Rapeseed sector getting crushed by imports

Updated 2017-04-25 10:01:01 Global Times

Domestic producers, refiners low in productivity, technology

The domestic rapeseed farming and processing industries have been pushed to the edge by imports, according to media reports, and experts said farmers' welfare, especially their pensions, must be enhanced to improve productivity.

According to a report published by the derivatives research center under Orient Futures on April 19, the domestic planting area of rapeseeds has dwindled and cut output. The report said that domestic output is expected to fall below 4 million tons in China this year, down from 4.6 million tons last year.

Also, many edible oil producers in China have abandoned the domestic crop. For example, in Central China's Hubei Province, where there used to be about 400 rapeseed processing companies, only five are still in operation, industry website ziguan123.com reported on Monday.

The planting area in Hubei fell about 40 percent year-on-year in 2016, ziguan123.com said.

Zhu Yi, an associate professor at the China Agricultural University, told the Global Times on Monday that the most key reason for smaller crops and declining processing is rising imports.

Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, said that China imports most of its rapeseeds from Canada, with a little also coming from countries like Russia and Australia.

According to the Canola Council of Canada, China imported about 3.5 million tons of rapeseed from Canada in the past year, compared with 3.9 million tons in 2015.

China boosted purchases of Canadian rapeseeds about tenfold in the past decade, according to a Bloomberg report in August 2016.

Ma told the Global Times that the import price averages about 0 per ton, almost half the domestic cost.

"What's worse is that China's rapeseed consumption areas are mostly those with relatively low economic development such as Southwest China's Yunnan and Guizhou provinces, where people usually put price first when choosing a product," Zhu noted.

According to Ma, rapeseed planting in countries like Australia and Canada has become highly mechanized.

"Professional farmers and production models raise productivity and cut costs," Ma said.

"In China, however, where farmers are still struggling to earn a basic income, they cannot scale up to professional mass production, and that's hampered the competitiveness of domestic crops including rapeseed," he said.

He said that the government must ensure that farmers are properly covered by the pension system.

"If farmers have secure incomes, they can reduce reliance on their land and transfer the management rights to those who can undertake more advanced levels of farming," Ma said.

Zhu said that the government appears to be less concerned about rapeseed than crops like soybeans. "I think the government should raise subsidies for rapeseed to increase the crop's competitiveness."

The government announced tighter certification standards on imported rapeseed starting from September 1, 2016, but it hasn't yet implemented those standards.

"I don't think impeding imports is a good solution in the long run, because if you block imports of certain products, it might also cause other countries to limit your exports. We should enhance the competitiveness and productivity of domestic rapeseed production," Ma stressed.

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