Beijing: China's plan to get rid of its massive corn stockpile by using it as raw material for its fledgling biogradeable plastics industry could be a game changer for Changchun Shengda Biomaterial and other private factories in China's corn belt.
After buying corn for years to support farmers, Beijing must find a way to work off a stockpile so big it could feed China's 1.4 billion people for more than a year.
The government reckons the cure for its longstanding headache could be in promoting the nation's polylactide (PLA) sector, which turns corn starch and cassava into biodegradable plastic products like bags and plates.
China's state grain bureau announced the strategy in a five-year policy document at the end of December, which also included a push to increase ethanol output and use of the grain as livestock feed.
The council didn't give details of how it would implement the plan, which has the potential to boost corn prices at a time of a global glut. Still, the policy marks a significant shift for the government and its food-security fixation, which has long made it reluctant to promote the non-food use of grains in a country that endured three years of famine in 1958-61. It also illustrates how the corn mountain .
If successful, a nationwide industry would help whittle down the corn inventory, built up after a decade of government buying from farmers to support incomes and ensure food for the growing, urban population.
It could in the long term upend the niche global market for biodegradeable plastics, challenging established PLA players like NatureWorks LLC, a joint venture between Cargill and PTT Global Chemical, which sells into China. China could export PLA products too.
Total global output of PLA products is expected to rise to 800,000 tonnes by 2020, from 200,000 tonnes in 2012, according to China Research & Intelligence in Shanghai. Half of that would be in Asia.
Some experts, however, have questioned whether focusing on polylactide is the answer to China's corn woes, saying it would take too long, with too much cash and still would not use up enough corn to make much of a dent in the stockpile.
