Soybean Economy In China: With Focus On Supply And Demand

Soybean is an impohant commodity in China's food production and consumption system. Ithas not only provided high quality vegetable protein for subsistence, development andprosperity of the Chinese nation, but also has been one of the ways to improve land fertilityfor intensive cultivation and sustainabIe development of the traditional 8griculture. Alongwith economic development in China, soybean, as an important source of vegetable andanimal protein (via animal transfOrmation) and due to its nitrogen-fixing function, will play anincreatiingly important role in the food system and make a significant contribution tosustainable deveIopment of agriculture in the future.However, soybean has been on decline in Chinese food production sincel949. The proportionof soybean output in grain production has dropped from 6% in the early l950s to 3% in l998.The sowing area fluctuated frequently with amplitude of vibration at plus minus 20%sometimes. The yieId rose slightIy with only 63% from l970 to l998, far below the growthrate of rice (87%), corn (152%) and wheat (22l %). The top soybean production provinces inChina have been Heilongiiang, Shandong and Henan, accounting for 46% of total soybeanproduction in China. But there is a trend that soybean production is shifting from thosetraditional regions to other regions. Although comparative advantage is apparent in thosetraditional provinces, the newly deveIoping regions are showing bright potentials withsoybean output growing steadily.Soybean production fiJnction estimated shows that sowing area has the most big productionelasticity (0.64), the other production elasticity are' physical input excluding fedilizer (0.36),labor force (0. l l ), fertilizer (0.04). During l980- l998, acreage's contribution to the groWth ofsoybean production comes to 7.38%, fertiIizer 9.98%, labor -5.99%, other physical inputs42.99%, natUral disasters -1 .03%. But the contribution of technological progress is only 30%.Soybean production in China falls into extensive pattern and still depends mainly on increaseof physical inputS. lt is essential to raise the technological level and to enhance managementin soybean production.The restricted Nerlovian model of soybean suppIy response indicates that short-term supplyelasticity of the soybean sowing area with respect to soybean price (divided by com price) is0.324, long-term supply elasticity 0.486, partiaI adjustment coefficient of sowing area 0.667and mnyinal coefficient to Iogallthm of sowing area 0.36. Soybean price divided by cornprice and arable land per capita are important factors affecting soybean sowing area. Theadjustment of soybean sowing area from previous equilibrium point to new point is veryprompt, and take only 1.5 years when it has been shocked by exogenous factors. Soybeanprice and boland scale policies have a significant impact on soybean supply.On the consumption side, soybean consumption per capita was 8.37kg in l953. After that itbegan to decline and reach the lowest leveI of 4 kg at end of 1970s. Since l980s andespecially l990s, fOllowing the gradual improvement of peopIe's food strUcture, theconsumption of soybean has been increasing steadily, Peaked at 6kg in l998. BefOre l980soybean was used to satisfy the basic demand of residentS for fOod. During l980s because ofthe rapid growth of the consumption of livestock productS, soybean had been consumed onlyfor replenishing nutrient. After l990 sOybean has become one of the important foods tobalance betWeen vegetable and animal fOod, and to improve fOod structUre.The consumption of soybean oil and meal has had a faSter increase since l980. Soybean oilconsumption was 0.4 kg per capita in early l980s and l.5 kg in l998. The outPut of soybeanmeal was 2637.0 thousand ton, and the consumption of soybean meal 2l29.0 thousand ton inl984. After that because the demand for livestOck feed increased incessantly and thevegetale oil price rose considerably, the prod...