Government to buy beans to prop up local prices

China plans to buy at least 3 million tons of domestic soybeans as slumping prices reduce farming incomes and discourage planting, according to two industry executives.

The plan will double the amount the government buys from growers in northeast China, said the executives, who declined to be identified. The amount represents about 18 percent of the country's total crop, and about a third of the output from the main growing region, Bloomberg News said.

Local prices have slumped 25 percent since September. The government's plan may spur Chinese crushers to buy beans from abroad but Nie Ben, manager at Shanghai Continent Futures Co, said from Dalian: "While United States growers will no doubt benefit from more orders from China, the government may have little choice" other than to carry out its price support plan.

Non-genetically modified domestic soybeans for May delivery gained 1.4 percent to 3,262 yuan (US$477) a ton in Dalian.

The futures have tumbled 38 percent from the July 3 record of 5,241 yuan. Prices for imported soybeans at Dalian have fallen below 3,000 yuan a ton, Nie said.

Prices of the government purchases haven't been decided, the executives said. The National Development and Reform Commission, China's top economic planner, said on October 20 that the government would pay 3,700 yuan a ton for soybeans. That would make the total purchase worth 11.1 billion yuan.

Imported soybeans, which are mainly gene-altered, can be used only as cooking oil and soybean meal.

Domestic beans are mainly used in making food such as tofu, Nie said.