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China's world market force catches world flat-footed

Would you believe: Foie gras, the ever-so-French goose liver delicacy that gourmets around the world have long loved to love, may come from Chinese geese.

Sacré bleu!

It is estimated that 65 percent of the goose liver for foie gras is now produced in China, and many French farmers are up in arms about it, demanding that the imposter product be labeled as to origin.

Sound familiar? Think U.S. catfish and its battles against Vietnamese imports. Think U.S. shrimp being displaced by Far East imports.

But China isn't just for cheap toys and athletic shoes any more. It is a major competitor on the world agricultural scene — a situation that's only going to increase with its acceptance into the World Trade Organization, says Scott Rozelle, professor and chancellor's fellow, Department of Agricultural and Resource Economics at the University of California, Davis.

“The whole world has really been caught flat-footed by China's emergence as a global market force,” he said at the annual conference of Western Growers Association. “We need to put our minds to this situation and try to figure out what's going to happen.”

But Rozelle says, data are hard to come by on China's agriculture. The Chinese government, with the exception of grains, tracks almost no agricultural production, and the reliability of numbers that are available often is questionable.

What China does, however, can be a major influence on markets and price.

“In 2002, they low-balled everyone in the world on rice, because they had huge amounts lying around,” he says. “But last year they imported American short and medium grain rice.

“It just shows that there will be short term fluctuations that no one can predict from year to year.”

Market research

Longer term economic trends point to the Chinese buying more of the world's goods, particularly high-end food products, as its population becomes more urban and incomes increase.

Rozelle, who's living in China for a year as a part of his university work, says there is a need for American agriculture to put more effort and money into studies that will help understand the markets that are emerging there — and the competition.

“We need to go in and figure out supply/demand, prices, and trade, and what affects each of them. That sort of information is critical, but there's zero research money available in the U.S. to do this kind of work.

“Before now, my work was largely financed by the Ford Foundation, by the Canadians, and the Australians. USAID (U.S. Agency for International Development) won't fund this kind of work because it's a communist country, and I think this has hurt what we know about China.

“Of all the research/Extension universities in the U.S., only one has a person working full-time on China research — and that's me.

“I think we need to put our minds to this and devote the resources necessary to try and figure out what's going to happen with China, both as a customer and as a competitor,” Rozelle says.

“As opportunities increase there, and as their threat grows as a competitor, I think we will see more work in this area.”


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