(Yicai Global) March 10 -- China Grain Reserves Group, the state-owned food behemoth that manages the country’s central grain reserves and is also known as Sinograin, is offering a higher price for the surplus from last year’s soybean harvest and waiving requirements for protein content in order to ensure farmers’ income and encourage them to plant more this year.

Sinograin has increased its offer price for soybeans harvested last year by about CNY0.05 (USD0.01) per kilogram, to CNY2.78 (USD0.39) per kg, and is not checking the protein content, the state stockpiler said yesterday. It is launching the scheme in northeastern Heilongjiang province and the Inner Mongolia Autonomous Region.

Raising the price and lifting restrictions on protein content will greatly inspire farmers, given the low protein content of soybeans in the two planting areas last year, industry insiders said.

By buying up last year’s surplus crop and hiking the purchase price, Sinograin is sending a positive signal, they said. This will guarantee farmers’ income and boost confidence ahead of the new planting season.

By waiving protein content requirements, farmers have a greater choice of soybean varieties to choose from, said Meng Dali, who is general manager of Heilongjiang Longlian Farmers Cooperative Association, China’s largest agricultural co-operative which consists of 130,000 farming households and covers 73,333 hectares of farmland.

Farmers used to choose soybean varieties with high protein content due to the stipulations, but these varieties generally do not have high yields, Meng said.

More Subsidies

Farmers are feeling more motivated to plant soybeans as they expect the government to increase soybean planting subsidies, a source at Heilongjiang Longke Seed Industry Group told Yicai Global.

“If the soybean planting subsidy in Heilongjiang is raised from CNY248 (USD35) per mu, which is equivalent to one sixteenth of a hectare, to CNY400 per mu, it will be quite tempting for farmers,” he said.

It costs around CNY1,450 (USD208) to grow one mu of soybeans in northeastern Liaoning province, according to soybean processing firm Jiusan Oils and Grains Industries Group. Based on a yield of 225 kg per mu and a government subsidy of CNY320 per mu, farmers can make a profit of around CNY130 per mu. This is CNY488 less than if they were planting corn.

“The current soybean stockpiling policy, coupled with secure soybean subsidies, yields, and market prices, can ensure a return, so farmers will show their support by planting more soybeans,” Meng said.

“Farmers have high expectations regarding soybean prices,” Meng said. Even though planting soybeans is not as profitable as planting corn, the farmers will still rotate their crops in order to prevent diseases and keep the land fertile, which all help improve crop yields and quality.

Editor: Kim Taylor