Our Chance in China

July 26, 2011 10:57 PM
Our Chance in China

By Kirk Leeds

Travels to China showcase growing demand for U.S. soybeans

I have traveled to China for the Iowa Soybean Association six times in the past seven years and have visited with importers, feed millers, bean crushers, grain handlers, food companies, livestock producers and government officials. My goals were to learn more about the needs of our customers, to assure them that U.S. farmers are the most reliable suppliers of high-quality soybeans and to build the personal relationships that are critical to the conduct of business in China, as in most of Asia. Although each trip was different, the three main take-aways were the same:

Growth. The expansion in China is almost impossible to comprehend. Though the population will soon plateau, it is still growing by 8 million people per year. That’s the equivalent of adding
2½ Iowas every year. China’s gross domestic product continues to grow 8% to 10% each year, and no one I spoke to there believes it will fall below 8% in the next three to five years. (The U.S. will be lucky to see 3% growth in the near term.)

More specifically, China has experienced an 11.7% increase in soybean meal consumption on average in each of the last 10 years. It adds approximately 15 million pigs—half of Iowa’s 2010 total production—to its production each year.

China produces more than 60% of all the aquaculture in the world, consuming the soybean meal from 300 million bushels of soybeans. That’s more than half of Iowa’s soybean production—and this is a market that barely existed just 10 years ago.

While it is striving to increase its soybean yields, the Chinese government is clearly aware that it won’t be able to produce enough to meet its rapidly growing demand. Soon, Iowa will produce more soybeans than the entire country of China. Soybean acres are expected to be down 10% in China this year due to the emphasis on increasing corn production.

Infrastructure. Every-where you look in China, buildings and apartment complexes are under construction. From my hotel window in Guangzhou, I could see five skyscrapers being built within eight city blocks. Roads and high-speed rail are being expanded at a rapid rate. There is a reason some people call the crane the official bird of China.

People. The people I meet are warm, proud and optimistic about the future of their country. They are just as focused on creating opportunities for their kids as we are in the U.S. They grumble about taxes and regulations. Capitalism is their religion and I doubt Mao would even recognize the changes that have occurred in their lives in the past 20 years.

Our customers in China are focused on building personal relationships with U.S. farmers. That’s why it’s crucial to continue our efforts to reach out. It’s through these relationships that we will continue to sell increasing bushels of U.S. soybeans to China.

Kirk Leeds is CEO of the Iowa Soybean Association. Read more about his most recent trip to China.

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