Is growing soybeans really worth it? Experts call for increased subsidies
There are three common staple grains today: rice, wheat and corn. In ancient times, however, China's staple crops were: shu, ji, shu, mai and dao, namely glutinous millet, broomcorn millet, soybeans, wheat and rice. Among them, soybeans were highly favored. Because of their good taste, high nutritional value and rich protein content, they were even called "meat from the field." As early as the Western Han dynasty, our ancestors had mastered the methods of grinding tofu and making soy milk. More importantly, in the era of the smallholder economy, growing soybeans fitted perfectly with the characteristics of self-sufficiency and a circular economy: the beans could be made into fine dishes, while the soybean stalks could be used as fuel, and after burning they turned into plant ash that could return to the soil as fertilizer. But now, although soybeans are a traditional advantage crop, farmers are not very willing to grow them.
Soybean planting area keeps shrinking
China is the country of origin for soybeans, with a cultivation history of more than 5,000 years. Yet the United States, which began growing soybeans in 1804, has become the largest producer and exporter. Last year its output exceeded 90 million tonnes, accounting for nearly one third of world production. By contrast, China's annual soybean output has fallen from 18.05 million tonnes in 2004 to 11.8 million tonnes last year, yet with persistently high soybean oil consumption, it has become the world's largest soybean importer.
Over the past 20 years, crops such as rice, wheat and corn have increased their yields year after year, while the soybean industry has fallen into stagnation or even shrinkage. As of 2014, the soybean sown area continued to hit a new low, at only 660 hectares.
Why are farmers increasingly unwilling to grow soybeans? Professor Zhu Junfeng of the College of Economics and Management at China Agricultural University believes: first, the per-unit yield of domestic soybean varieties is generally not high, and this is the most fatal factor for farmers. The per-unit yield of American soybeans is about 230 kg per mu, and China's is about one third lower. Second, the soybeans we import are mainly high-oil varieties, with an oil extraction rate reaching 18-20%; while Chinese soybeans are high-protein, with an oil extraction rate of only about 15%.
Are Chinese soybeans really lacking in market competitiveness? Looking at both per-mu returns and market efficiency, domestically produced soybeans appear uncompetitive, and farmers' returns are not high either. This is precisely the reason why the soybean planting area has continued to shrink over the past 20 years.
Per-mu returns: the current market price of domestically produced soybeans is 3.7 yuan per kg. Calculating on the basis of a per-unit yield of 160 kg per mu, the gross income per mu is less than 600 yuan, and after deducting costs there is likely little left. The three northeastern provinces and the Inner Mongolia Autonomous Region, as pilot areas for the soybean target price reform, implement the separation of price and subsidy. Last year the target price was set at 4,800 yuan per tonne, which works out to farmers earning close to 800 yuan per mu. If the same plot were planted with corn, even calculating according to the market price after the abolition of temporary storage, corn at about 1.5 yuan per kg with a yield of 700 kg per mu would still give a gross return of more than 1,000 yuan per mu, still clearly superior to soybeans.
Market efficiency: domestically produced soybeans yield little oil, while imported soybeans from the United States and Brazil are mainly high-oil genetically modified varieties, used chiefly for oil pressing. Their higher oil yield and relatively low price quickly captured the Chinese market. A 5-liter bottle of genetically modified soybean oil is about 10-40 yuan cheaper than traditional soybean oil. It is especially favored by ordinary Chinese households, particularly small restaurants and snack stalls.
However, this year the Ministry of Agriculture explicitly proposed the structural adjustment approach of "reducing corn and increasing soybeans," which is also a measure by which the state implements supply-side reform in the agricultural sector.
With the marketization of corn prices and changes in consumer attitudes, domestically produced non-GMO soybeans have gradually become popular. I hope everyone can see the reality clearly and seize the opportunity.
Why should the country use soybeans to replace corn?
Corn is already China's staple crop with the highest total output, and in farmers' eyes it is an "ironclad crop," but "excess capacity" has now appeared. In 2014, northeast China began piloting "grain-soybean rotation," encouraging some local corn growers to plant soybeans and giving appropriate subsidies.
But some people may still have questions: why does the state encourage planting soybeans in areas where corn is being reduced? 1. Soybeans' external dependence reaches 80%; 2. In places where soybeans can clearly be grown, we are growing things that are not needed. From the policy perspective, although the state attaches importance to grain production, it does not advocate that farmers "plant grain wherever there is land." On one hand, a contradiction emerges: from the perspective of state industrial support, soybeans are a traditional industry, and the competitiveness of domestically produced soybeans must be protected; while from the perspective of increasing farmers' income, soybean prices are not high and per-mu yields are relatively low, so if there are other better choices, no one is willing to grow soybeans. On the other hand, this is actually not contradictory: if the state wants to support the soybean industry and let domestically produced high-quality, high-protein soybeans secure a place in market share, it must let farmers obtain real benefits. In recent years, the state has also been working hard, for example by relying on science and technology to raise soybean per-unit yields.
According to Professor Zhu Junfeng, at present the soybean experimental field of Northeast Agricultural University has already achieved a yield of more than 400 jin per mu, and the gap with American soybean yields is narrowing.
In China, besides northeast China being suitable for growing soybeans, Shandong is also very suitable, and its protein content is 3% higher than that of northeast soybeans. So as long as high-quality varieties are used, relatively good returns can be achieved.
In addition, "grain-soybean rotation" cannot look only at the benefits of soybeans. On one hand it reduces the use of chemical fertilizers, and on the other hand the nitrogen-fixing and soil-enriching effect of soybeans comes into play, which is also good for improving the fertility of black soil. Through "grain-soybean rotation," the goal of "storing grain in the land" is achieved.
A pack of spicy strips reveals the upgrade direction for domestically produced soybeans
During this year's G20 summit in Hangzhou, a photo of Russian President Putin holding a pack of "made in China" spicy strips, raising his thumb with a smile on his face, went viral. In fact, spicy strips have long become an export product sold as far as South Korea, Japan and Russia, and in a few more years they may well sweep the globe. In this sense, the soybean industry, as the raw material for spicy strips, has ushered in its spring.
The fundamental reason for farmers' complaints that soybeans do not make money is still that the integration of the primary, secondary and tertiary industries has not been done well.
What specific deep-processing pathways are there? They include tofu, soy milk, doubanjiang, soybean products, soybean protein powder and so on. As long as we can find more "buyers" and "outlets" for soybeans and process them into more high-quality, delicious processed foods, soybeans will not have to worry about sales, and prices will rise somewhat.
Future policy subsidies may be expected
Judging from the current situation, on the basis of three years of experience with the soybean target price pilot in the three northeastern provinces plus Inner Mongolia, the state does not rule out promoting it nationwide in the future and further raising the subsidy standard.
Professor Zhu Junfeng of the College of Economics and Management at China Agricultural University believes that farmers think the soybean price is low and not worthwhile, so even if the state shouts its slogans loudly, ordinary people still will not plant them. Therefore I think the target price can be set a bit higher to give ordinary people more subsidies. But under this year's dual conditions of market pricing and the separation of price and subsidy, plus corn being affected by disasters, the proportion of soybean planting should increase somewhat.