China's corn revolution promises great leap forward in yields

Sun Nov 11, 2012 4:20pm EST
 

By Niu Shuping and Naveen Thukral

BEIJING/SINGAPORE (Reuters) - China's farmers are using higher-yielding seeds and embracing modern technology in a shift that makes it less likely China will be a long-term major corn importer.

Record Chinese imports of 5.5 million tonnes in 2011-12 helped drive up benchmark Chicago corn prices to $8 a bushel earlier this year - more than double the average of the past decade - and raised the prospect of the world's second-biggest consumer becoming dependent on big overseas purchases.

But the government, which has always pushed for self-sufficiency in what is also the world's No.2 corn producing nation, has approved the use of more hybrid seed varieties and given more money to state farming institutions.

With new hybrid seeds, some farms in China's northeastern grain belt are already matching corn yields in the U.S. Midwest, around double the average Chinese production of 5 tonnes per hectare.

China's corn crop is forecast at a record 200 million tonnes this year, according to the U.S. Department of Agriculture, and imports are expected to tumble.

"My view is that within the next 7-10 years the gap in terms of demand and supply will probably be reduced to close to zero if the technology can reach the farmer," said Diego Diz, China corn marketing lead for Monsanto.

A sizeable reduction in China's imports could leave big exporters such as the United States and Argentina with no ready alternative outlets, analysts said, as there's little or no growth in demand elsewhere.

"China might not emerge as a major corn importer given efforts to boost yields," said Abah Ofon, a commodities analyst at Standard Chartered. "But they'll remain opportunistic buyers, taking U.S. corn as and when the price is low."   Continued...