Brazil aims to be major corn supplier to China

Brazil is poised to someday become a "major supplier" to China's corn market with China's move to allow Brazilian corn imports, a trade group executive said.

"Even though our exportation to China starts at small scale, the trade can grow very rapidly," said Sergio Mendes, president of the National Association of Cereal Exporters (ANEC). "It would not be surprising for us to become a major supplier to China if we can ship good product."

China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) approved Brazilian corn exportation to China on March 31. An April 8 statement detailing the conditions for Brazil's corn exports said Brazil can send corn produced "anywhere" into China, provided the imports are used only in "processing" and not for "planting".

Sun Hongbo, a researcher on China-Latin American relations at the Chinese Academy of Social Sciences, said Brazil "deeply values agricultural cooperation with China", because the Asian nation is "very important to help Brazil achieve export diversification".

"China's corn market is huge and the demand is rather stable, so Brazil wants to compete with the United States in this market. It is very natural," Sun said.

Zhou Xinyu, an emerging-market researcher at Beijing Foreign Studies University, said allowing Brazil's corn will enhance China's food security while ensuring "a stable supply of necessary agricultural products".

"At the same time, Brazil's competition can also add pressure on US corn exporters to China, which means we can get a more appropriate price," Zhou said.

A bushel of soybeans from Brazil's Paranagua port trades on Brazil's BM&FBOVESPA bourse at 72 real ($32) while Brazilian corn is less than $13, much lower than US corn exports.

Although China, the world's second-largest corn producer after the US, is on track to produce 210 million tons of the grain this season, it is expected to expand its grain imports to feed its growing middle class.

In the 2012-13 season, China imported 3 million tons of corn. The amount is expected to rise to 7 million tons in the 2013-14 season, according to the US Department of Agriculture.

Of the five countries that annually export corn to China, the US handles more than 90 percent of the total.

"The US still controls the whole chain of agricultural production, from seed to storage and transportation," Sun said. "Even though the production and sale of these products are mostly completed within developing countries, only the US has the power of pricing. It is very unreasonable," he said.

To gain more freedom in agricultural trading, China and Brazil are working together to develop agricultural technology in laboratories jointly built by the countries. China also set a special fund for agricultural cooperation with Latin America during former Chinese premier Wen Jiabo's visit to the region.

"China and Brazil need to reduce the influence of transnational corporations," Sun said. "This is why Brazil starts to improve its logistics system of agricultural products from 2012. The independent cooperation within developing countries is the best way to protect our interests."

"There is still a long way to go to reach this goal", Sun said.