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The Chinese Government has recently asked its northeast region to expand its soybean crop. In the wake of trade tensions between China and the United States, soybean has been put under the spotlight and even become an important weapon for constraining each other.
Soybean is originally a species of legume native to East Asia, but today, no East Asian nation is a top producer of soybean in the world. At present, China accounts for 30 percent of global soybean consumption. The country has 117 million mu (7.8 million hectares) of land of soybean crop. However, domestic output only accounts for about 10 percent of Chinese consumption, and as high as 90 percent of soybean consumption is supplied by imports.
Why is soybean so important in our daily lives? Soybean is valued for its high protein content (38-45 percent) as well as it high oil content (approximately 20 percent). To extract oil from seed, soybean is cracked, adjusted for moisture content, rolled into flakes, and solvent-extracted with commercial hexane. The oil is then refined and blended for different applications. Soybean meal or soymeal, the remaining protein after solvent extraction of oil from soybean flakes, is often used in livestock feed and dog food.
In recent years, the Chinese use of soybean for food processing has continued its unrelenting growth, mainly fuelled by rising affluence, urbanization and expanding consumer preference. China now allows imported beans to be used by processors to make vegetable oil and soy meal for animal feed, but none of the imported beans, all of which are genetically modified (GMO), are permitted for use in food products such as tofu and soymilk. For health’s sake, China itself now produces around 13 million tons of beans annually, all of which go to the food sector to make soymilk, tofu and other food products.
As a big and agricultural country, why should China import such large amounts of soybean every year? In my point of view, this is the result of an agricultural reshuffling around the world. In a globalized world, China’s large landmass does not necessarily mean that the country should plant all the crops it needs.
Firstly, rapid urbanization over the past years drastically decreased the amount of available arable land in China. In terms of China’s gigantic population scale, it is impossible to make both food and soybean supplies self-sufficient with such limited land resources. Under these circumstances, our strategy is to make other food supplies (such as rice, wheat and corn) basically self-sufficient and import more soybeans.
Secondly, from an economic perspective, soybean is not a profitable crop to grow in China. At present, the average outputs of corn, rice and wheat per mu in China are 650 kilograms, 600 kilograms and 400 kilograms respectively. However, the output of soybean per mu is less than 200 kilograms. Meanwhile, the oil content of imported soybean is generally 3 to 5 percent more than that of domestic soybean. An increase of 1 percent in oil content for a ton of soybean means about 150 yuan (US$24) of net profit for soybean processors. Moreover, the United States, Brazil and Argentina are now the three biggest soybean producers in the world. These countries have already formed a perfect industrial chain in terms of soybean seed research, seed selection, plantation, harvest, storage and transportation. Their CIF (cost, insurance and freight) price to China from thousands of miles away is even cheaper than our domestic bean.
Thirdly, the global food and oil market is now mainly controlled by four conglomerates in the sector, namely Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus. Of the four big names, three are based in the United States. These companies hold the power to distribute resources and set prices.
The emergence of China, India and other big countries has led to an agricultural reshuffling across the world. With the population explosion in Africa, human consumption of food and oil will further increase in the coming years. In order to meet food and oil demands of more and more people on the earth, farms in North and South America may not lie fallow for years as before. To earn more money from emerging countries, American farmers will also use fertilizers so as to make their farms able to be tilled year after year.
(The author is the editor-in-chief of the Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)