Five questions on Ag trade with China

By U.S. Grains Council

Kevin Latner, USGC director in China, answers five questions regarding the state of the market and future of agriculture in China.

1. With China’s increasing population and demand for products, what role do you see U.S. farmers playing in China?

China’s urban middle class is expected to double in the next 10 years. As consumers move up the income chain, they begin to regularly consume dairy products and expand meat protein consumption. The U.S. Grains Council has spent more than 20 years in China making sure meat and dairy production is safe and educating on the use of quality ingredients. Now, with an estimated inventory of 500 million hogs and 5 trillion birds continuing to grow, China’s demand for feed ingredients increasingly depends on a diversified source of supply, which the United States can meet.

2. How will China’s recent decision to import more U.S. corn affect trade relations with the United States?

Trade with China has always been a two-way street and great for U.S. agriculture. While it is common knowledge that many Chinese products are exported to our country, the United States exported over $10 billion in farm commodities to China in 2009, including soybeans, cotton, animal products, seafood and wood. This is a 300 percent increase over the last eight years. At current rates, 2010 looks to be a record year for agricultural exports to China. Through September, China has imported more than 2.5 million metric tons of distiller’s dried grains with solubles (DDGS) and 1.4 metric tons (55.1 million bushels) of corn, clearing a record $1 billion in U.S. corn and co-product exports.

3. What is the biggest opportunity involving U.S. penetration of feed grains into China?

As China’s food consumption trends shift to a higher protein intake, China will expand both production and imports of meat. This means providing quality feed ingredients to support their production needs. DDGS is a viable quality product for the swine and dairy industries.

4. What barriers to trade do the United States face as China’s market continues to develop?

There are challenges in the Chinese market. Perhaps the most striking is the continued concern over food security. Years of inadequate food supplies have ingrained a view of food self-sufficiency as a necessity for national security, affecting China’s agricultural and industrial development programs. Additionally, there is limited knowledge about U.S. corn and DDGS in the market. In 2010, the Council has learned there is a need to introduce more knowledge about product information and handling, contract handling and product use. Furthermore, regulatory issues arise often in China. Every feed ingredient requires a registration and the Council is working with the Chinese government to deal with these issues regarding DDGS. The registration of seed varieties derived from biotechnology also continue to be critical to trade flow.

5. With the growth of the swine industry in China, what programs are the Council implementing to take advantage of this opportunity?

With individual assistance, seminars and trainings, the Council is able to influence importers, traders, distributors, and end-users on how use trade as a means for food security. One of the successes is evident in the swine sector. Muyuan and Wens, early adopters of Council technology, are now the two largest swine producers in China. These highly-productive farms serve as models to competitors and the Chinese government uses these examples in its own production enhancement programs. In the dairy sector, the Council’s promotion of the use of whole corn silage has gone from zero to 60 percent inclusion in five years. Last month, Huaxia, the Council’s model farm, completed the country’s most successful dairy training program.

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