Government farm increases soybean production in second acreage shift in 3 years

Beidahuang Group, a major government-owned farming company in Heilongjiang province, announced that it expected to plant 3.1 million hectares of spring crops this year and it would continue to expand soybean production with goals of reaching 0.9 million hectares.

The company’s history dates back to 1947 and the collectivization of farming in the early days of the PRC. Over the decades, many state-owned farms were consolidated, leading to the creation of Beidahuang. The company is directly overseen by the central government in Beijing and is estimated to account for 1/5 of the cultivated land area in Heilongjiang province.

Previous announcements about their spring planting operations also illustrate the constantly shifting priorities of the government in terms of crop planting.

In 2020, the company was still focused on increasing soybean production as part of the government’s effort to increase oilseed self-sufficiency following the US-China trade war. 

This focus on soybeans decreased as spot corn prices rose over 60% from March 2020 to March 2021, and front-month corn futures shot up by 50% in Q4 2020. The government’s priority then switched to protecting the corn area, and in 2021, the company said it was focused on “increasing corn production and stabilizing soybean production”.

Expansion of the soybean area is once again the priority. But previous cycles suggest this will weigh on corn production and could lead to high prices and imports before the government’s focus shifts back to grain production.