China, the world's largest soybean consumer, will start stockpiling soybeans from this year's harvest in order to boost farmers' income and increase State reserves, the country's grain administrator said Wednesday.
The government will pay 4,600 yuan ($731) per ton to soybean farmers in North China's Inner Mongolia Autonomous Region and Northeast China's Heilongjiang, Jilin and Liaoning provinces, the State Administration of Grain (SAG) said in a statement on its website seen Wednesday.
The price is 15 percent higher than the 4,000 yuan per ton the SAG offered in 2011.
The stockpiling will end on April 30, 2013, and China Grain Reserves Corp, or Sinograin, is responsible for the stockpiling, the statement said.
"The wholesale price for soybeans is around 4,500 yuan per ton on the market, so the 4,600 yuan per ton offered by the State this year is reasonable," Zhao Gang, a soybean farmer in Heilongjiang's Nancha county, told the Global Times Wednesday.
"But my major concern is not about the price but the limited number of State grain depots that stockpile farmers' soybeans," Zhao said.
Zhao is located in a remote area in the province and has to take a train to get to a State grain depot in a nearby city to hand over his soybeans.
"The fee I need to pay for transporting soybeans to the State grain depots squeezes the profit margin, so I sell the majority of the soybeans I grow on the market," Zhao said.
Soybeans can be used to produce edible oil and grease and as an ingredient of animal feed. Soybean prices also affect inflation.
China has started to stockpile soybeans every year since 2008 in order to boost State inventories and stabilize market prices.
"The offering of a price that is higher than that of last year is intended to stimulate the enthusiasm of farmers and stabilize domestic production of soybeans as China has seen continuous decline in the growing area and output of soybeans in recent years," Ma Wenfeng, an analyst at Beijing Orient Agribusiness Consultants, told the Global Times Wednesday.
China's soybean output will drop by 11.6 percent from 2011 to 12.8 million tons in 2012, as the soybean growing area in the country has shrunk by 14.43 percent from last year to 6.75 million hectares this year, according to a report by the China National Grain and Oils Information Center (CNGOIC) last month.
With the decline in output, the country increasingly relies on soybean imports.
The imports are expected to reach 57.5 million tons by the end of the year, up 9.3 percent from 2011, according to CNGOIC's report.
"The reliance on imports means China has lost pricing power over soybeans in the international market. China should continue to encourage soybean producers and at the same time develop alternatives such as growing corn and palm trees to ensure the grease supply," said Ma at Beijing Orient Agribusiness Consultants.
The SAG also announced Wednesday it would stockpile corn and pay farmers between 2,100 and 2,140 yuan per ton.