MARKET DEVELOPMENT
31-08-2001
Unsure of GM rules, Chinese oil makers may replace
SHENZHEN, 30/8/01 (AsiaPort) - Chinese vegetable oil processors areconsidering replacing soybeans with canola as a source of oil while theywait for the government to release rules governing genetically modifiedorganisms (GMO)."We might shift part of our raw materials to canola if the governmentintroduces severe restrictions on GMO imports," an official with aShenzhen-based processor said.American Soybean Association President Bart Ruth said the new rules hadlimited the raw materials available to China's vegetable oil processors.He warned that severe restrictions on GMO imports could force many Chineseprocessors to close.The president said although China's Chief Trade Negotiator Long Yongtupromised a grace period for trade, uncertainties made Chinese tradersreluctant to buy soybeans on the international market.Long said last Wednesday in Beijing that China would allow a transitionperiod before the GMO rules were introduced.The gradual implementation of the new rules should not be a hindrance totrade, Long said."We have to take some time to lay out the detailed implementation rules.Until then, we are going to make sure this law will not become a hurdle totrade," said Long, who is also vice-minister of the Ministry of ForeignTrade and Economic Co-operation.China announced the GMO rules on June 6, but fell short of issuing detailsof their implementation. This has frustrated many traders at home andabroad, especially those involved in soybeans, which China activelyimports.Chinese analysts said with the grace period and delayed release ofdetailed implementation rules, they expected the new rules to have alimited influence on the grain market."The new rules could slow down China's soybean import growth, but theextent should be limited," said Du Jing, an analyst with Beijing CapitalFutures Co Ltd.When the new rules were announced in June, soybean prices on the Chinesefutures market soared in contrast with tumbling prices in the UnitedStates.But the prices have slowly fallen as domestic supplies pile up, said Du.Prices were expected to receive a boost with the release of detailedrules.But traders doubt whether the government will adopt severe restrictions onsoybean imports if it damages the domestic vegetable oil processingindustry, Du said.The majority of Chinese processors, especially those in South China,favour imported soybeans due to their high content of oil and low price.China's new rules require government approval for all production, sale andimportation of GMO foods.They require safety certificates stating that the products are not harmfulto humans, animals or the environment, and appropriate labelling.Traders fear that once the rules are implemented, cargoes in shipment mayhave difficulty passing the stricter quarantine provisions.In June, soybean imports from the United States plunged to 153,000 tonsfrom 1.06 million tons in May, according to customs statistics.According to the US Department of Agriculture, 68 per cent of US soybeancrops are genetically modified.Imports were brisk before the rules were announced. China takes 20 percent of US soybean exports.In the first six months of 2001, China's soybean imports rose 69.2 percent year-on-year to 5.97 million tons, of which nearly 75 per cent camefrom the United States.Ruth said although the new rules were of high concern to US soybeanfarmers and traders, they had no official plans to discuss the issue withChinese officials at present, believing that China needs itsprice-competitive soybeans.Chinese processors do not want to have to pay a premium for non-GMOsoybeans while the world market is filled with cheap genetically modifiedones, Ruth said.
