Small grain import quotas remain a challenge for private feed mills

As China allocates 2023 tariff rate quotas for corn and wheat, some local governments are highlighting their success in obtaining import quotas, but this is also illustrating the relatively small volumes available for private businesses.

A key dispute in the US-China trade war was that China was not allowing the import quotas for products like corn, wheat, and rice to be filled. Additionally, many companies might be assigned quotas that were so small that they were not economically viable. If companies then didn’t use those quotas, they would face challenges in the following years in being able to apply and get granted a quota. 

Luoyang, a city in Henan province, said that in August their local government worked with local businesses to teach them about the import quota system and assist them in filing the for quotas. 

One company, Luoyang Feed, obtained corn import quotas for 872 tons. This was also the first time a company in the city had received an import quota in five years. This compares with the company’s annual yearly feed output of 240k tons. 

Located nearly 400 miles inland, it would be relatively costly to import corn in containers from overseas and then transport it so far inland. 

Also in Henan, the city of Puyang announced that two flour millers in the city had received import quotas of 689 tons. The city’s companies received total import quotas of 1378 tons, up 36 tons from the prior year, and this was a new record high for wheat import quotas in the city. 

As part of the US-China trade deal, Beijing said the country would increase the amount of grain import quotas being used and make other reforms to improve the allocation of these quotas. 

At the same time, many small and mid-sized private companies still face challenges to import grain due to relatively small allocations that may not be economically viable due to higher shipping costs. This means that state-owned companies remain the dominant players when it comes to sourcing grain from overseas.