China was the hot topic of the day at the 2003 United Soybean Board (USB) and American Soybean Association (ASA) International Marketing Conference in St. Louis.
A press conference with USB farmer-leaders, and ASA regional and country directors, dealt with the topics of increasing the value of U.S. soy exports, market share in targeted markets and emerging trends in international demand.
Chris Davis, USB International marketing chair and soybean farmer from Shullsburg, Wis., says competition for global market share is as intense as ever.
With the United State's marketshare falling below 30 percent, he says it is more important than ever before to build a preference for U.S. soybeans in those markets where U.S. farmers have the ability to compete.
“A drop in U.S. production, resulting in a decreased carry-out supply, lessens the ability of the United States to increase its share of the global market,” he says. “Because of these changing market conditions, the United Soybean Board has adopted three new strategies for international marketing to increase our share of targeted export markets.”
Approved by USB farmer-leaders in December, the new International Marketing strategic plan builds a preference for U.S. soybeans among trading partners, then concentrates promotion efforts in those countries where U.S. farmers are best able to compete.
“The competition for the global market is getting tougher by the minute, and these strategies give us a better chance to succeed in the global market,” Davis says.
Corwin Fee, ASA trade policy and international affairs chair and soybean farmer from Knoxville, Iowa, says, “The importance of the market for U.S. soy cannot be overstated, because soy is the number one vegetable protein and vegetable oil in the world.”
One country where the United Soybean Board's checkoff-funded market development programs are finding success is China.
According to Davis, China has imported more than 194 million bushels of soybeans in this marketing year, and continued growth is expected. “Checkoff funding programs are building customer preference for U.S. soybeans with China's livestock and poultry industries,” he says.
John Lindblom, ASA Southeast Asia Regional Director agrees that Southeast Asia continues to be a growing market for U.S. soy, as it has been over the last 10 to 15 years. “It's a very rapidly growing market representing our number one export customer for soy meal, and our number six market for soybeans. It represents about $1 billion in U.S. exports annually, and is continuing to grow despite current economic conditions.”
Phil Laney, ASA country director for China, agrees that China's livestock industry is fueling an increased need for soy meal. “Almost every week a new crushing plant or a substantial expansion to a current plant is announced in China.”
While soy protein is something that has traditionally been fed to livestock, Davis says, demand for soy protein has grown by 85 percent in last 10 years due predominantly to larger incomes in the Asia region and consumers' growing ability to add meat to their diets. As a result, he says, economic conditions in those countries directly effect the market for U.S. soybeans.
“When Asian middle class incomes increase, consumers do three things: they improve their health care; they improve their education; and they improve their diet by adding protein,” he says. “So China is a very important, dynamic, growing market.
“The Chinese economy is really quite dynamic, with almost no negatives in the overall demand picture. I expect China is the most dynamic economy anywhere in the world, with demand skyrocketing for protein and table oil.”
The United States' inroads into the Chinese market, however, are not without roadblocks. Lindblom says the United States is facing increased competition from Argentina, and there continue to be concerns about diminishing quality, as related to food protein.
“We can continue to sell our quality, but we have to focus on those areas where we have control,” he says. “For example, farmers have control over what they can grow. If there are soybean varieties that provide the same yield, but higher quality with regards to protein, we would urge producers to consider planting the variety that offers a higher protein content.”
In addition, Laney relays reports about China rejecting applications for transgenic varieties. However, he says, “It's just a blip in the road. China wants Monsanto to complete field trials of the two biotech varieties proposed for certification, and while we feel those are unnecessary, Chinese law requires them. Obviously we would like to see a permanent certification issued to stop all of this silliness, but we don't take this as a serious long-term issue.”
In the European Union, Fee says, international marketing efforts with U.S. checkoff dollars have helped keep European Union markets open to U.S. soybeans “We are working with exporters and traders to identify and understand our customers, in order for the United States to maintain its role as a premium supplier,
“Even with a more competitive market the United States maintains its dominance in several markets, including Africa and Japan,” Fee says. “We have just finished our third year in a row of record exports, and we must continue to partner with USB, industry and foreign agriculture service to continue.”
Thad Lively, ASA Western Europe regional director, says Europe has been the largest export destination for U.S. soybeans for a number of years, but Europe is expected to be surpassed by China for the first time this year. At the same time, he says, Europe will continue to be a very important market for us, despite increased competition with Brazil and Argentina.
“Strategies for Europe are changing somewhat in order to hold onto the share of the market we have today, and we are stepping up our effort to address trade policy and market access issues,” he says. “We are disappointed in the stance the European Union governments are taking on the biotech issue, but in the near term I think we've done a fantastic job representing the interests of the industry.
“We simply cannot sit by and watch what has been happening in the European Union to continue. We have to continue hammering away to change that,” Lively says. “We are very aware of the fact that there are concerns among some consumers. However, we are simply not going to win a public relations battle with the likes of Greenpeace, and the money they bring to it, in Europe.”
Instead, he says, the U.S. soybean industry is concentrating its work with legislators, health care workers, and others respected as credible sources of information about food safety. “Working directly with consumers would frankly not be the best use of money.”
Fee adds, “We have worked extensively with legislators in the European Union to stress the safety of biotechnology, and we feel that we have made great inroads. We're putting pressure from the inside-out, so our resources are better spent targeting the most influential people.”
According to the American Soybean Association, U.S. soybean farmers exported nearly 1.1 billion bushels of soybeans during the 2001-02 marketing year, surpassing the previous record set the previous year by almost 90 million bushels.