BEIJING Feb 8 Beijing is urging regional
authorities in the nation's top four corn producing regions to
offer subsidies to livestock feed companies, the latest move to
boost demand for a bumper crop, according to a source briefed on
The country's State Administration of Grains and the
Ministry of Finance issued a joint document dated Jan. 13
outlining the recommendations to northeastern regions of
Heilongjiang, Inner Mongolia, Liaoning and Jilin, according to
the source and local media.
Only feed producers that produced more than 50,000 tonnes in
2015 and have local operations can apply for the subsidy. The
corn must also be bought by end-April and processed by end-June,
according to the source.
Other stipulations are that they must only use the funds to
buy local corn harvested in 2016 and store it in their own
facilities, the source said citing the document.
The size of the subsidies, which would effectively make corn
cheaper for feed producers, was not disclosed.
Analysts also questioned the impact of the move as the bulk
of China's vast feed-making industry, the top user of the grain
is located in the country's south and would not be eligible for
Industry websites, including Shanghai JC Intelligence Co.
Ltd (JCI) and cofeed.com, have also reported the details of the
release without citing sources and photos of the document were
circulating on Wechat, China's mobile social platform. Their
authenticity could not be verified.
A spokeswoman for the Grains Administration declined to
comment. The Ministry of Finance had not responded to requests
It's not known if the provinces, which are home to most of
the country's corn farmers, have complied with the
The move comes after China announced a strategy at the end
of December to tackle its corn glut following a decade-long
stockpiling programme, including a push to use more grain as
It reflects an intensifying effort by Beijing to force
regional authorities to bear the financial burden of buttressing
their corn industries.
In October last year, Heilongjiang, Liaoning and Jilin doled
out subsidies to corn processors, the second-largest users of
the grain who make products such as corn starch, sugars and
But analysts said more corn processors had benefited from
the subsidies and the impact of subsidies for only a few feed
producers was likely to be limited.
"This won't help increase the demand for corn unlike the
subsidies to corn processing companies," said Cofco Futures
analyst Meng Jinhui.
Still, it could give sentiment and prices a further boost.
Hopes of central government measures to spur consumption
have triggered a months-long rally, with prices hitting 18-month
highs on Monday. Turnover and open interest hit all-time highs,
eclipsing soymeal, typically the country's largest agricultural
(Writing by Josephine Mason; Editing by Richard Pullin)