Soy Likely to Remain China's Biggest Ag Import

Amid growing Ag risk, China strives to boost domestic wheat, rice, corn production

China appears to have singled out three major crops – wheat, rice and corn – that it hopes to grow more of domestically to achieve its food security goal of 90% production, a Chinese business reporter told our group of American farmers touring Beijing this week.

"It appears the government is sacrificing soybean production for the sake of growing more corn," the reporter, who asked not to be identified, told U.S. farmers, touring China this week with Farm Futures and Trump Tours.

Why? Corn, wheat and rice are staples, and corn demand is growing. "Soy is harder to grow and not as profitable if you are not using GM seed," he explains. "Our consumers are worried about GM crops. Here you can import GM crops but you cannot grow them."

China imports 80% of its soybean needs, with half of that traditionally coming from the United States. However, North America's drought and resulting higher prices forced Chinese officials to begin diversifying sources for soy including increased sales from South America and countries like Ukraine.

China's agriculture department this week said its farm sector will face growing risk in the next decade, even as officials vowed to "breed a new type of agricultural player" and develop large-scale operations.

According to a Reuters report, "The next five to 10 years will be a key period for the development of China's agriculture sector - with production factors like land, water and labor getting tighter," said Minister of Agriculture Han Changfu at a session of the ruling Communist Party congress in Beijing.

China expects a bumper crop this year as officials report a ninth consecutive year of rising grain production. However, agriculture is facing greater risks and is entering a period of high prices and high investment as a more prosperous middle class demands more from its food sector.

"More people move to the city, and so China is consuming more and more pork, creating stronger demand for corn and soybeans," our reporter colleague told us. "We have to make better use of land and water."

GM controversy

Consumers here worry about genetically modified crops. "The Chinese government tried to push it, without result," our source told us. "The Chinese people were actually panicked when the government tried to push GM rice."

Transgenic rice with markedly higher levels of vitamin A was developed years ago, but has, so far, not been commercially adopted anywhere.

Watch this blog for more reports on our trip to China.

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