CHINA’S top corn-growing provinces will offer major processors subsidies of 200 yuan (US$29.50) per ton of corn consumed to stimulate consumption of the grain, government documents showed.

    The move had been widely anticipated after the Central Government abandoned an annual corn stockpiling scheme this year, leaving farmers to rely on market demand for the first time in almost a decade.

    Recent signals that local governments were preparing to issue subsidies have helped to lift corn prices, which are up by almost 10 percent this month after falling to a 1-year low in late September.

    Jilin Province in China’s north-east will give processors a subsidy of 200 yuan per ton of corn bought between Nov. 1, 2016, and the end of April, 2017, the provincial grain administration said in a notice posted on its website Thursday.

    The corn must be processed by the end of June 2017, it added.

    Neighboring Liaoning is also offering subsidies of 200 yuan per ton, according to a statement posted earlier this month on the provincial government’s website.

    Top grower Heilongjiang will also offer subsidies, provincial governor Lu Hao said in a speech reported by a local media website last week, without offering details of the subsidy amount.

    China’s corn processing sector is the second-largest consumer of corn after the feed industry, making products such as corn starch, sugars and alcohol.

    But it has struggled in recent years with overcapacity and a lack of competitiveness on the international market because of high domestic corn prices.

    The four Liaoning-based processors eligible to receive subsidies had a production capacity of 2 million tons last year but only processed 1 million tons of corn, the government notice showed.

    The subsidies will help processors expand their operating rate, said Cherry Zhang, analyst at Shanghai JC Intelligence Co.

    “Northeastern processors are already making money. If you add these subsidies, it’s a really good deal.”

    Alcohol producers in Heilongjiang are currently making about 700 yuan per ton while corn starch makers in Jilin are making about 200 yuan per ton, said Zhang.(SD-Agencies)