By Liu Hui
One of reasons for the lack of competiveness for domestic soybean is without price advantage and price domination in the market. Market is the key for price domination so it needs to construct an active soybean trade market. The reporter finds that Heilongjiang Province, as a major soybean production area, fails to have a soybean wholesale market with international competiveness. However, it is trying to construct one and such a trial is helpful for Heilongjiang to gradually obtain soybean price domination.
In 2003, Hailun City set up the soybean wholesale market, which was a relatively large professional soybean wholesale market in the country approved by National Development and Reform Commission.
As a state high-quality, high-fat and high-protein soybean production base, Hailun is famous both at home and abroad for its soybean. Earlier, Hailun attracted a lot of domestic and foreign dealers and its Soybean Wholesale Market became the important distribution center for soybean trade in Heilongjiang Province. The market was much prosperous and flourishing.
The situation has now changed. Generally, it is a gold time for soybean business from May to August every year. However, when the reporter came to Hailun Soybean Wholesale Market, the place with an area of 41,000 m2 seems empty. A dozen of workers in a corner are packaging a batch of soybean which will be transported to Hubei.
"The market is at low ebb with inactive soybean trade. It hardly earns money to make soybean business so few dealers come to trade." Yu Guangjun, office director in Hailun Soybean Wholesale Market seemed depressed while talking of the current soybean market. He told the reporter that he purchased 12,000 tons of soybeans last year which was planned to be sold in places like Zhejiang, Chongqing and Zhengzhou. However, due to a slight price difference between the major production and sales area, he hardly earned money, which made him a little discouraged. After the Spring Festival this year, he never purchased soybean.
Yu Chunlong, a dealer, makes soybean business in Hailun for a lot of years. He owned a warehouse in Haibei Town and his soybean was sold in Guangzhou, Shanghai, Jiangsu and Henan with fixed customers. However, he does not sell soybean this year and is waiting for upturn of the market situation.
"Currently, soybean price is the lowest among all agricultural products and may rebound. However, the soybean meets a good harvest in countries like the US and Brazil, which results in the continued falling of the soybean price in the international price, so there is little power for domestic soybean to rise its price," said by Yu Chunlong.
The reporter found that one of important reasons for the soybean market downturn in Hailun is that the market keeps in disorder for a long time. Due to low purchase threshold of soybean, when the situation was flourishing, there were 300 to 400 dealers in different sizes in Hailun and 30 to 40 of them were in large scale. Dealers enjoyed their own sales channels, and competed with each other and depressed the price that they could not form a union. It is also an important reason for Hailun soybean market to obtain its own right to speak.
Soybean Association of Hailun City was established in 2009 with the aim of stabilizing the soybean market price. Yu Chunlong told the reporter that most dealers were unwilling to join the Association because the Association would not bring them any substantial benefit temporarily.
Serious impact from import
"Market downturn for domestic soybean is directly related with the domination of imported soybean in the domestic market," said by Yu Chunlong.
Soybean industry in China is strongly linked with and greatly influenced by the international market. Currently, the average soybean consumption keeps 70 million tons on average every year in China, with 55 million tons of the soybean being imported. The imported soybean is mainly used in oil processing and the price of the imported soybean basically dominates the soybean price in China. As 60 percent soybean is used for oil processing in Heilongjiang, the soybean price is basically dominated by the imported soybean.
With pour-in of the imported soybean and the continued expansion of the soybean processing capacity in the coastal areas, the imported soybean enjoys stronger and stronger influence on the market. Someone describes it vividly that "the America plants soybean, transnational enterprises make soybean business and China purchases soybean".
The current market situation is that while the domestic soybean is hard to be sold, the amount of imported soybean is increasing greatly. "Such a situation is due to the high dependence on the imported soybean. This high foreign dependence results in the loss of right to speak for the domestic soybean," said by Wang Xiaoyu, deputy secretary general of Heilongjiang Soybean Association.
Currently, there is a great demand for soybean in China and it should make full use of the international resource and fill the market gap through importing a certain amount of soybean. Liu Zhongtang, agronomist of Heilongjiang Academy of Agricultural Sciences gave an advice that the domestic soybean industry needed policy support urgently and two price systems needed to be set up. The first is the dynamic price system in which the benefit of planting soybean is not less than that of planting corn for farmers; the second is to set up a price system in which the soybean is purchased at a protection price and sold at a constant price. This price system will give a support to the whole soybean industrial chain and promote the harmonious development of the soybean industry.