By Rick Jordahl, Associate Editor, Pork MagazineThe United States rolled out the red carpet last week to China's President Hu Jintao leaving no doubt that we wanted to leave a good impression. When Hu arrived at the White House, he received a 21-gun salute. His visit also was highlighted by an elaborate state dinner.
It is interesting that we give this treatment to a country whose trade is so out of balance with the United States. According to the U.S. Census Bureau, we imported more than $334 billion in Chinese goods in 2010 but exported only $82 billion worth of goods to them.
China is the world's second largest economy behind the United States and the second largest market for U.S. agricultural exports. There's no doubt that China is a lucrative market for U.S. agriculture, importing around $13 billion in U.S. ag products in fiscal year 2009. The projected total for 2010 is around $14 billion. There is definitely potential for much more.
Emphasizing the importance of China to U.S. agricultural exporters, USDA recently opened a new Agricultural Trade Office in Shenyang, in northwest China. The objective: to raise the profile of American agricultural and food products at a time when Chinese per capita income is on the rise.
The prospects for Chinese imports of U.S. agricultural products are enticing. According to USDA's Foreign Agricultural Service, China's per capita arable land is 40 percent less than the world average. Production of land-intensive commodities such as soybeans and cotton simply cannot keep up with surging demand.
Soybeans now account for more than half of the value of U.S. agricultural exports to China, which is expected to import 24 million tons of the oilseeds from the United States in the 2010/2011 marketing year. In addition to soybeans, China also imports large quantities of cotton and wheat.
In recent years, China has had a surplus of corn, but recent efforts to increase livestock output there may change that. In order to stifle inflation that reached 5 percent in November, China released sugar and corn from their strategic reserves last year.
Higher meat consumption among China's ever-expanding middle class is another important factor explaining their greater level of agricultural imports. Reducing barriers to American-produced beef was on the leaders' agenda last week.
Pork is the nation's number one meat protein and feeding China's 1.3 billion people will be a significant challenge, especially with the nation's less efficient livestock production methods. "Chinese pork production costs are simply too high and will be even higher in the future," says Dermot Hayes, Iowa State University. "If China increased imports as a percent of consumption by just 1 percent, the U.S. pork industry would increase sales by $1 billion."
The United States must put agriculture first in its attempt to advance relations with China. Thomas Wahl, director of the International Marketing Program for Agricultural Commodities and Trade Center, lists the following priorities for increasing U.S. ag exports to China:
- Solve economic, social, or technical problems that impede exports
- Uncover new or expanded export opportunities
- Develop new products, processes and technology to increase exports
- Educate exporters and potential exporters about the international marketplace
As the world's two biggest economies, the United States and China have a huge stake in each others' success. As China's number one agriculture trading partner, the United States is firmly positioned to help ease their growing food inflation.
Instead of flattering China with 21-gun-salutes and state dinners, we need to double our efforts in advancing agricultural exports while bringing overall trade between our nations closer to equilibrium.