Singapore’s “Straits Times” September 20 article, original title: “Stay in” China’s strategy in the soybean trade war At an agricultural export conference in Kansas City, An executive from China’s largest soybean squeeze company is listening to an expert explaining why China will still rely on us soybeans to feed its vast herd of pigs. When it came time for the Chinese executive to speak, he told international soybean traders here that what they had just heard was wrong. He then outlined six strategies China would adopt that would allow it to slash soybean use and use alternative sources of supply almost without any economic pain.
“Many foreign businessmen and politicians have underestimated the determination of the Chinese people to support the government in this trade war,” he said. The comments are in line with growing confidence within the Chinese soybean industry and government that the world’s largest pork producer is able to shake off its dependence on US soybean exports — a prospect that will not only hit US farmers hard but will completely remap the course of global soybean trade.
A big reduction in soybean meal content in pig feed, one of the six strategies widely used, could wipe out Chinese demand for US soybeans, according to calculations by Reuters. Reducing the soybean content in pig feed from the usual 20 per cent to 12 per cent would be equivalent to a 27m tonnes reduction in annual demand, or about 82 per cent of China’s total imports of US soybeans last year. Experts say this alone will enable China’s pig farms to cut nearly half their soybean use without damaging pig growth. Chinese and US industry experts say the soy content in the feed provided by Chinese pig farms has long exceeded the normal amount required for pigs to stay strong.
Large Chinese farmers have recently adopted new standards, but the country’s pork industry remains dominated by small pig farms and lacks a strong incentive to invest money and time to overhaul the formula. Now the trade war is accelerating China’s push to slash the proportion of soybean meal in feed. Agricultural experts say trade tensions between China and the United States will surely promote the application of such expertise on a wider scale.
The statements by Chinese businessmen at the meeting highlighted a philosophy that is now widely accepted by the Chinese government and state-owned agricultural companies and marked a shift since the start of the US-China trade war. As recently as April, Chinese feed producers and some agricultural experts were worried that domestic industries would suffer more than their biggest trading partners.
As a result of the trade war, Nongmeizi of South Dakota, USA, plans to reduce soybean cultivation next spring. “This makes me very nervous” because China has always been the main buyer of American soybeans. Zhanmusi·yadangsi, the former president of the American Soybean Association, who opened the Chinese market for American soybeans, now fears that this lucrative economic and trade relationship may collapse. “The partnership that has been cultivated for so long can be lost overnight. When you start to become an unreliable supplier, the Chinese will look elsewhere. “
