China's soybean industry on the rise

China's soybean acreage will increase by 400,000 hectares this year as a result of a government-led initiative to increase the supply of domestic soybeans.

Yu Xinrong, vice-minister of agriculture, told a news conference Thursday that a survey of farmers' planting intentions indicated that the corn acreage in China will decrease by close to 1.33 million hectares. This is noted as the first decreasing year of corn acreage in 13 years.

He said the increase in soybeans acreage will mainly take place in the northeastern provinces where farmers are encouraged to switch from the cultivation of corn to soybeans.

According to a guideline issued by the ministry on the adjustment of the crop structure in the next five years, the country will seek to stabilize the production of staple foods and grains. It will also try to stabilize the level of self-sufficiency in cotton, edible oil, and sugar during the period.

In March, Reuters reported that China has accumulated an estimated 250 million metric tons of corn in its reserves, which is more than it consumes in a year.

China's grain production has increase for 12 consecutive years mainly thanks to an increase in the corn acreage.

China introduced floor prices for farm products in 2006 to protect farmers from price volatility. The government buys products including wheat, corn and cotton for State reserves when market prices fall below floor prices.

The central government announced an end to the floor price for corn in late March, due to large inventory. The government will instead provide subsidies for farmer in the main cultivation areas to protect their interests.

Yu said in the conference that the abolishing of the floor price scheme means corn farmer will be encouraged to sell their products based on the fluctuation of prices of the market, and different market entities will also be able to purchase grains from farmers freely, as opposed to the fact that farmers sell their corn solely to the State reserves in the past.

Chen Xiwen, deputy director of the Central Rural Work Leading Group, said in an interview with Caixin Magazine that the authority could also roll out similar measure to abolish the floor price for wheat and rice in the near future. The Central Rural Work Leading Group is China's top rural affairs decision-making agency.