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Iowa soybean delegation learns of Chinese agriculture needsBy Ken Root
China is old and new, communist and capitalist, traditional and free wheeling, all rolled together. They suffered much in the 20th century, but the 21st may be theirs, with rising prosperity and greater contact with the outside world. Currently, the people want a better diet and agriculture is being severely strained to feed the 1.3 billion Chinese people. Those who are seeing a higher income want more meat in their diet and that comes from greater feeding of grain and oilseeds to livestock, such as pork, poultry and fish. "We will need to double our imports of soybeans by 2020," was the conclusion drawn by Renault Quach, vice general manager of Guangzhou Green Oil Industrial Company Limited. He made the statement in a presentation to an Iowa Soybean Association delegation headed by Bill Northey, Iowa secretary of agriculture. Representatives of Ag Processors Inc., are also traveling with the trade mission. China took over the title of number one importer of U.S. soybeans this year, buying 435 million bushels, almost 40 percent of total U.S. exports. Farmer organizations are attempting to cultivate that interest for quality soybeans by touting those grown in the U.S. and highlighting the ease and low cost of shipping from west coast ports. Northey, himself a corn and soybean farmer from Spirit Lake, Iowa, said he can appreciate the increasing standard of living in China's cities and the high prices for farm products that are having a positive impact on those in rural China. He also was asked to explain why the U.S. is converting food to fuel--corn to ethanol and soybeans to biodiesel. "We are in the position of importing fuel. Our government is facing fuel price inflation," he said. Northey said the decision on the conversion of grain to fuel is one of price to the Chinese. "It's not about starvation, at least in China--it's about those who want to step up their diet, that are not now farming," said Northey. "In China, it's about cost, not availability." China has taken a different approach than the United States. They subsidize 50 percent of the cost of fuel so economic growth will be accelerated, but they forbid the conversion of biomass to fuel. "No meals for our wheels" is a popular saying today in China. The U.S., on the other hand, has had moderate food inflation, even with increased production of biofuels, and now is moving toward 10 percent of our gasoline coming from corn. China subsidizes fuel directly and we subsidize replacement of traditional fuels with ethanol and biodiesel. One avenue to grow production of crops such as soybeans is to plant biotech (GMO) varieties. China has banned the growing of GMO soybeans, but has a market oriented policy on importing them. Quash said the Chinese government will continue to allow GMO beans into the country. "We have no indication, or voices, that the end product is harmful to health," said Quash. He also said there is a prospect of planting of GMO soybeans in China. Xiaoping Zhang, deputy director for the American Soybean Association in China, says biotech beans are banned for planting and he doesn't see that changing for a while. But they will approve future biotechnology derived varieties as they are submitted and work through the government system. Kirk Leeds, Iowa Soybean Association executive director, also traveling with the delegation, is concerned that China's government can't handle future biotech beans in a timely fashion. "We've had one biotech soybean approved by China in the past 10 years. We could have five more requests in the next five years." At a meeting with China National Cereals Trade Group the talk centered on how big a crop of soybeans the U.S. would grow in 2008. Curt Sindergard, president of the Iowa Soybean Association, joined Northey to provide China with reassurance that farmers would produce a large soybean crop in 2008. Sindergard, a farmer from Rolfe, Iowa, is an advocate of forward selling at least a portion of the crop. "When we see the prices leading up to this time, farmers realize that they need to be forward contracting to solidify a certain percentage to guarantee pricing," said Sindergard. He also answered a question about the USDA's estimate on planted acreage, saying the report has no science behind it and has been wrong four of the past five years. The Chinese buyers used the meeting to get farmers' views on soybean versus corn plantings this year, with Sindergard explaining that their intentions to plant corn or soybeans could be switched, but with considerable difficulty. "In certain maturities of soybeans, there is already a tight supply of seed in those varieties and also the quality of those soybean seeds are lower than we normally would want to plant," he said. He also talked of inputs that were purchased last fall at a cost lower than the market value today giving the indication that farmers would not make last minute changes unless the market made a major move against them. Wu Deyong, Vice General Manager of COFCO, outlined his projections for the next several years on major grain imports and exports. He stated that China is self sufficient in rice and wheat, due to less demand for both grains. Corn production, versus demand, is making a major shift, as China was a net exporter before the push for more meat in the diet. Now, China is crossing over to become an importer of corn in 2009 and beyond. Wu put the amount of corn imports at 2 million metric tons per year. But China is clearly in a major oil seed deficit situation. This year's severe winter damaged their rapeseed crop and they don't have the available acreage to increase production enough to meet demand. He says China's annual production will be 14.3 mmt with imports of 34 mmt for a total of 48.3 mmt and the expectation for that to rise in future years. In all the discussions, there was no mention of any hostility of one government to the other; no talk of social strife in either country. The Chinese are focused on gaining supplies of needed materials and selling their manufactured goods to pay for agricultural products. The city of Beijing shows problems and promises. There is a high level of air pollution, due to intensive manufacturing with dirty technologies, and there is an incredible boom in building. Eighty percent of the overhead cranes in use in the world are now in China. They joke that it is their national bird. The city will host the Olympic Games in August and has modernized beyond belief in the past 20 years. It appears their key limiting factor is high quality food for a rapidly urbanizing society and the Chinese are turning to the United States and other suppliers to meet their needs at historically high prices. Ken Root can be reached by e-mail at kenroot@clearchannel.com. 4/7/08 Date: 4/2/08 Advertisement
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