On Tuesday, December 10, 2013, the first stop on our itinerary was the U.S. Embassy in Beijing, China. Bryan Lohmar, Country Director, U.S. Grains Council, China, was our host and he and Andrew Anderson-Sprecher, an Agricultural Attache for the U.S. Embassy, gave us an overview of China and trade initiatives.
The three cornerstones to the overview presentation included:
- Developing markets
- Enabling trade
- Improving lives
Andrew began with an overview on China, which included various facts and figures. China’s gross domestic profit is equivalent to Brazil, Russia, India, Turkey, Taiwan and Egypt combined.
The size of the market is massive in China. The challenge is that each province and city has its own dynamics and is treated as an individual entity rather than a whole country.
The size of China is similar to the United States. China has a population of 309 million and the United States has 310.9 million. Although both countries are large and in similar situation in terms of growing climates there are a lot is rocky mountains and deserts in China. At 9.6 million square kilometers, China is slightly larger than the United States, but because of its population size every 1 ha. of arable land must feed 11 people, nearly twice of the world average.
Agriculture is all over the place in China. Northern China grows corn and wheat. Southern China grows rice and horticulture and the far northwest grows cotton.
China is the world’s second largest economy, and leading agricultural producer by volume. Agriculture contributes to 10 percent of China’s total gross domestic product (GDP) and employs nearly 35 percent of its labor force. China is also the second largest corn producer in the world, largest producer of rice, second in wheat after European Union. China is #1 pork producer.
Corn is planted in areas wherever they can – hills, etc.
The majority of water is in southern China. Water scarcity issues are mainly in North China. 66 percent of water resources in China are used for ag production with the majority of irrigation systems inefficient – room for larger water efficiencies. It’s also an area that they want to improve. Water quality is a major concern with pollution mainly contributed to industrial production.
Ground water over exploitation is the most pressing problem in northeast China as it is unsustainable. Limited water and limited land means increased difficulty in sustaining and growing a food supply for a growing population.
China is the number one ag export market for U.S., the majority of which is soybeans. Corn is increasingly important but a little bumpy right now.
Biotechnology is a huge and ongoing challenge. Andrew spends half of his time working on this issue.
China won’t accept any biotechnology products until it is approved in the country of origin (or its home country). Has to be commercialized in the U.S. before it can even be considered by China. It takes two to three years to get approval in China on specific hybrids.
China’s system is not transparent. Overall, the regulations within the country are quite cumbersome. The have challenges in certain audit requirements.
China is 95% self sufficient in producing rice.
The push back in trade comes because they want to try and maintain as much self-sufficiency as possible. They view it as a national security issue, policy issue, state issue (keep farmers happy and on the land). Crops are grown in politically sensitive regions. There are local and ethical problems/policies.
China is working hard to develop a local seed industry.
They have seen some increasingly positive messages from the government on biotechnology but it does not correspond with how they handle foreign biotechnology events.
China has made the biggest investment in biotechnology than any other country in the world but has not taken the next step.
Grain security is primarily with food grains.
Chinese society perspective is a complicated question and opinions differ. Most are negative about GMOs. The government hasn’t weighed in until recently. They are beginning to show interest in GMOs and position of it.
Are they selling items in China that they don’t eat at home? The Chinese don’t believe we eat what we are selling to other countries – 36% don’t believe U.S. people eat biotechnology products at home.
In the long-term, what will have to happen? We have to change the view and allow GMOs because China can’t sustain the way it is currently structured.
China’s original goal was to be 100 percent self-sufficient. However, over the past 10 years or so, that has changed and that number has been reduced to 95 percent self-sufficient. Yet that goal still puts a restriction on imports.
The Ministry of Agriculture is still fighting that mentality that they have to rely on others for food to sustain. But the tide is slowly turning.
Brazil is the one country China is really interested in for corn and soybeans.
Another issue with China is that regulations are very individualized at each port. Makes it difficult to streamline a business partnership here. However, it is an area the United States continues to work on, especially in areas like matching retailers with importers, educating Chinese about imported products, and developing a food ingredient program.
In the afternoon our group visited the Yonghe Temple, which is the largest Tibetan Buddhist Temple in Beijing. It was a very beautiful and interesting place. Steeped in tradition, there were many who were paying homage and lighting incense. In addition, there were areas we were asked not to take photographs out of respect.
Later that day we were joined by Michael Pareles with the U.S. Meat Export Federation (USMEF).
Michael explained that the Chinese have three ways to purchase food – wet market, hypermarket or convenience stores. However, there is a new market – ordering groceries online, which accounts for about 1 percent of the market currently.
Our group was taken to the Xicheng District Sihuan Wholesale Wet Market, which is the largest wet market in the city. Sixty thousand people shop here every day. There are 1,260 Wet Markets in Beijing. This was quite an experience. There were about 500 vendors in this area selling everything from baked goods to live fish. Meat is ground on site.
In regard to buying habits, the elderly tend to buy groceries every day. Half of the population purchase groceries about every three days.
Our next stop was the Hypermarket –Wu-Mart, which is their version of Wal-Mart. It is the new face of Chinese retail. It spanned two basement levels. We were greeted with vendors shouting to gain our attention so they could draw us in to tell us about their products. It’s very competitive area and a highly competitive sector.
There is a huge demand for beef in China right now. The price of beef went up 34 percent this year from last and it’s not even decent cuts of beef. Australian beef imports are up 1,000 percent year over year.
There is great potential in this area for the United States. The potential income is $400 to $500 million/year from beef imports to China. That is why USMEF is working so hard to get beef imported into China.
That evening we had dinner with several agricultural company representatives including Pioneer, Syngenta, U.S. Grains Council and USMEF. The Quan Ju De Roast Duck Restaurant served a traditional Chinese meal, which consisted of duck, duck tongue, duck heart, duck liver, scorpions, and duck feet. While we learned a great deal today one of the main takeaways is that they let no part of the animal go to waste.
Laurie Bedord is the advanced technology editor for Successful Farming, a publication of Meredith Corporation. She is an award-winning writer and past president of the American Agricultural Editors Association.