December 13, 2011

Council corn mission told to expect strong Chinese demand

The Nebraska Corn Board’s Kelly Brunkhorst discusses
U.S. corn supply and demand with representatives while in
Japan as part of the U.S. Grains Council’s 2011 Corn Mission.
Tell your children to stay in agriculture because demand for U.S. farm products will continue. That was the overriding message members of the 2011 U.S. Grains Council’s Corn Leadership mission heard while visiting China, Japan and Vietnam earlier this month.

“Discussions with the U.S. Agricultural Trade Office in Guangzhou, China, led us to the conclusion that strong demand for a number of U.S. farm products will continue,” said Kelly Brunkhorst, director of research for the Nebraska Corn Board and a member of the Corn Mission, in a news release.

“In addition, the general consultant went on to describe United States agriculture trade opportunities with China as ‘immense,’” he said. “Such opportunities for trade provide a great outlook for U.S. farmers.”

During the 10-day mission to Southeast Asia, the group visited the southern China city of Guangzhou. Located in the Pearl River Basin on the South China Sea, Guangzhou is the largest feed manufacturing center in China. With a population estimated at nearly 15 million and average income of $16,800, its rapidly growing middle class consumes the most meat protein in China.

“China is very sensitive to food security issues and stability is job one for the government,” said Jorge Sanchez, director of the U.S. Department of Agriculture’s Agriculture Trade Office in Guangzhou. “The government wants to keep farmland producing food and China has the ‘invisible boot’ that pushes farmers to produce, but the government also knows there never will be nearly enough land to meet demand and I don’t see yields growing or more farmers going into production.”

In the past, China supplied corn to other Southeast Asian countries but that changed in 2010 when the country became a net corn importer. For the coming marketing year, China is expected to import nearly 3 million metric tons of U.S. corn, making it the fastest growing, and second largest, U.S. corn customer. Sanchez said Chinese corn imports could grow to between 4 million and 10 million metric tons annually. However, policy and infrastructure issues pose potential threats to this business.

For example, inconsistent biotechnology policy and a lack of asynchronous approval for new U.S. biotech events is a potential issue U.S. corn growers are watching in China. Sanchez stressed the importance of relationship building on the issue to avert cargo rejections. His office is working through social media in China to proactively build consumer confidence in biotechnology.

Those on the mission also spent time in Japan and Vietnam, assessing corn markets first hand and meeting with grain buyers, end users and government officials.

While in Japan, the team met with officials at the Kushiro Port in Hokkaido. Port officials detailed plans to expand the port’s capacity to accommodate larger vessels. Kushiro is the largest port facility in the heart of Japan’s major dairy producing area.

“This construction ensures Japan will be able to take advantage of larger ships that will be able to move through the Panama Canal, which is being expanded,” Brunkhorst said. “It shows that our foreign buyers are investing in grain handling infrastructure, and the importance of infrastructure in general.”

Brunkhorst said those they met with in Vietnam made it clear the country is working to be more self-sufficient in terms of meat protein. “They are expanding their livestock operations as a result,” he said, “and that provides opportunities for feed grains and related co-products.”

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