Global AgInvesting Research & Insight released a new report on China's oilseed processing market. The report, Bringing Transparency to the Chinese Oilseed Processing Sector, provides an analysis of the market dynamics driving the growth in the Chinese oilseed processing industry over the next decade. Some of those dynamics include:

  • The migration of oilseed processing capacity from the interior of the country to the coast and its impact on domestic production and imports of oilseeds;
  • Rationalization of less competitive facilities in the Chinese interior in an effort to modernize the industry and increase capacity utilization;
  • The impact of government policies, price controls and modernization efforts on China’s oilseed processing sector;
  • Growing consumer demand for protein meals and vegetable oils driven by GDP per capita, urbanization and population growth which have led to a shift from grain-based to animal protein-based diets; and
  • Industry structure and market shares of the major oilseed processors.

This report analyzes capacity, production, utilization and consumption in what has until now been an opaque industry, and focuses on what China will need to do to ensure a more robust and modern oilseed processing industry over the next decade, including addressing overcapacity and modernization issues.  It also answers the question of how the industry has continued to grow despite volatile margins and government intervention.

According to Bill Devens, lead contributor to the report and managing director at HighQuest Partners, LLC., a leading global food and agribusiness consultancy, limited land availability, a lack of modern oilseed processing technologies, and collection and transportation issues in the Chinese interior have made it very difficult for interior processors to compete with processors located on the coast. 

At the same time, limited land and production capabilities for oilseeds in China and government policies favoring food grain over oilseed production, coupled with increasing demand and other variables, can only lead to investment opportunities for expanded agriculture in Argentina, Brazil, the U.S. and Africa over the next decade.  

“China’s demand for agricultural products is likely to remain strong in the future,” said Devens. “Yet, for various reasons its domestic agricultural sector cannot meet the growing demand for oilseeds which means that China will have to increasingly rely on imports for its oilseed supply.”