March 22, 2013 (BEIJING, CHINA) – As 27 Minnesota soybean farmers and spouses (including myself) continue our 10-day trade mission trek across eastern China, we spent valuable time Thursday with Paul Burke, North Asia Regional Director of USSEC (United States Soybean Export Council) as part of the MSR&PC International Marketing 'See For Yourself' program.
Burke, through his work with USSEC, represents almost 500,000 U.S. soybean farmers here in north Asia (China, Japan, Taiwan and Korea). Those four markets represent 70% of U.S. soybean exports.
He gave an overview of soybean consumption trends in China – from crushing to food use to domestic production. Crush has grown an amazing amount in China since 2000, where more of it is used for meal than oil, since China is the largest importer of soy oil in the world. For example, this year China is taking 25% of all U.S. soy oil.
Soy meal clearly drives the crush here. Thanks to the hard work of many people backed by a good soybean checkoff investment, it opened doors for greater feed inclusion by soybeans and corn. Soy meal inclusion is now 14% of the feed ration.
China crush capacity is 120 million metric tons. It only imports 63 mmt, so 50% of its crush capacity is underutilized. A lot of new crush investment has occurred in China, and it's now the most modern crushing industry in the world. A 1,000-ton/day plant is too small and uncompetitive. They believe you must have a 3,000-ton/day plant just to be competitive. COFCO, one of largest state-owned enterprises, can crush 12,000 tons/day in three plants in one place along a major river. By comparison, the big plants in the U.S. crush 1,000-1,200 tons/day.
There are approximately 20 soy crush groups in China, a very diversified group. The biggest growth sector is the state-owned enterprises – Yihai-Kerry, COFCO, Jiusan and Chinatex, to name a few. Reason for such growth is that the Chinese government was concerned back in the mid-2000s about large multinational control of the crushing industry, so the government denied their requests to expand.