Promoting Preference for U.S. Soybeans in China

Chinese demand for Iowa and U.S. soybeans will only increase in the months and years to come. As 1.3 billion people with increasing incomes want more meat in their diets, that equals more demand for soybeans. The Chinese government is beginning to accept the fact that China cannot grow enough soybeans to meet its needs. Therefore, the Iowa Soybean Association’s job is to make sure China buys Iowa and U.S. soybeans.

The Iowa Soybean Association (ISA) recently sponsored its third trade mission to China. There were two main goals for this mission, according to ISA CEO Kirk Leeds. ”One goal was to continue to build relationships with key customers in China,” he says. “The second goal was to gain a better understanding of the capacity of China to grow corn and soybeans.”

While the livestock industry in Iowa remains the largest customer for Iowa-grown soybeans, the largest export customer is China, which represents nearly 60 percent of the U.S. soybean export market.

For the first time, this trade team represented all facets of the export supply chain. Trade mission participants included ISA President Delbert Christensen, ISA President Elect Randy Van Kooten, ISA CEO Kirk Leeds, ISA Director of Marketing Grant Kimberley, ISA Director of Communications Karen Simon, AGP Group Vice President Cal Meyer, AGP Corporate Director of Marketing Glen Heitritter, and Port of Gray’s Harbor Executive Director Gary Nelson, as well as trade mission staff Peter Mishek, managing consultant, Mishek Inc. & Associates; Pete Lombardo, president, Amtechk Consulting; and James Tsao, managing partner, J.T. International Ltd.

The ISA trade team learned more about the companies in China that purchase soybeans and just how great the demand is for soy in China.

One of the companies the trade delegation met with was COFCO, a Fortune 500 company founded in 1949. It is a major international player in various agricultural products as both an importer and an exporter. COFCO is the largest importer of soybeans into China. The company also plays a major role in the soybean crushing industry and vegetable oil refining.

According to Leeds, COFCO remains very bullish on the growth of its government-controlled company in a still robust Chinese economy. There was no indication of concern regarding a slowing down in demand for U.S. soybeans in the months and years to come.

Of particular interest to the Chinese companies visited is the expansion project AGP has undertaken at the Port of Gray’s Harbor in Aberdeen, Wash. “We believe the expansion will allow us to become a major link and gateway to the Asian market,” says Cal Meyer of AGP. “The farmer-owned system is very important to companies in China. COFCO is focused on quality from farm to table, which fits in well with AGP’s philosophy.”

According to ISA President Christensen, relationship building is very important to successfully working with China. “The projected growth of soybean consumption here is remarkable, and we will need good partnerships with the Chinese to meet the needs of this country’s growing population,” he says.

During the trade mission the Iowa trade delegation also met with Xiaoping Zhang, deputy director of the American Soybean Association-International Marketing, who provided a very good overview of the current year exports of U.S. soybeans to China and thoughts on future growth opportunities.

According to Zhang, China’s soybean meal consumption has grown more than 3,000 percent since 1990. China’s population is not only growing, but it is becoming more urbanized. Many Chinese citizens are making more money and can afford to buy meat. Soon, for the first time, Zhang says, 50 percent of China’s population will be urban.

“Exports of U.S. soybeans to China this marketing year have already exceeded 844 million bushels – nearly double Iowa’s total annual production of soybeans,” Leeds says. “And to think, before 1996 China didn’t import any soybeans. This is a market that has grown from 15 million bushels from the United States in 1996 to 844 million bushels in 2010. Most of this demand is being driven by the consumption of soybean meal. More Chinese with more money are eating more meat, and this trend is going to continue for the foreseeable future.” This is great news for Iowa’s soybean farmers.

“The scope and size of the market demand here is unbelievable,” says Grant Kimberley, ISA director of market development. “It’s important for ISA to be here to cultivate and develop relationships to make sure Chinese buyers prefer U.S. soybeans.”

Another key goal of this mission to China was to travel to Northeast China to see the major soybean producing region. The trade team had the opportunity to see areas of China that very few Americans get to see. Black soils and flat fields dominated the landscape, with climate similar to Fargo, North Dakota.

Visiting a soybean field in China is a bit like visiting Mecca for U.S. soybean farmers. The first domestication of the soybean plant has been traced to the eastern half of North China in the 11th century B.C. or perhaps a bit earlier. It was developed as a source of high protein food. In comparison, soybeans are a relatively new commodity in the United States, becoming widely planted in the 20th century.

The trade team first visited the State Farm Land Reclamation Bureau of Suihua MA Liuhe, a large scale state-owned farm. A demonstration farm for mechanization, the farm provides a living for about 600 households. The farm’s goal is to become fully mechanized by 2012.

The farm produces corn, soybeans and rice and a host of local vegetables, melons and fruits. The farm manager shared that he thought the soybeans there would yield around 44 bushels per acre and said that was an average year. Corn yields were anticipated to be in the 150 bushel range.

“The soybeans looked very good, taller than most U.S. soybeans. There were no signs of disease and very few insects,” says ISA President-Elect Van Kooten. “The leaves were more elongated than those in the United States, but were a very consistent dark green color. There were some four-bean pods, but there were also some one-bean pods. The distance between nodes on the plants was also greater than typical U.S. soybeans.”

As the trade team concluded this trip to China, Leeds took away a number of memories.

"As always, I will remember the people we have met. They were warm, generous and genuine. The energy of the people was just as noticeable as in previous visits,” he says. “I’m also reminded of the many challenges the people of China face. Of the 1.3 billion people in China, upwards of 700 million of them still struggle to make a decent living. Although there is very little starvation in China, this country still has a very long way to go to provide an adequate standard of living for all its citizens.”

FUNDED THROUGH THE SOYBEAN CHECKOFF