China’s new feed grain policy should be a boon for western Canadian farmers, says an analyst.
Reuters reports that the world’s largest consumer of the commodity issued new guidelines on April 21 recommending that hog and poultry producers use less corn and soymeal in their rations.
The country’s Ministry of Agriculture and Rural Affairs issued a statement on its website saying the guidelines are aimed at better using available raw materials.
Brennan Turner, CEO of Combyne, believes the guidelines will be a blessing for prairie farmers because it opens the door to more imports of feed ingredients like wheat, barley and peas.
“The net benefits are pretty positive to the western Canadian wheat and barley producer,” he said.
Turner believes the new guidelines address rising food security concerns in China that have been exacerbated by the COVID pandemic.
The government wants to keep a lid on corn and soymeal prices, which have been skyrocketing in the country and are, in turn, driving up the costs of pork and poultry products.
It also appears to be a policy designed to reduce the country’s reliance on importing corn and soybeans from the United States, he said.
Many Canadian crops have already greatly benefitted from China’s attempts to diversify its sources of feed grains in 2020-21 and the rebuilding of the country’s hog herd after a devastating setback caused by African swine fever (ASF).
“What this indicates is this trend is not going to slow down,” he said.
The U.S. Department of Agriculture forecasts that China’s total feed use in 2021-22 will increase by 17 million tonnes or 6.7 percent.
It is forecasting a decline in the country’s corn imports to 15 million tonnes from a record 28 million tonnes in 2020-21 due to improved domestic corn production prospects and increased use of rice and wheat in feed rations.
China’s new guidelines promote the use of all sorts of alternative feed ingredients including wheat, barley, peas, rice, cassava, sorghum, distillers grains and many different oilseed meals.
According to Reuters, if China’s hog herd returned to pre-ASF levels the government’s new recommended corn and soybean meal feed ratio levels would cut corn use by 40-50 million tonnes and soymeal use by four to eight million tonnes.
That estimate is based on comments to Reuters made by Lu Min, an analyst with the brokerage firm Zhaojin Futures.
Wheat has been one of the main beneficiaries of China’s shifting feed grain policy. Reuters reports the country used 40 million tonnes for feed in 2020-21, displacing high-priced corn and soybean meal.
China has been Canada’s top wheat customer so far this year.
Turner said a lot of farmers were already contemplating whether they should plant high-yielding, low protein wheats instead of spring wheat this year or feed barley instead of malting barley.
He said China’s new guidelines might push some of the guys who were sitting on the fence into growing feed-types of wheat and barley on maybe two or three fields.
An analyst interviewed by Reuters noted that China’s new guidelines are suggestions rather than strictly enforced rules, so decisions will continue to be made based on economics.
But Turner said a “suggestion” made by China’s Communist government likely carries considerable clout.
“Who wants to be the organization that goes against the official party guidelines?” he said.
“If you go against the guidelines of the Chinese government, expect some sort of pushback.”