Increasing Domestic Soybean Production in China

• 2024-10-08
• News

"Domestic soybean production is achieving a historic breakthrough," said a person from the agricultural product market monitoring and early warning team of the Agricultural and Rural Ministry's Agricultural Research Center. "The main bodies of the domestic soybean industry chain should seize the opportunity of the continuous policy efforts, be well prepared for the arrival of a new era of consumption, fully tap the potential of domestic soybean consumption, and jointly expand the market space for domestic soybeans."

With the continuous increase in China's soybean production, data from the American Soybean Association shows that in the first week of October, the United States shipped 710,000 tons of soybeans to China, a 50% decrease year-on-year.

The United States has always been one of the main exporting countries of international soybeans. However, since this year, the volume of U.S. soybean exports to China has been "continuously declining." As of August 31, the total volume of U.S. soybean exports to China in the 2023-2024 marketing year was 24.307 million tons, compared with 31.381 million tons in the same period last year.

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As the world's largest soybean importer, China is reducing its dependence on imported soybeans by expanding the cultivation of soybeans year by year.

The value of domestic soybeans is highlighted.

"We won't use the best land to grow soybeans, we use slightly worse saline-alkali land to grow soybeans, and the best land is used to grow staple food," Wang Jianguo, a farmer in the main soybean producing area of Suihua, Heilongjiang, told a reporter from China Business News. "Even so, this year's soybeans can be said to be a bumper harvest, with very good yields."

For farmers in the main soybean producing areas, obtaining a bumper harvest of soybeans is not difficult, mainly by increasing the planting area.

Wang Jianguo's planted land exceeds 1,500 acres, mainly soybeans and corn. Growing soybeans on saline-alkali land does not require much management, nor does it need irrigation.

"Although the yield per acre is only 300 jin, the advantage of growing soybeans is that there are national subsidies, the cost is relatively low, and there is no need to worry about management, so I still choose to grow more soybeans," he said.

Wang Jianguo also has an agricultural transport vehicle, and with this advantage, he has also served as a soybean broker in the village, collecting soybeans from the fields and selling them to oil extraction enterprises.In previous years, the price of domestically produced soybeans was significantly higher than that of imported soybeans, with a price difference of about 0.4 yuan per jin (0.5 kg). As a result, imported soybeans occupied a certain market share due to their lower cost. This year, the price of domestically produced soybeans has been falling and is almost equal to the price of imported soybeans including transportation costs, fluctuating around 2 yuan per jin. At the same price point, merchants prefer to choose domestically produced soybeans with higher protein content.

Currently, domestically produced soybeans are mainly used for direct consumption, processing into bean products, and soy protein. As they are non-GMO, they better meet the needs of some specific consumers for "green and natural" and "food safety." Imported soybeans are mainly used in food processing, feed, and can also be used to produce biofuels such as biodiesel.

A person from the company with the highest share of domestic edible oil market once said to a reporter: "Domestically produced soybeans should take the path of deep processing of protein to highlight the advantages of domestically produced soybeans."

A notice from Heilongjiang Agricultural Investment Chenqing National Reserve Warehouse Co., Ltd. on the purchase price of high-protein soybeans obtained by the reporter shows: "Protein content ≥39.5%, unit price 2.02 yuan per jin; Protein content ≥40.5%, unit price 2.06 yuan per jin; Protein content ≥41.5%, unit price 2.10 yuan per jin."

However, in the market, most soybeans with protein content between 37% and 39% are generally priced at less than 2 yuan per jin.

A farmer told the reporter that soybeans with protein content exceeding 39.5% are relatively rare in the market, and imported soybeans cannot meet this standard.

In the process of planting and selling soybeans, Wang Jianguo found two trends: "Either increase the yield per mu (0.0667 hectares) of soybeans, so that farmers can increase their income; or increase the protein content of soybeans, so that soybeans can be sold at a good price."

He believes that in addition to increasing the yield per mu, the way to get higher returns is to plant high-protein soybeans, because high protein is the most significant advantage of domestically produced soybeans.

Soybean Market Game

Both China and the United States adopt strategies to increase soybean production by expanding the planting area.According to data from the National Bureau of Statistics, in 2022, the national soybean sowing area reached 154 million mu, an increase of 27.425 million mu compared to the previous year, a growth of 21.7%.

In 2023, the soybean planting area continued to expand, reaching 157 million mu, a year-on-year increase of 1.95%, the highest level since 1958. Among them, the area of high-oil and high-yield soybeans reached more than 20 million mu, an increase of about 5 million mu compared to the same period last year.

On July 30, 2024, Han Jun, Secretary of the Party Group of the Ministry of Agriculture and Rural Affairs, presided over a meeting of the Party Group, calling for the consolidation of the results of expanding soybean cultivation, planning measures to promote procurement, processing, and sales, and promoting the healthy development of the domestic soybean industry. It is necessary to focus on improving the overall efficiency of the agricultural science and technology innovation system, thoroughly study work measures, and study mechanisms and methods in reality.

According to the observations of the Ministry of Agriculture and Rural Affairs, the soil moisture in the main producing areas of the Northeast is suitable, and soybeans are expected to have a good harvest this year.

Data from the Wuhan National Grain Trading Center shows that domestic soybeans are expected to produce more than 20 million tons for three consecutive years.

At the same time, the United States is also encouraging farmers to expand soybean planting areas. It is expected that the U.S. soybean production is likely to set a new historical high, and the global soybean supply situation remains relaxed.

In May 2024, a senior official of the International Grains Council told reporters that soybeans are a market with a lot of fluctuations. "For soybean-producing countries such as the United States and Brazil, the government has provided farmers with more encouraging measures to expand the planting area, especially the United States' policy to expand the planting area is very obvious, which will affect international soybean prices."

The aforementioned senior official believes that under this situation, the world's soybean production in the 2024-2025 season is relatively optimistic, and it is expected to increase by 6%.

However, a subtle change is that South American countries are beginning to compete with the United States for a share of international soybean trade.

At the same time, Chinese companies are also transferring their supply chains to South American countries. In the first half of this year, China's purchases of Brazilian soybeans increased by about 20%.Xu Jianfei, General Manager of Huahong Investment Co., Ltd., revealed to reporters: "We often import soybeans from South American countries rather than the United States. Currently, our clients are in Brazil, mainly because trade between South American countries and China is more convenient, and their production is continuously increasing."

Statistics show that from January to July 2024, China imported 34.43 million tons of soybeans from Brazil, replacing the United States as the largest soybean supplier.

During the same period, the volume of soybean exports from the United States to China has been shrinking. In the week of October 3, 2024, the United States shipped 710,000 tons of soybeans to China, a 50% decrease compared to the same period last year.

The weekly export sales report released by the American Soybean Association on September 26 showed that in the week of September 19, the total volume of soybean exports from the United States to China was 299,000 tons, lower than the 626,000 tons in the same period last year.

In addition, in the Sino-American soybean game, another trump card for China is the grain market support purchase.

At the beginning of 2024, Jiusan Grain and Oil began to purchase domestically produced non-GMO soybeans, and the purchase price was slightly higher than the market price, at about 2.35 yuan per jin (0.5 kg). Before the market support purchase, the soybean price was 2.30 yuan per jin.

Cheng Guoqiang, Dean of the National Grain Security Strategy Research Institute, said to the reporter that the minimum purchase price policy for grain is the most direct and effective institutional arrangement to protect the enthusiasm of farmers in growing grain, mainly playing a bottoming role in the income security mechanism for grain-growing farmers.

"When market prices fall excessively, and farmers face the risks of 'loss' and 'difficulty in selling' when selling grain, the state will act in time to start the minimum purchase price purchase, providing a bottom guarantee for farmers to sell grain and effectively preventing the impact of market risks on the basic income of farmers," Cheng Guoqiang said.