By T.J. BURNHAM
Trade missions and shows, market development and access, domestic ag deals with foreign customers. All are in the bailiwick of the Agricultural Trade Office to help U.S. farmers penetrate the Chinese marketplace, says Keith Schneller, who heads up the American Consulate General’s Shanghai ATO.
“China has really taken off as a market for U.S. farm products,” he says, noting a trend from less than $10 billion in U.S. ag exports to China in 2006 to $20 billion in 2012. “I anticipate that figure will be $28 billion at the end of this year.
“I believe we’ll be seeing China buy more beef.”
Red meats are the largest growth sector for U.S. consumer-oriented exports to China, Schneller reports, followed by dairy products and tree nuts.
“China is a complicated market,” he says. “While Shanghai is a very modern city, most of China is still developing.” Seventy percent of food is sold in wet markets on streets, with less than 25% sold in modern supermarkets.
But with China investing heavily in building new infrastructure, the affluence of the nation and preference for quality U.S. goods is increasing, he observes. What looms as a golden potential for the future of supermarket growth in China is its large number of big metro areas. More than 160 cities have more than a million people living in them, concentrating the market in a specific target area.
Meanwhile, people are making more money to buy U.S. produce. “Higher incomes lead to increased consumption,” says Schneller. “We need China, and China needs U.S. agriculture.”
The Chinese middle class is still growing with 300 million consumers today, he says, and the desire for safe, imported food and beverage products is growing along with it.
Millions on line
Marketing on the Internet is a prime resource for agriculture, with 600 million online today.
In one day called “Singles’ Day” on Nov. 11, the Chinese fill cyberspace with endless shopping. One source, Alibaba Weibo, found that in 2013 the Chinese spent nearly $6 billion in 24 hours in product purchases on this one day alone.
America’s big shopping day, black Friday, posted less than $3 billion in marketing by comparison, Schneller told the Colorado Governor’s Forum: Colorado Agriculture earlier this year.
“China’s TMall site does more business each year than Amazon and eBay combined,” he adds.
TMall has 500 million registered users, 40 million daily hits and 60,000 registered merchants.
One evaluation of the impact of TMall was the sale of 168 tons of US. cherries in July 2013.
Total Chinese retail e-commerce sales next year are predicted to rise to $445 billion, compared with the U.S. predicted total output at $270 billion, according to eMarketer and Macquarie Research.
“There are already 600 million smartphones in China,” Schneller says. “Chinese consumers are becoming more sophisticated.
“The social media will help us lead Chinese to our products,” he adds.
The new farm bill’s renewal of the market access program for $200 million a year for the next five years to help U.S. producers expand into exports will help develop this nation’s sales with China markedly, Schneller believes. “We are very relieved to see this program continued,” he says.
This article published in the July, 2014 edition of WESTERN FARMER-STOCKMAN.
All rights reserved. Copyright Farm Progress Cos. 2014.
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