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China's cooking oil industry is being threatened by falling output of colza and by foreign competition, with domestic colza-growing areas shrinking dramatically, China Quality Daily reported on Thursday.
Low prices in the last two years have made Chinese farmers reluctant to grow colza, with the country's 10 major colza-growing areas shrinking 10 percentyear on yearto 5.7 million hectares in 2006, the report quoted Chu Xuxuan, an official with the Chinese Cereals and Oils Association (CCOA), as saying.
Declining output pushed up colza prices by 50 to 60 percent in June this year in Chaohu and four other cities in East China's Anhui Province, according to figures from the local price bureau.
Wang Guangming, chairman of Anhui-based Guangming Grain and Oil Industries Co, said his company, with an annual processing capacity of 60,000 tons, was short of supplies and purchased only 6,000 tons of colza last year.
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In the first four months this year, China imported 101,721 tons of rapeseed oil, 55 times more than last year. The cost of colza imports in the same period rocketed from US$1 million to US$76 million.
Soaring imports would continue to force down the prices of domestic colza, leading to a further shrinkage in output, said the report.
"There used to be 70 colza-processing companies in Anhui but there are only 10 left now," said Wang, adding that "almost all the companies in coastal regions are owned or funded by foreign capital, which is taking a bigger and bigger share of the Chinese market".
Foreign companies, with better raw material and lower costs, would have more say in pricing in China, making it difficult for domestic companies to compete, said the report.
"Seventy percent of the remaining domestic companies will be forced out of business if the situation remains unchanged," said Wang.
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