Iowa Soybean Association » Trade Mission to China | Travel Journal with Karen Simon

Last words

As has become the tradition during Iowa Soybean Association trade missions, ISA CEO Kirk Leeds has gathered impressions from those participating in the trade mission. Those interviews follow, but first, to hear Kirk’s thoughts about this trip, click here: 

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Iowa’s Deputy Secretary of Agriculture, Karey Claghorn, comments on her fourth trip to China, saying that the changes and growth never cease to amaze her. To hear that interview, click here: 

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ISA President Randy Van Kooten comments on the importance of maintaining China as a “very valuable customer” To here that interview, click here: 

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Dean Coleman, ISA president elect comments on China’s insatiable demand and the need to increase the yield of Iowa soybeans:

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Grant Kimberley, director of market development for ISA commented about the importance of continuing to build relationships with our key customers in China:

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And finally, click here to hear my comments about the importance of sharing this story through the trade team participants’ eyes so all Iowa soybean farmers can learn more about this important market for U.S. soybeans.

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Dreaming in Chinese

The ISA trade team met with representatives of one of the largest soybean crushers in China, COFCO.

Evidence that there is incredible growth and opportunity here in China continues to mount. Today, the trade team visited a COFCO soybean crushing plant near Guangzhou, China.

COFCO currently crushes nearly 5 mmt of soybeans each year. The company plans to double its capacity in the next year, and expects to continue to grow each year. Grant Kimberley, ISA director of market development, noted that this is a very competitive business environment, and that the soybean crushers in China will continue to expand so they can capture and maximize their market share.

The COFCO representatives from the crushing plant we visited said they prefer U.S. soybeans because they’re easier to crush and process.

The trade team also visited a feed mill owned by the Haid Group. This particular feed mill specialized in aquaculture feeds, and has been achieving remarkable growth of 60 percent each year.

“This will continue to be a strong market for at least another decade,” Kimberley commented.

To hear Kirk Leeds’ interview with Grant Kimberley, click here:

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When I start dreaming in Chinese it’s a sure sign that it’s time to come home. Today was the last day of what was, by all accounts, a very successful trade mission in China. Tomorrow we begin the long trek home. (We figure it will take us about 36 hours of travel time.) We hope for safe and uneventful travels and will post some final thoughts along the way.

Team “Calls Home” to Visit with ISA Members and Ag Journalists

This morning several ISA members and ag journalists accepted the invitation to participate in a conference call with the team visiting China.  Members of the team reported on what they’re learning about Chinese transportation, farming, aquaculture, expected growth in demand for soybeans in the next several years and more. In addition, they made observations about their experiences including the food, bullet trains and the warm, gracious people they are meeting.

To hear a recording of the call, click here. 

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Trade team watches U.S. soybeans arrive in China

Members of the ISA trade team showed off the U.S. soybeans that had just arrived at the port.

Today the ISA trade team was able to see U.S. soybeans offloaded from a Panamax vessel into the Port of Huangpu, the largest port in southern China. It was the first time anyone on the trade team had seen U.S. soybeans arrive in another country. The ship arrived last night, and had originated from Port of New Orleans.

ISA Director of Market Development Grant Kimberley said that the protein and oil content of the soybeans was good and there was very little foreign matter. He said it was gratifying to see a high quality U.S. product coming into China.

The trade team watched the soybeans being removed from the vessel. From the ship, the soybeans were transported via truck to a flat storage area where they will be kept temporarily until they are transported to a local soybean crushing plant.

Earlier today, the team visited Dongling’s Nansha soybean crushing plant and soybean oil refinery. Workers were loading bags of soybean meal onto a vessel to be transported to customers in southern China.

 

Big cities mean big demand

Renault Quach, vice general manager of Dongling Grain & Oil, presented members of the Iowa trade team with a commemorative plate.

The ISA trade team traveled to Guangzhou today to meet with Renault Quach, vice general manager of Dongling Grain and Oil Co., Ltd. Talking with Renault is always enlightening for trade teams. The amount of growth he predicts in the soybean markets in China is astounding.

He estimates that 55 mmt of soybeans will be imported from the United States and South America during this trading year. However, the growth he anticipates is staggering. He estimates that in five years (the 2014-2015 trading year) China will import 68 mmt of soybeans. To put that into perspective, he predicts demand will increase approximately 13 mmt, which is equivalent to Iowa’s annual soybean production.

The Canton Tower is 600 meters tall, which is 150 meters taller than New York’s Empire State building.

In addition, Renault estimates that corn production in China was not as high as the government predicted, so he estimates the country will need to import about 4 million tons of corn, and most of those imports will probably come from the United States.

To hear ISA CEO Kirk Leeds’ interview with Renault Quach, click here:

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Kirk also spoke with Pete Lombardo who is the AGP representative in China. He talked about the importance of developing relationships, noting that the Chinese like the idea of working directly with farmers through farmer-owned co-ops like AGP.

To hear the interview with Pete Lombardo, click here:

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And finally, the group had dinner at a traditional Chinese restaurant that was larger than any of us had ever seen before. ISA President Randy Van Kooten talks about what he saw at the restaurant. To hear that interview, click here:

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The group had the opportunity to visit the Canton Tower after dinner. The communications tower is 600 meters high — that’s about 150 meters taller than New York’s Empire State Building. The views were amazing.

Tomorrow the group will visit a soybean crushing plant and the Huangpu Port.

Trade agreements are increasingly important to U.S. soybean growers

The ISA trade team met with representatives from Huamei Oil

Today, the trade group met with representatives from Huamei Oils, where we visited their port facilities and a soybean crushing plant that is currently closed for renovation. Once the plant opens in June, Huamei Oils anticipates purchasing the equivalent of a Panamax shipment of soybeans each month. Of course we hope those soybeans come from the United States, but the general manager of the facility said repeatedly that the price is the main criteria for their purchasing decisions.

As we visited the crushing plant, ISA CEO Kirk Leeds was reminded of the overcapacity of crushing facilities in China. Because the government decided to make investments into crushing plants a priority a few years ago, it is estimated that China currently is 50 percent over capacity.

Representatives from Huamei Oil showed the ISA trade team their port facilities.

Kirk expects this over capacity will drive China’s interest in purchasing whole beans instead of soy meal or oil. This trend will continue to put more pressure on U.S. crushers, who are already challenged by the flat or only slightly increasing demand for meal by the U.S. livestock industry. He anticipates that the export of the majority of the crop will continue. (United States soybean exports exceeded 60 percent this past year.)

He adds that this trip is a reminder of the importance of getting trade agreements in place so U.S. soybeans can be sold into markets created in China and other fast growing markets around the world.

For more comments from Kirk Leeds, click here:

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China is, by far, the largest importer of U.S. soybeans and expects to set a new record for soybean imports again this year. One wonders if this trend can possibly continue, or if it’s wise to put all of our eggs (or soybeans) in one basket. However, I think the time has passed to doubt this market.

China is a real economic force to be reckoned with, and cannot be ignored. Last week, the World Bank predicted that China will overtake the United States as the world’s largest economy in 2030. In 2010, China overtook Japan to become the world’s second largest economy. China’s target is 8 percent GDP growth for this year, and average annual GDP growth of 7 percent in each of the next five years.

It is also estimated that by 2030 the country’s per capita income (measured in terms of purchasing power parity) may reach 50 percent of the per capita income in the United States.  In addition, it is estimated that 70 percent of the population is likely to be urban by 2030. Currently, about 50 percent of China’s residents live in urban areas.

In an unusual divergence of cultures, this "spirit house" is located in the shadow of several large wind turbines.

What does this mean for U.S. soybean growers? Huge opportunity, if we continue to build relationships with customers in China. If China hopes to feed an increasingly urban and well-off population, it must continue to increase imports of soybeans, as well as corn, rice and other commodities.

The United States is uniquely positioned as the most reliable source of commodities, but we must continue to invest in production research to increase the protein and oil of the soybean and raise the yield. We must also invest in the U.S. transportation infrastructure, so we can maintain our competitive advantage. And of course, as we’ve already mentioned, trade access will be increasingly important for U.S. soybean growers.

And finally, we asked ISA President Elect Dean Coleman to share his perspectives on his first trip to China. Dean noted the stark differences in this country. “It’s like two different worlds in one place,” he commented.

After meeting with some of U.S. soybean growers’ key customers here, Dean commented,” It’s extremely important to meeting our customers in person. They grab your hand and greet you like you’re best friends, and that’s what we’re trying to do so they think of us first when they’re buying soybeans.”

To hear Kirk Leeds’ interview with ISA President Elect Dean Coleman, click here:

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Tomorrow we travel to Guangzhou, where we will meet with representatives of Dongling/Green Oil.

Imports, along with domestic production, provide food security in China

A key issue in China is the country’s ability to produce enough food to feed its people. Although China wants to be self sufficient, it’s unlikely that will be possible in the foreseeable future.

“The 1.3 to 1.4 billion Chinese people are becoming more affluent and want to eat more meat,” says Grant Kimberley, ISA director of market development, noting that this trend won’t likely slow any time soon, since China’s economy grows an average of 8 percent per year. “I see a huge demand pull from this side of the world,” he adds.

While China wants to be self sufficient, there are challenges. According to a report in today’s China Daily, a researcher at the Chinese Academy of Agricultural Sciences told that publication that limited available arable land, scarce water resources and rapid urbanization have made it very difficult to expand China’s grain harvest.

Last year, the country imported 54.8 million tons of soybeans, more than any previous year. This year, the country is on pace to set another record in soybean imports. Increasingly, China is also importing corn and wheat.  

Ultimately, food security is the issue, and the government, through large reserves, does what it can to assure its people that there is plenty of food to meet growing demand.

To hear ISA CEO Kirk Leeds’ interview with Grant Kimberley, ISA director of market development, click here:

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Tomorrow the trade team will visit a port and the Huamei Oil crushing plant.

Aquaculture: Working together to develop new opportunities

The growing demand for commercially-raised seafood presents a significant opportunity for soy-based aquaculture feeds. Currently, the greatest demand for soy used in aquaculture feeding is in the China freshwater sector, which represents 63 percent of global aquaculture. It is estimated that the Chinese aquaculture industry uses the equivalent of 300 million bushels of soybeans each year. That’s a lot of soybeans. To offer a bit of perspective, Iowa, the #1 soybean producing state, grows just under 500 million bushels of soybeans per year.

Feed me! The fish seemed to thoroughly enjoy the soy-based feed ration members of the trade team fed them.

Global demand for seafood continues to increase, with the United States consuming about $15 billion worth of seafood annually. At the same time, the wild catch of seafood is leveling off or decreasing. This represents an opportunity for the aquaculture industry, as well as the soybean industry.

Soy-based feeds and production technologies developed in China through collaborative research with the soybean checkoff is used in 18 countries. The Iowa Soybean Association, along with state soybean checkoff boards from Illinois, Indiana, Nebraska, Pennsylvania, Kentucky, South Dakota, Ohio and Minnesota, partner with the United Soybean Board and the United States Soybean Export Council (USSEC) to fund aquaculture-related research and international marketing efforts.

Today, the ISA trade team traveled to a government-owned farm on Hainan Island where various feeding trials are conducted in cooperation with ASA-International Marketing. Jim Zhang, the program manager for aquaculture for ASA-IM told the group about the projects being conducted at the research farm. He believes that the biggest opportunities for the future are in freshwater aquaculture.

To hear ISA CEO Kirk Leeds’ interview with Jim Zhang, click here:

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We stopped to admire the produce this fruit vendor was selling.


A mix up along the way today allowed us to meet this baby and her mom.


Workers at the New Hope feed mill loaded a truck with bags of feed.

A broken down van turned out to be an opportunity to walk a bit in a village near the fishery to get to the restaurant where we had planned to eat lunch. The trade team participants were likely the first westerners most of the citizens of that village had ever seen. There were lots of curious stares, but we enjoyed experiencing life in a typical village for a short time.

A wrong turn on the way to our afternoon meeting provided the opportunity to meet an adorable baby.

After lunch, the group visited the New Hope group feed mill, which processes soy-based feed for a variety of purposes, including for inclusion in fish feed rations.

Tomorrow is another travel day. We’ll travel to Shantou where the group will meet with the Huamei Oils group.

It’s about feeding people

Living in the United States, it’s sometimes easy to forget that a significant number of the world’s population is hungry. China has made great strides in reducing poverty in this country. In just 20 years, China reduced the number of people living on $1.25 per day from 84 percent to 16 percent.

Despite this monumental progress, it appears China still has a way to go. According to today’s Wall Street Journal, China still appears on the list of countries with major hunger issues. However, the Chinese government seems very committed to improving the lives of its citizens, including making sure they are well fed. And U.S. farmers are committed to help China feed its people.

To hear an audio report on this topic from ISA CEO Kirk Leeds, click here:

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Today was a travel day. The trade team traveled from Taiwan to Haikou, a city on Hainan Island. Tomorrow the group will see ASA-IM fish feeding trials to see how U.S. soybean farmers’ investments in these projects are progressing.

Protein and oil are key to competitive edge

On the second day in Taiwan, the ISA trade team traveled via high speed train to the southern part of the country to visit two soybean customers there, TTET Union Corporation and Uni-President Enterprises Corp.  The Iowa delegation heard that the United States, while a reliable source of soybeans, is at times being edged out by Brazil because Brazilian soybeans, on average, boast a higher level of protein and oil.

During a visit at TTET Union Corporation, Randy Van Kooten, Dean Coleman, Karey Claghorn and Kirk Leeds posed for a photo with Roger Y.S. Huang, president of TTET Union Corporation

TTET Union Corporation was founded in 1982 and is the largest soybean crusher in Taiwan. Company representatives expressed concern about the protein and oil content of U.S. soybean and said some of their customers request Brazilian soybeans for the higher protein and oil. However, their food grade soybean customers prefer the taste and smell of U.S. soybeans in products like soy milk and tofu.

The trade team also visited Uni-President Enterprises Corp., a global food company. The company, which originated in Taiwan, now employs 200,000 people worldwide.

Anthony Thang, ASA-IM country director in Taiwan, traveled with the group and explained that while the Taiwanese market is mature, it is an important one for the United States.

“We’ve had an office in Taiwan for 42 years and the country is very supportive of the U.S. soybean industry,” says Thang. He added that typically 75 percent of soybeans imported to Taiwan are from the United States. However, this past year, that market share dropped to 60 percent because of the improved quality of Brazilian soybeans.

To hear an interview with Anthony Thang, click here:

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Iowa’s Deputy Secretary of Agriculture Karey Claghorn observed that trade missions to countries like Taiwan are vitally important.

The trade team traveled via high speed train from Taipei to Tainan today.

“When buyers have the opportunity to buy from the United States or another country, all things being equal, they may buy from the people they know,” she says, noting that the meetings here could possibly give Iowa a competitive edge in the end.

To hear Karey Claghorn’s interview with ISA CEO Kirk Leeds, click here:

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And finally, Kirk Leeds also interviewed Sophia Lee of FoodChina, who, although a native of Taiwan, is a graduate of Iowa State University. To listen to that interview, click here:

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Tomorrow, the trade team travels to mainland China. Our first stop there is Haikou, where we will visit fisheries and meet with the New Hope group.

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