bodies - China Grain Reserves Corp and China National Cotton Reserves Corp - to buy such products as wheat, corn and cotton for State reserves when market prices fall below floor prices.

"Under such circumstances, domestic oil-processing enterprises are happy to purchase US soybeans to cover the rising cost of labor, electricity and logistics," Hu said.

"However, they cannot simply raise their product price and pass the higher raw material costs onto consumers as they also have to face competition from foreign vegetable oil producers."