Kirk Leeds, Grant Kimberley, Randy Van Kooten and Delbert Christensen examine this Chinese farmer's soybean crop in the Jilin Province

On this final day of the trade mission in China, the group visited a grain warehouse in Cailjia, two hours outside Changchun. It was interesting to hear a bit more about how the agricultural system here works.

The farmers among us were surprised to hear most farmers here bring their crops to the elevator at 30 percent moisture. Because they are guaranteed a price by the government, and need the money, they hurry to bring in their crop and collect their payments.

In the Jilin province, the government encourages farmers to grow corn. We saw soybeans grown in strips between corn crops, along road ditches and even in the narrow dividers between rice fields. Soybeans are clearly a valuable crop, but corn is king in this area of China. In this region they call corn “jade rice.”

James Tsao shows the farmer and his family where Iowa is located.

A special part of this trip has been the opportunity to meet farmers. Today we met a farmer and his family from the Jilin province. Actually, most of the village came out to greet us. It was a wonderful experience to meet with the farmer, look at his crops, and see the pride he has in his farm.

To hear an interview with ISA President Delbert Christensen about the farmer to farmer link, click here:

“This visit puts our jobs in a whole new light as we harvest our crops,” says ISA President Elect Randy Van Kooten. “It’s important where the crop is going and that we’re feeding families here and across the globe.” To hear an interview with Randy Van Kooten, click here:

Meeting this little boy makes it easy to think about the U.S. and China working together to feed the world

To hear the insights of ISA’s Director of Market Development Grant Kimberley on the farm visit and the hospitality of the Chinese people, click here:

ISA CEO Kirk Leeds outlined five challenges that we need to solve in order to meet demand and make sure the growing global population has enough to eat, now and in the future:

• Continued increases in production
• Solve quality issues and increase protein and oil
• Continue improving infrastructure, like the expansion of Port of Gray’s Harbor in Washington
• Market access, reducing trade barriers, and
• Acceptance of biotech traits.

“It’s important that we view the expansion of trade in the American ag industry as vital,” says Cal Meyer, group vice president of AGP. “We have to strive to open markets and be competitive from the farm to the ag industry and meet customer demand.”

To hear Cal’s interview with Kirk Leeds, click here:

To hear Kirk’s comments, click here:

Now that we’re acclimated to our surroundings and the 13 hour time difference it’s time to go home. Our travels tomorrow will take the Iowa delegation to Des Moines via Changchun, Beijing, Vancouver and Minneapolis.

By all accounts, this trade mission has been a success. We’ve learned and listened, and talked about Iowa soybean production. And we gained a new appreciation for the vast potential of this market for Iowa-grown soybeans.

The women of the farm family asked to have their photo taken with me.

We’ve met new people. We’ve seen things we’ve never seen before. We’ve eaten different food. But yet, for all the different and new experiences we’ve had here, what strikes me most about traveling to China is how surprisingly similar we all are. We and our Chinese counterparts have a great deal to learn from one another, and we’ve appreciated the opportunity to experience the Chinese culture briefly during our time here.

To listen to Kirk Leeds’ interview with me on a bus to Changchun, click here:

I’ll continue to post wrap-up information and additional photos on the blog upon my return home.

The trade team was greeted at the feed company with a welcome banner. ISA CEO Kirk Leeds highlights the part of the sign that says "Iowa"

Today the trade team traveled to Changchun, China, for the final two days of the trip. After a morning of travel, the group visited the New Fang Yuan feed company. This company has a long history of working with ASA-IM on feed technology, and in fact the plant manager had a photo of himself with a group visiting an Iowa farm.

When asked about the soybean meal the company uses in its feed rations, the manager said he prefers meal made from U.S. soybeans over those grown in South America or even China because of the higher protein content. The limiting factor, though, is that he can’t get enough U.S. soybeans.

The big news both here and in the United States lately has been China’s first shipments of U.S. corn. A report in China Daily (the English language newspaper here) says increases in rice and corn imports had raised concerns that international grain prices would go up. The International Food Policy Research Institution maintains that grain imports are a “temporary phenomenon that will help reduce domestic prices.”

ISA CEO Kirk Leeds says that industry predicted that China would soon import corn, and industry was correct even though the government would disagree. However, he doesn’t see that there is any reason to expect the trend of importing U.S. soybeans and corn will end anytime soon.

“It’s unrealistic to expect that China will be able to avoid relying on exports of corn and other feedstuffs until the country adopts crop technology that will allow farmers in China to increase yields,” says ISA Director of Market Development Grant Kimberley. “Even then, it’s unlikely that, due to increased demand for protein, that China will be able to avoid importing grain.”

In the short term, whether or not China will continue to import corn will depend on the country’s harvest this fall. The China Daily report says the Heilongjiang region is on track for a good harvest despite weather challenges.

Peter Mishek of Mishek Inc & Associates says that soon China will have other challenges on its hands. “I believe we’re seeing the end of the surplus labor market in this country. The city is soaking up all the young people,” says Mishek. “With urbanization, there are very few 20 to 30 year olds on farms in this country anymore. Demographics are going to prompt changes like increased mechanization and fewer farmers controlling more acres.”

For the full interview with Mishek, click here:

Tomorrow the group is scheduled to visit the Cailjia Grain Warehouse and Chinese farms near Changchun.

Port officials used a scale model to explain the features of the facility

Today the trade team visited one of the largest grain export and import ports in China, Dalian. It was the first time U.S. farmers have visited the Chinese port.

The main purpose of the facility is to transport food and other goods from north to south – essentially serving as a transfer station. According to COFCO officials, Dalian is a very important strategic location for COFCO. However, the port also takes in imports from countries like the United States and Brazil, and exports to countries like North and South Korea.

“Just a few years ago we were exporting soybeans and now we are adjusting to the change of importing them,” said Zhu Shi Liang, general manager of the PDA Bulk Grain Terminal Company. “Our soybean imports are increasing every day, so in a sense we are already working together.”

The port is huge and encompasses six different operations, the smallest of which is grain handling. The facility can handle 725,000 metric tons of grain, which translates to the capacity to store 26.6 million bushels of soybeans.

According to Gary Nelson, executive director at the Port of Gray’s Harbor in Aberdeen, Wash., he believes the port at Dalian is unmatched by any port on the west coast of the United States. To hear Nelson’s comments, click here:

Representatives from the Iowa Soybean Association, AGP and Port of Gray’s Harbor met with the port officials and representatives from COFCO to attempt to develop relationships that would encourage a preference for U.S. soybeans.

“The scope and size of the market demand here is unbelievable,” says Grant Kimberley, director of market development for the Iowa Soybean Association. “It’s important for ISA to be here to culture and develop relationships to make sure U.S. soybeans are the market of preference for Chinese buyers.” To hear his comments in their entirety, click here:

Tomorrow the trade team hops on a plane again, this time to travel to the last city on the itinerary: Changchun. The group anticipates seeing a feed company and farms in the region before heading home Sunday.

The Iowa delegation with the farm managers and representatives of COFCO in a Chinese soybean field

Today was a study in contrasts. From a visit to a 40,000 acre state-owned farm to a 40 acre family farm, the scale was notably different, but the farmers’ pride in their operations was certainly a common thread. For the first time, an ISA-sponsored trade team visited the soybean fields of China.

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 second farm the trade team visited was located in the Dayong 4 village of the Hulan district where the delegation caused quite a stir in the village. They met with the woman who runs the 40-acre farm.

The farmers in the delegation noted that the soybeans in this region are of very consistent quality and seem to suffer from little disease or insect pressure.

ISA President Elect Randy Van Kooten observed that the soybeans were very healthy looking and appeared that they would yield well. To listen to the full interview, click here:

Tomorrow the trade team travels to Dalian, a major port city in China.

Click here to view the embedded video.

Click here to view the embedded video.

Click here to view the embedded video.

Mountains cover the landscape for as far as the eye can see

Today the trade team traveled north to the city of Harbin, which is located in the Heilongjiang province. According to USDA, this area of China produces 33 percent of the soybeans grown in this country. Tomorrow we’ll visit a large scale state-owned farm and see soybean production here, a first for an ISA-sponsored trade mission.

It will be interesting to talk to Chinese farmers and learn more about soybean production here. Even more interesting, in my view, will be the interaction between farmers from Iowa and China. My guess is they’ll find they share many things in common, most importantly the critical task of feeding the world.

Incidentally, one of our hosts pointed out yesterday that Iowa nearly produces an equal amount of soybeans to all of China. While Iowa’s soybean production averages 13.5 million metric tons, it’s estimated that China’s total soybean production is about 15 million metric tons, but has been as low as 12.5.

Looking at the countryside from above as we flew from Beijing to Harbin, it’s easy to see why China needs partnerships like those with U.S. farmers to feed its people. We flew over mountains that covered a huge expanse of land as far as I could see, shortly followed by a huge desert. That being said, landing at Harbin looked very similar to Des Moines, where corn also can be seen from the airport runway.

We’ll share our observations from the soybean fields of China tomorrow.

While we were waiting for our flight this morning, ISA CEO Kirk Leeds talked to Glen Heitritter, corporate director of marketing for Ag Processing, Inc. He notes that one feature of the expansion of Gray’s Harbor (mentioned in an earlier post) is the ability to load vessels with more than one commodity. This is very appealing to purchasers in China who want to be as efficient with their resources as possible. For the full interview with Glen, click here:

The trade team meeting with COFCO, China's largest soybean processor

As generations of Americans become further removed from farms, concern about where their food comes from increases. A growing segment of the Chinese population shares this concern.

Yesterday, I reported that soon, for the first time, the number of Chinese living in urban areas will equal that of those living in rural areas. Increasingly, China relies on imported food as the population grows and more people can afford to eat more protein. As the percent of imported food grows, so does the concern about the quality of that food.

That’s why companies like COFCO, China’s largest soybean processor, are interested in working with the Iowa Soybean Association and Ag Processing Inc. (AGP). The two organizations, paired with the Port of Gray’s Harbor, represent a direct link from the farmer to the Pacific Rim.

Of particular interest is an expansion project AGP has undertaken at the Port of Gray’s Harbor. Beginning in 2012 the facility will have storage capabilities that will allow AGP to store whole soybeans and corn, as well as enable the cooperative to handle DDGs more efficiently.

“We believe the expansion will allow us to become a major link and gateway to the Asian market,” says Calvin Meyer, group vice president of AGP. “The farmer owned system is very important to companies like China. COFCO is focused on quality from farm to table, which fits in well with AGP’s philosophy.”

For the full interview with Cal Meyer, click here:

Obviously, the farmer is the focus of the farm to fork philosophy, which is why the soybean processors in China are very interested to hear what the farmers leading the Iowa Soybean Association have to say.

According to Delbert Christensen, president of the Iowa Soybean Association, 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.

For the full interview with Delbert Christensen, click here:

Tomorrow the trade team leaves Beijing on an early morning flight. We are traveling to the City of Harbin, located in Northern China.

Randy Van Kooten, James Tsao, Calvin Meyer, Gary Nelson, Glen Heitritter, Grant Kimberley, Kirk Leeds, Peter Mishek and Delbert Christensen visited the Hall for Prayer of Good Harvest at the Temple of Heaven

Because today was Sunday and businesses are closed in China, the trade team took the opportunity to learn more about Chinese culture, meanwhile learning more about those with whom they do business. The group first visited Tiananmen Square, the site of the famous protests, where millions queue up to see the grave of Chairman Mao, who, according to our tour guide, says is regarded like a god to many Chinese people.

The group then visited the Temple of Heaven. This complex of Taoist buildings in the southeastern part of central Beijing was visited by the emperors of the Mind and Qing dynasties for annual ceremonies of prayer to heaven for good harvest. The temple complex, built in 1420, was inscribed as a UNESCO World Heritage Site in 1998.

Great Wall of China was the trade team’s final stop for the day. Because Beijing is the political center of China and strategically located, many walls were built in the area. The Great Wall in Beijing built during the Ming Dynasty (1368-1644) is most often seen, running over 373 miles and containing about 827 city wall platforms, 71 passes and many tours. Famous Great Wall sections include Badaling, Huanghuacheng, Mutianyu, Jiankou, Gubeikou, Jinshanling and Simatai. The Great Wall is the only manmade structure than can be seen from space. The trade team visited the section of the wall called Mutianyu.

Tomorrow the team has a number of meetings beginning with representatives from COFCO.

Click here to view the embedded video.

ISA President Elect Randy Van Kooten exchanges business cards with Jeffery Xu of Chinatex

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

Jeffery Xu, chief economist for Chinatex Corporation explained why they shifted their attention away from cotton and toward soybeans. “We saw people were wearing fewer clothes and eating more meat,” quipped Xu. And since Chinatex’s entrance into the soybean crushing business “there has been huge growth in the oilseeds and meal markets.”

In fact, according to Xiaoping Zhang, deputy director of ASA-International Marketing, 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.

China grows soybeans, so why have imports grown so sharply in the past few years? According to Zhang, Chinese soybean farmers (approximately 60 percent of them) save their seed, which reduces yield capability. In addition, some multinational corporations are hesitant to bring their best technology here, fearing patent infringement. While researchers and the government are working to improve yields, it’s not happening fast enough to meet Chinese demand.

Fortunately, U.S. farmers produce a plentiful, good quality, reliable source of soybeans, and trade between the United States and China is burgeoning. According to ASA-IM, the United States achieved another year of record high market share in China this year and there are still three months remaining in the fiscal year. For the first nine months of the 2009-2010 purchasing year, U.S. farmers provided 61.2 percent of the soybeans China imports. This compares to 51.3 percent market share in 2008-2009 and 36 percent in 2007-2008.

This is why it is so crucial to both countries to develop and maintain good relationships. China remains a growing market with great potential for U.S. soybeans, meal and oil. And China needs a reliable source for good quality soybeans – and plenty of them.

Between meetings today some of the trade team made a quick tour of the Forbidden City. Because tomorrow is Sunday, the trade team will spend the day exploring the area around Beijing, including a trip to the Great Wall.

Guest Blog by ISA CEO Kirk Leeds

It is Saturday night here in Beijing and we have now completed our second day in China.  Although the temperatures have been very hot here lately, today’s high was in the low 80s.  It was overcast (combination of clouds and smog) and humid.

We started the morning with a meeting here at the hotel with three staff members of a government company called Chinatex.  The firm was originally created to handle cotton and other textiles, but they entered the soybean trading business in 1997 when they saw that “soy was more expensive than eggs.” Today they are the third largest crusher of soybeans in China with annual revenues exceeding $3 billion (US).  Even though the country is already over built with soy crushing facilities, they will soon be opening their eighth plant in China.  They believe that the size and the location of their plants will help them remain competitive in the global crushing business.

Later in the day, we were able to meet with staff of the American Soybean Association – International Marketing (ASA-IM).  They provided a very good overview of the current year exports of US soybeans to China and thoughts on future growth opportunities.  Exports of US soybeans to China this marketing year have already exceeded 844 MILLION bushels – just under TWICE Iowa’s total annual production of soybeans.  And to think, before 1996 they did not import any soybeans.  This is a market that has grown from 15 million bushels from the US in 1996 to 844 million bushels in 2010.

Most of this demand is being driven by the consumption of soybean meal.  Since 1990, the overall consumption of soybean meal in China has increased 3,000 percent!  More Chinese with more money are eating more meat and this trend is going to continue for the foreseeable future.  Great news for Iowa’s soybean farmers.

This evening, we had a dinner meeting with three staff members of the Great Food Company of Taiwan.  They flew from Taipei to have dinner with our delegation.  The meal was another traditional Chinese banquet with lots of foods that one could not identify.  The whole chicken, including the head was the highlight of the meal.  I think we were served at least four different kinds of dumplings, a couple of which were pretty good.

Throngs of tourists visit the 600 year old Forbidden City

We did have about three hours around mid day to take a short taxi ride to the Forbidden City.  I have had the opportunity to visit the former Imperial grounds on several occasions, but was just as impressed by this 600 year old structure as I was the first time I visited.  Our tour guide said that it took about 1 million peasants six years to complete this massive construction project.  With just under 10,000 individual rooms, it would take something like 27 years to sleep in each room for one night.  The size of the complex and the incredible beauty of the buildings and artwork is a must see on everyone’s “bucket list.”

Tomorrow (Sunday) we should have a bit more time to see some of the cultural sites of the city.  If I can get the technology figured out, I will try to attach some photos to my blogs.

A traditional Chinese dancer wowed the group

“We have two main goals for this mission,” says ISA CEO Kirk Leeds. ”One goal is to continue to build relationships with key customers in China.  The second goal is to gain a better understanding of the capacity of China to grow corn and soybeans by touring the production regions in Northeast China.  Even though I have been to China several times before, this will be my first opportunity to see first-hand some of China’s grain and oilseed production areas.”

Trade team participants were treated to a performance of traditional Chinese music

This evening the group met with senior managers from COFCO. Founded in 1949, COFCO is a leading grain, oils and foodstuffs import and export group in China and one of its largest food manufacturers.

During the dinner, one of our hosts said he welcomed us not as guests, but as family. The group was treated to a traditional Chinese dinner as well as entertainment that showcased traditional Chinese music and dance. The trade team will have more formal meetings with COFCO on Monday.

Tomorrow morning (Saturday in Beijing – Friday evening in Iowa) we will meet with another major importer of U.S. soybeans before meeting with a group of buyers from Taiwan later in the day. The group from Taiwan is flying to Beijing just to meet with our delegation. In addition, we’ll receive a briefing from ASA IM/FAS.

Guest blog by Grant Kimberley, ISA Director of Market Development

This is my third trip to China and while its a long 13+ hour flight from the United States, I am still amazed at how small our world has become that we can smoothly travel half way around the world in a relatively short period of time.  That being said, these flights can still be grueling. 

With the time change being 13 hours ahead, we arrived in Beijing on Friday afternoon after leaving Des Moines first thing in the morning on Thursday.  We flew in constant daylight, with many more hours of daylight left to go by the time we landed. By the end of the night it’s easy to feel like a you’ve been in some sort of time warp. Eventually a person gets adjusted to it, right before it’s time to head back home. This time, the flight path we took was a little different than I have taken in the past.  We ended up flying almost straight north out of Chicago and right over part of the Arctic Circle.  It was amazing to look out and see the ice sheets covering the ocean.  

International trade is critical to the U.S. soybean industry.  More than 50 percent of what we produce in the U.S. is exported each year and out of that roughly 25 percent is going to China.  By the way, the economic development in this city and country is nothing short of phenomenal.  They are the major growth market in our world and should continue to be so for many years to come.   

Once we arrived Friday afternoon, ISA joined representatives from Ag Processing Inc. (who’s one of the largest exporting and processing co-ops based mainly in Iowa and Nebraska) and checked into the hotel before holding our first meeting.  We attended an opening dinner meeting with representatives from COFCO.  On Monday, we will hold a more formal meeting at their corporate headquarters with their key executives to continue dialogue and to give a formal presentation.    COFCO is the largest grain and oilseed buyer in China.  They are an absolutely huge company that imports more than some countries.   Meetings like these, and relationship building in general, are very important in the Asian and Chinese culture.  In order to do business more effectively, relationships need to be built in this part of the world.  ISA is helping build customer preference for U.S. soy and soy products in partnership with US Soybean Export Council/American Soybean Association – International Marketing and companies like AGP, by demonstrating the quality consistency and reliability of our products, so the Iowa soybean farmer will benefit with better markets as a result of increased international trade. The goal for AGP, as they expand their new export facility in Grays Harbor, Washington, is to sell Iowa soybeans and products to key customers like COFCO.    

We have a busy next few days and week ahead of us with a more formal meeting with COFCO as well as other key companies. Later in the week we travel to the northeastern part of China to meet with other importing feed and food companies, visit seaport terminals and observe farms and crops currently growing in the field, to better gauge their current and future production capacity, which will impact future demand.   

We’re just at the beginning but we’re off to a great start of what should be a very productive week.   

ISA CEO Kirk Leeds

In a relatively short amount of time, China has gone from a net exporter of soybeans to importing 60 percent of U.S. soy exports. It’s estimated that this developing country will purchase 700 million bushels of soybeans this year — that’s one and one-half times Iowa’s total soybean production.

A new experience for Leeds and the rest of the trade team this year will be a trip to the soybean production areas of China.

Stay tuned, as we report on what we learn during our travels via our blog posts and audio reports. Also check Flickr at the lower left side of the blog for photos we’ll post from the road.

Please comment and ask questions in the comment space on the blog, or e-mail ksimon@iasoybeans.com.

ISA CEO Kirk Leeds talks about his upcoming trip to China.
Click here: