As U.S. and Chinese trade officials scramble to resolve trade tensions between the world’s top economic superpowers, participants in the Iowa Farm Bureau Federation (IFBF) market study tour to China saw first-hand that, whatever the outcome, China will remain a big and vital market for crop and livestock farmers. But, they said, the 10-day visit to China and Hong Kong also made it clear that China will continue to be a customer that is frustrating, opaque and difficult to depend on.
With its vast population and growing wealth, there is no question that Chinese demand will always have a big influence on the price of soybeans and other Iowa-grown commodities, said Erik Oberbroeckling, a Clayton County Farm Bureau member who raises corn and soybeans near Garnavillo. “There are just so many people here, and it’s clear that, as their wealth grows, they want a more upscale diet,” he said.
The Iowans were surprised by China’s commitment to invest in infrastructure. They marveled at super highways that ringed China’s cities. They were impressed riding one of the bullet trains that connect major cities. And they could not believe the pace of high-rise apartment construction on the edge of every large and small community.
But after visiting with officials from the U.S. Embassy in Beijing, leading Chinese agribusinesses and trade associations, Duane Bodermann, a Howard County Farm Bureau member, wondered if U.S. farmers can ever feel secure about sustained Chinese demand.
“I know that we need the Chinese market, but I just can’t tell if we will be able to ever really count on it,” said Bodermann who raises hogs, along with row crops near Elma. “It really looks to me that they are going to be continue to be difficult trading partner, even after the current trade issues are settled.”
Jay Hofland, an O’Brien County Farm Bureau member, agreed that reading the China market is tough. “I don’t think they are feeling the stress from the trade tensions that we hear so much about,” he said. “That makes me a little less optimistic about demand from China in the future. They really act like they will be able to get the food they need from us or other suppliers.”
One problem, noted Tracy Frahm, a Jackson County Farm Bureau member, is the tendency of the Chinese government to throw up arbitrary roadblocks that can cut off U.S. exports. “You just always worry that they will change the rules in the middle of the game. That makes it so hard to plan as a farmer,” she said. “It makes you want to work harder to develop other markets beyond China that might be more reliable.”
The inconsistency and opaqueness of Chinese market has been a problem for U.S. agricultural exporters, long before the current outbreak of trade tensions, said Dave Miller, IFBF international programs consultant.
“The reality is that China, despite having a capitalist economy, it still operates on a strict command and control political system,” Miller said. “With very narrow decision making at the top, a single news release or speech by the right official can have serious implications for our exports.”
Miller, who recently retired as IFBF director of research and commodity services, noted that exports of many U.S. commodities and value-added products, such as poultry, beef and dried distillers grains, suffered when China abruptly changed policies. “Soybeans are the latest to feel the heat, but there is a long list of U.S. products that have been affected by China imposing rules arbitrarily.”
Max Hunter, a Winneshiek County Farm Bureau member, said it was clear to him that, while China needs massive amounts of food, the government was very serious about controlling imports. “They seem to want to be sure they are not too dependent on any one exporter,” he said. “It also seems pretty clear that they want to always be the top dog,” he said.
Another issue with the Chinese market is accessing reliable information about supply, demand and other issues, said Steve Peterson, a Webster County Farm Bureau member. He and other participants on the market study tour noted the widely contrasting reports they heard about the seriousness of the African Swine Fever epidemic in large parts of China.
The Iowans heard from U.S. embassy officials and agribusinesses that the government was struggling to control the disease, which does not affect humans but is deadly to pigs. However, in a meeting with the China Animal Agriculture Association, the Iowans heard a repeat of the government’s official line that the disease was well under control across the country and no longer a major threat.
“Getting reliable information from the Chinese is always tough and that’s definitely what we say here,” Oberbroeckling agreed.
While the Iowa Farm Bureau members picked up definite concerns about the future of the Chinese market, participants said the market study tour of China was very valuable. “It’s so important to get to know your customers and see what they want,” said Hofland, who raised hogs and row crops. “This is really the best way to do that.”
Jackson County’s Frahm noted that there is no substitute for being on the ground to really to get a feel for a market. “You really have the see and smell a place to get a real sense if it,” she said.
The IFBF China Market Study tour started March 1 and participants returned to Iowa March 10. Also participating were: Scott and Arin Anderson of Winnebago County, Robert Casterton of Bremer County, Betsy Freese of Warren County, Kevin Holst of Scott County, Charles and Joanne Kuster of Polk County, Andrew McDowell of Polk County, Randy Renze of Carroll County, Bob and Barb Sexton of Calhoun County, Ann Vorthmann of East Pottawattamie County, Darrel and Della Weems of Dallas County and Shelby Williams of Benton County. IFBF board members Randy Brincks and Matt Schuiteman also participated in the market study tour.