Over the past few months, the controversy surrounding China and the heightened tariffs on soybeans has only continued to cause more problems for China. Now, in an attempt to solve this issue and save costs, China are considering placing restrictions on the amount of protein used in animal feeds, specifically for pigs and poultry.

Farmers and members of the agriculture industry are, however, unhappy with this option, declaring that this use could easily lead to less healthy and protein-deficient livestock. If this issue is not rectified soon, then problems could multiply.

 

The soybean dilemma

China is now struggling especially hard with these soybean tariffs, as we are now entering the top-buying season, where China would typically import the majority of their soybeans.

The trade-war between China and the US has been brimming over since April, and the impacts of the war are beginning to cause major issues for China and the US. The US implemented these tariffs to combat what is said to be are China"s unfair trade practices. Beijing retaliated to this, by also raising import tariffs on a multitude of US exports, such as cotton and dairy, however, this has only made the issue worsen.

President Trump, of the US, has stated that the pressure these tariffs will put on China will eventually force China to address trade complaints from the US for various problems, such as intellectual property theft.This isn"t the first raise of tariffs that the US have gotten involved in, as Trump also raised tariff costs for cheese exported to Mexico.

Chinese soymeal prices have escalated by a whopping 20 percent since early June, to an all-time high of 3,539 yuan (US $511) per ton. It is not surprising that reductions to imports have had to be made, as in 2017 alone China imported a massive 95 million tonnes of soybeans from abroad, 70 million tonnes of which was made into soybean feeds for animals, notes Li Defa, of the Chinese Academy of Engineering and China Feed Industry Association.

"Soybean substitutes will be the automatic choice, given the price hikes of soybeans", notes Hu Bingchuan, an agriculture researcher with the Chinese Academy of Social Sciences. However, if these are used extensively, then prices for substitutes could also soar.

"Soybean usage can be reduced as buyers opt for more cost-effective substitutes. So far, the global crop market has remained a buyer"s market. Over the past several decades, prices of agricultural products have stayed stable amid long-term adequate supply", he continued.

Whilst Asia has turned somewhat to getting their soybean imports from other countries, namely Brazil, Argentina and India, this has not provena wholly effective substitute.

 

Impacts on the US

Speaking at the US Wheats Association"s Crop Quality Seminar in London, on November 12th, Regional Vice-President of the US Wheat Associates (UWS), Mr Ian Flagg, described in detail the issues this trade war is causing for America.

"One of the major implications we have [due to the trade war], is that the US are designed to produce a lot, store a lot, and sell when the market is in our favour. But, right now, we have so many soybeans, with a very low cash price, the farmer can either sell at a loss, or store it. And when there is no end in sight, how long can you store it? It is very difficult to make decisions", says Mr Flagg.

Soybean exports from the US are now having to be drastically diversified, but this in"t solving the issue.

Ian Flagg suspects that much of the US soybean area will be replaced with wheat and corn in the upcoming months of 2019, in an attempt to rectify this issue.

"It is causing a big issue with logistics. China counts for more than 50 percent of soybean export, we have to increase sales to other destinations but it"s not enough to replace China", he continues. "If the trade dispute continues, and I see no reason why it would not at this point, some US soybean area would be replaced with corn and wheat in 2019."

 

The considered solution

A possible solution to this issue, China"s Feed Industry Association have considered, is limiting the quantity of crude protein and phosphorus in feeds for pigs and white-feathered broilers at varying growth stages. According to a document published on the Chinese Feed Industry Association"s website, this method would "reduce consumption of raw materials for feed and reduce environmental pollution from animal farming."

Prior to the development of this issue, guidelines have only ever stated the minimum protein requirements within feed, a maximum level has remained unspecified. This new solution is estimated to reduce China"s soybean imports by 10 million tonnes, a significant saving for the country in this time of crisis.

Under the proposed guidelines, farmers were advised to feed their pigs, what weighed over 100kg, feeds containing between 10-12.5 percent protein. Experts suggest that even these numbers are too low, with most farmers feeding their swine feeds which are 13-14 percent protein. Li Defa notes, however, that supplemental artificial amino acids could offer the same energy to farm animals, in place of the missing protein.

"If the new guidelines get implemented, the amount of soymeal in feed will drop, as now there would be a cap for protein levels", says a manager at one of China"s major feed producers, who wishes to remain anonymous.

Some individuals feel like the protein reduction will not be an issue for farmers. Chen Gang, Vice President of the China National Vegetable Oil Association, says that soybean meal is only one of many sources of protein in animal feed, as it can be obtained from canola, cottonseed meal, peanut and sunflower seed.

 

Effects of protein reduction

China"s Feed Industry Association have sought public opinion on this controversial issue, which will need government approval before being put into action. In response to this suggestion, Beijing imposed 25 percent tariffs on $34 billion worth of US products, including soybeans.

If these changes take place, then swine fodder will typically cost only 30 yuan (US $4.30) per tonne, a big reduction to its current costs under strict tariffs.

The official Feed Industry Association document notes that China "has been relying on imports for feed proteins for too long, which has become a bottleneck that hinders the development of our feed industry and animal farming."

Experts believe that the changes will be implemented soon, and that most farmers will still remain eager to respect these changes, to avoid further issues within the industry. Whatever the future holds, it looks uncertain.

 

You might also like

Latest Videos

Leave A Comment

Don’t worry ! Your email address will not be published. Required fields are marked (*).

GET NEWSLETTER

ADVERTISING

ADVERTISING