China's agriculture ministry recently issued a three-year action plan to reduce soymeal use in animal feed as it tries to reduce its heavy reliance on soybean imports.
The new plan proposes soymeal ratios in animal feed should be reduced to less than 13% by 2025, from 14.5% in 2022.
Authorities in the world's top soybean importer already issued guidelines in 2021 to its animal feed industry recommending lower soymeal ratios.
The new plan would "guide the feed industry to reduce the amount of soybean meal, promote the saving and consumption reduction of feed grains, and contribute to ensuring the stable and safe supply of grain and important agricultural products", said the document, published by the Ministry of Agriculture and Rural Affairs.
Some say the plan could have a big impact. China could reduce soymeal consumption by at least 3 million tons a year, said Liu Bing, an analyst at Donghai Futures, equivalent to 4 million tons of soybeans. Imports could drop to 82 million tons by 2025, he said, with feed makers using more rapeseed, sunflower seed and synthetic protein as soymeal substitutes.
Lower soybean imports would, however, result in less soy oil production, requiring more palm oil imports as compensation, Liu added.
Jim Sutter, Chief Executive at the U.S. Soybean Export Council, said he was not worried about a significant drop in Chinese imports. "I think we'll see strong demand continuing. There's a limit as to how much soy can be taken out of rations," Sutter said during a visit to Beijing.
MORE RESILIENT SUPPLY CHAIN
The new target of under 13% by 2025 is slightly lower than an earlier target of 13.5%, but the direction is not new, said Lief Chiang, senior analyst at Rabobank. "The whole point is to build a more resilient supply chain amid geopolitical risks.”
China buys more than 60% of the world's traded soybeans, well over 90 million tons a year, largely from the United States and Brazil.
"On the one side, they would like to lower the absolute volume of soybean imports but meanwhile, as a contingency, they want to diversify, and lower their dependency more, particularly on the United States," added Chiang.
The push for lower soymeal use has so far been successful, helped in large part by soaring prices of the protein-rich ingredient in recent years, which has pushed feed makers to scale back its use.
Rabobank estimated in January that the ratio could drop to 12% by 2030, lowering China's soybean imports to 84 million tons. This year, imports will be about 95 million tons, according to Chiang.
China will also approve up to two microbial proteins for feed by 2025 and will carry out pilot projects to use leftover food and animal carcasses for feed in more than 20 large or medium-sized cities, according to the Chinese action plan. It also targets increasing the output of high-quality forage to 98 million tons by 2025, allowing forage to take a greater share of dairy and beef cattle feed.
EDITOR’S TAKE:
As mentioned in previous issues of the AIR report, China has a problem, a big problem – they cannot produce enough food domestically to feed their people. Even though their population will decline in coming years as a result of their one child policy, food availability will still be an issue. Today, the United Nations estimates that China has over 130 million people who are malnourished. And let’s face it, if there is a conflict of some significance and their supply from the U.S. is cut off or reduced significantly, China will not be able to fill the void from other trade partners. That’s why they are instituting policies of this nature, so they can survive on less if necessary. We will all be watching what develops over the coming months and years – hoping for the best.
