Economy

Experts: Soybean firms must focus on edible sector

By Lan Lan and Tian Xuefei (China Daily)
Updated: 2010-07-31 08:50

BEIJING - Domestic soybean makers should focus on developing their own transgenic varieties and marketing the commodity to tofu, vegetarian products and noodle makers, as competition from foreign players is crimping profits, industry officials said on Friday.

Soybean output in the nation has been increasing steadily, but still lags far behind demand, necessitating the need for imports. China's annual soybean output is likely to exceed the 14 million tons of last year, said Wang Xiaohu, senior director of science and technology bureau under the Chinese Academy of Agricultural Sciences.

But China's soybean imports rose to 42.55 million tons last year, an increase of 13.67 percent over 2008. Imported soybeans are expected to be around 50 million tons in 2010, analysts said.

From 1996, China has become a net soybean importer rather than a major exporter and thus lost much of its say in the commodity trade. Countries like the US and Argentina control the soybean trade, while prices follow the rates on the Chicago Board of Trade.

Soybean is one of the commodities that sees a lot of price fluctuations, Wang said.

"But after groping in the dark for several years, finally we are seeing a ray of hope on the future direction that domestic growers should adopt," said Lu Lingang, deputy secretary-general of the China Soybean Industry Association.

"Chinese soybeans are green and have rich protein content and come with lots of nutritional values. Hence they are the most suited for the edible soybean food sector," said Wang.

Big players like Archer Daniels, Midland, Bunge, Cargill and Louis Dreyfus dominate the processing sector. Together they account for over 70 percent of the fat production plants and nearly 80 percent of the soybean processing capacity in China.

Currently only 50 percent of the output is used by the edible food sector, while the rest finds its way to the crushing sector, said Zhang Xingchao, an analyst with Jingyi Futures Co. "There is no logic in positioning both varieties together for crushing as the yield from the domestic soybeans is less than the imported one."

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Transgenic soybeans have in recent times been making significant inroads in markets like Japan, South Korea and Europe as they are perceived to be safer. Though transgenic crops are still a controversial issue, domestic companies should try and build up their knowledge in it if they have serious ambitions of becoming global players," he said.

"Quality and consistency of domestic soybeans and soybeans products should also be improved to cater to overseas customers' requirements," he added.

The government should come out with standards for edible soybeans. This will help domestic companies make inroads in global markets, said Zhang.