China to see soybean crunch with fuzzy GMO rules
Date: 16-Aug-01
Country: CHINA
Author: Lee Chyen Yee
China soybean imports were brisk in the past six months, but arrivals were expected to fall sharply because very few contracts had been signed since China announced new rules on genetically modified organisms (GMO) in early June, they said.
Traders have been reluctant to book any new deals since the June announcement because they fear that when the new rules are implemented, their cargoes in shipment may not pass the stricter quarantine provisions. Beijing has not said when it would issue details on the GMO policy.
Traders were also hoping the government would allow a grace period for the rest of the year to allow imports free of the restrictive GMO rules, they said.
But before that happens, few traders are brave enough to book orders.
"Some of the contracts signed before the rules were announced could probably last until September or October," said a trader with an international trading firm in Beijing.
But analysts said imports from October to the end of the year were likely to be only about 600,000 tonnes a month, far below average monthly imports of about a million tonnes so far this year.
"After October, some crushers in China will start to feel the pressure," said Mou Cun, head of the information department at Yixing Futures in the eastern province of Jiangsu.
China was on a soybean buying spree in the first half of 2001, with imports rising 69.2 percent year-on-year to 5.97 million tonnes and nearly three quarters of that came from the United States, customs figures show.
GMO HAUNTS
According to the U.S. Department of Agriculture, 68 percent of U.S. soybeans are now genetically modified.
With traders estimating that China will be short of 12 million tonnes of soybeans this year, domestic crushers will have to start scrambling for more foreign beans, which yield more oil than the domestic crop.
"They need to sign new contracts now in order to ensure a continuous supply," said a Western diplomat in Beijing. "The crushers in south China will be the ones who suffer the most."
"China may think they are creating an advantage for their own soybeans by doing this. But in truth, the crushers in south China are not going to bring in northeast soybeans because it costs too much to transport them by rail," he said.
While China drags its feet on implementing the rules, the market hopes Beijing will eventually offer a grace period so traders could import without being subject to the restrictions.
The new rules require government approval for all production, sale and import of GMO foods. They require safety certificates stating that the products are not harmful to human beings, animals or the environment, and appropriate labels.
Some industry officials said the government was considering that possibility.
Traders have said China may be using the GMO rules as part of its strategy to control imports after it enters the World Trade Organisation, expected to happen in early 2002 at the latest.
But the Western diplomat was sceptical.
"It is a blunt instrument to use. I do not know of many countries that can supply the quantity of soybeans that China needs that are completely GMO free," he said.