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NCGA and USGC Explore Trade Opportunities in China

NCGA and USGC Explore Trade Opportunities in China

After years of predicting, it appears China is set to become a large U.S. export grain market. Last year, U.S. exports increased 50% to China.

National Corn Growers Association CEO Rick Tolman recently joined U.S. Grains Council leadership and others on a mission to China during which they assured Chinese leaders of the United States' ability and commitment to being a reliable corn supplier to their market.

Speaking at several meetings on U.S. corn production and marketing systems, the delegation followed up on contacts made during the agricultural tour to the United States by high-level Chinese officials last August sponsored by the U.S. Grains Council.

Following this visit, Tolman stressed the immense growth of agricultural imports into China from the U.S. noting that, while many sectors face a trade deficit in this relationship, U.S. agriculture actually carries a favorable trade balance here.

"Many in ag grew accustomed to experts touting China as a major market for our exports in the future," says Tolman. "While the projections continually cast this reality as only a few years away, this target has stopped moving and now offers a more concrete, immediate reality."

During these exchanges, the Chinese hosts often provided information back to Tolman and Grains Council President and CEO Tom Dorr on corn production in their country and the utilization dynamics expected for 2012 and in the longer-term.

In 2010, China emerged as the largest export market for U.S. agriculture. This follows approximately two decades of speculation that China would, at some point in the near future, become a major importer of ag products. Now, major ag exports to China by the U.S. include soybeans, cotton, wood, hides/skins, distillers grains and seafood.

Over the past few years specifically, China has become a net importer of corn. According to the U.S. Department of Agriculture's Foreign Agricultural Service, Chinese corn purchases from the United States have increased by 50% this year.

Tolman notes these totals only account for confirmed sales, and the total figure is most likely substantially higher once additional sales are moved to confirmed status.

While China currently maintains a self sufficiency rate of 95% for grain production, which includes corn, wheat and rice, constraints on land, water and other resources coupled with a consistently increasing standard of living may result in opportunities to increase corn exports to the market further.

Further increases of U.S. agricultural products to China would help to correct the large trade deficit run with China, Tolman adds. As one of the very few sectors enjoying a trade surplus with China, it is imperative that the U.S. recognize the importance of this opportunity for agriculture to create greater parity in the trade relationship.

"One of the most important steps toward facilitating increased agricultural trade with China is the development of a system or culture in which both governments view trade and political issues as separate," notes Tolman. "After witnessing first-hand the opportunities for U.S. farmers that lie in China, I urge U.S. farmers to be leaders in helping our elected officials understand that China is a good market for U.S. agriculture and that we want to supply it and that we need to keep politics separate from trade."
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