Domestic rapeseed oil production faces challenges

With lingering low prices of rapeseed on the market and continuing influx of cheap foreign rapeseed, domestic rapeseed has got into a fix, the Economic Daily reported.

Every year, the nation launches the purchase and storage of various crops including rapeseed, as a measure to regulate market prices. Food acquired on the state system, mainly through China Grain Reserves Corp, from farmers nationwide, will be auctioned.

This year, the situation seems even more complex. The state’s store of rapeseed oil in 2011 was auctioned earlier, the first batch of 4,992 tons, and the second 200 tons. But all the rest fell through.

“Price inversion and the high cost of purchasing and storage are the main reasons leading to the unsold rapeseed oil,” said Wang Cheng, a sales manager at Zhonghe Food and Oil Group, a grain processor based in Hubei province, one of the major production bases for rapeseed in China.

“The price of future Number 1401 rapeseed oil on the market has fallen to 8,064 yuan per ton, and the price of the spot rapeseed oil is only 9,100 to 9,500 yuan. But the cost of the country’s temporarily stored rapeseed oil is as high as 10,200 to 10,600 yuan per ton,” said Chen Yanjun on July 16, a senior analyst from China Zhengzhou Grain Wholesale Market.

Although the prop price or the state purchase price of rapeseed has been increasing, the market price remains low. Now almost all the rapeseed oil on the market is imported.

According to the Ministry of Agriculture, rapeseed imports from January to May reached 1.655 million tons, a year-on-year increase of 37 percent. The influx of cheap foreign rapeseed makes the production of domestic rapeseed oil frustrating.

For farmers, growing rapeseed is a thankless task.

“If I grow rape on all my 4 mu (about 0.27 hectares) of farmland in autumn, I could probably get 600 kg of rapeseed the next spring. Deducting all the costs, I could only get 300 to 400 yuan,” said Gong Zhengqiu, a farmer from Hubei province.

Gong said that unlike 20 years ago, nobody wants to grow rapeseed anymore. Most farmlands are empty during the winter.

“Farmers used to rush to carry the rapeseed to my house, but now it’s very difficult to collect. Sometimes you can hardly collect a car of rapeseed even if you look for it for several days,” food and oil broker Lu Guobing said.

Low quality of domestically grown rapeseed and high production costs are two main reasons leading to the difficulties facing rapeseed oil market players.

Oil yield rate of imported GM rapeseed is 42 percent, with a water impurity rate of 11 percent, while domestic rapeseed oil yield rate is 35 percent with a water impurity rate of 14 percent.

Automation of rapeseed planting is low, and labor costs can be as high as 9,000 yuan per hectare. Machine sowing technology has no problem, but mechanical transplanting and collecting are not ideal for domestic growers. Current rape growing machines are all modified machinery that was used to cultivate rice and wheat.

“We need to develop specific rapeseed cultivation machinery as soon as possible. In addition, we need to promote concentrated land cultivation to reduce labor costs,” said Gan Yuhua, an official from the Hubei Provincial Department of Agriculture.

The main growing season of rapeseed in the south is winter. Pests are fewer in low temperatures, so the plants are real safe food, Gan added.