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JCI: China’s Corn Imports are Beginning of ‘New Era’ 
The chairman and chief consultant of Shanghai JC Intelligence Co. Ltd. (JCI) said his organization anticipates that China will import some 1.7 million tons of corn this year, 5.8 million tons next year and as much as 15 million tons in 2014-2015.

Speaking through a translator, JCI’s Hanver Li told those at the U.S. Grains Council’s 50th Annual Board of Delegates Meeting that demand for corn in China is simply outstripping the country’s production trend. China’s economy continues to grow, he explained, which is driving an increase in demand for meat, milk and eggs because as incomes rise, food is one of the first items people look to buy.

In fact, JCI estimates that meat consumption per capita will grow from 59 kg in 2005 to 61.7 kg this year to 63.1 kg in 2015. Milk consumption will grow from 22.0 in 2005 to 30.1 and 33.4 in that same time frame, while aquatic products will grow from 39.2 to 44.1 and 48.9. Li said rural areas will drive meat demand, while urban centers will drive milk and aquatic products demand.

In looking at the economy, Li said China’s gross domestic product (GDP) growth rate now stands at 11 percent, although some individual provinces are seeing growth rates of 15-16 percent, as estimated by JCI. The country’s consumer price index is within a normal range, the amount of currency held by the public is strong and incomes in both urban and rural areas are rising. “There is a great future for the growth of agricultural products in China,” he said.

To answer the question about why China imported U.S. corn this year, Li explained there is simply a short supply in China right now due to production shortfalls driven by poor weather but demand has remained strong. He said prices have moved up and the amount of corn in storage has fallen – and JCI believes there is less corn on hand than the government’s official estimates.

This also explains why China’s imports of U.S. distiller’s dried grains with solubles (DDGS) have grown so quickly, he said. China is on pace to become the largest buyer of U.S. DDGS this year, buying some 1.5 million tons. JCI estimates imports of 1.5 million to 1.8 million tons.

Li said imports of U.S. corn and higher local prices for corn and wheat indicates that “we have gotten to the turning point” – the point where China will become a regular importer of corn.

In addition to economic growth, the population continues to expand, Li said, and even with normal weather, China’s ability to produce corn can’t keep up with that growth. “That’s why we’ve come to the conclusion that a new era of China importing corn is here,” he said.

Li did note that China will work to better control corn production. “Policy changes can only improve the production of corn,” he said, “and if the government invests a lot to improve the land” it could override shortfalls created by poor weather. He added, however, that this will take some time and that by then “my hair will all turn gray.”

Market Development, Other Programs Key to Growing Exports
The United States has been in an enviable position with its ability to post an agricultural trade surplus year after year, said Jim Miller, the U.S. Department of Agriculture’s Under Secretary for Farm and Foreign Agricultural Services.

Miller, at the U.S. Grains Council’s 50th Annual Board of Delegates Meeting, said that trend will continue in fiscal year 2010, when the agricultural trade surplus is estimated to be some $28 billion, the second largest in history.

“As we moved through the economic downturn, there were some impacts,” he said, “but the agriculture trade recovery is certainly well underway.”

In fact, he said, agricultural exports are expected to reach $104 billion this year, the second largest in history and below only the record $115 billion in 2008.

In an effort to increase exports across all industries, the Administration has launched the National Export Initiative with a goal to double exports over the next five years. “That is a very significant challenge,” he said. “It’s going to be a significant challenge for any sector in the economy, even in agriculture, despite its good performance lately.”

He said exports are key to growing the economy and aiding the economic recovery, because rising exports create jobs.

For agriculture, Miller said there are four areas where a renewed effort will pay dividends. Among those four areas are market development programs like those implemented by the U.S. Grains Council.

“We have a long history – you have a long history – of market development, and we’ve been relatively effective,” Miller said, adding that a budget request for increased market development funds was submitted to Congress.

He said USDA will be “extremely aggressive to make sure those funds are used in a way that allows us to maximize our efforts.”

Another item that will benefit agriculture is bilateral and multilateral trade talks. Miller said increasing trade opportunities will require a more aggressive effort within USDA, as well as working with colleagues in the Office of the United States Trade Representative. There can be accomplishments, he said, including in the Doha Round, finalizing the three existing free trade agreements that have yet to be implemented; the Trans-Pacific Partnership and bilateral issues that impede U.S. exports.

Ensuring the enforcement and compliance with existing trade agreements is also necessary, Miller said. “We will be redoubling that effort,” he said, “one issue and one country at a time.” He cited pork trade with Russia and access to markets for U.S. beef as examples. Yet he noted that agricultural trade is also dependent on the ability to market products that come from new technology and that technology itself.

“Efforts like biotechnology are at the forefront of this agenda,” Miller said.

Finally, Miller cited the global hunger and food security initiative as a way to boost agriculture exports. This effort stretches across governmental agencies and involves finding new ways to deliver foreign assistance programs. The goal, he said, is to think long term – to help educate people, build infrastructure and promote free and open markets. Over time, more people will have a better standard of living and will be more receptive to U.S. agricultural products.

“Poor people don’t make very good commercial customers,” he said. “We must create real growth and income in people oversees.”

Coverage of the U.S. Grains Council’s 50th Anniversary Meeting
Couldn’t make it to the U.S. Grains Council’s 50th Annual Board of Delegates Meeting?

Videos, presentations, biographies of the speakers and pictures are available on the Council’s website and Flickr account.

For audio casts of Council members, follow the Council Cast.

Colombia Ambassador Expresses Urgency in Ratification of Pending FTA 
Colombian Ambassador to the United States, Carolina Barco, told attendees of the U.S. Grains Council’s 50th Annual Board of Delegates Meeting that U.S. agricultural exports to Colombia have dropped dramatically, with significant market share loss due to the non-ratified U.S.- Colombia free trade agreement (FTA).

In 2008, U.S. agricultural exports to Colombia totaled nearly $1.2 billion. In 2009, this number was cut by 50 percent to roughly $600 million. The greatest loss of market share for U.S. agricultural exports to Colombia were corn, a 65 percent reduction, and wheat, a 57 percent reduction.

“Colombia has a preference to the United States as a way to strengthen Colombia’s economy,” said Ambassador Barco. The lack of a ratified free trade agreement with the United States “has a cost if we don’t carry it out … We must work together on behalf of the United States and Colombia.”

The Colombian government’s active policy is to seek trade agreements, Ambassador Barco explained, and the newly elected Colombian president will be just as proactive.

Ambassador Barco explained that Colombian exports have tripled since 2002.

“In 2002, Colombia had two free trade agreements with five countries. Now we are active in more than 11 free trade agreements with 47 countries, which represents nearly 1.5 billion consumers,” she said. “We are starting the work to implement the newly signed Canada free trade agreement and pursuing FTAs with Panama and Korea.”

Ambassador Barco expressed the urgency for the United States to ratify the pending free trade agreement with Colombia.

“The job the U.S. Grains Council does to increase international trade is will recognized and appreciated all over the world. The sooner we move on ratifying the U.S.- Colombia Trade Promotion Agreement the better,” she said.

Ag Exports on Target to be Second-largest on Record
U.S. agriculture exports are projected to be second-largest on record and surpass $100 billion dollars this year, second only to 2008 when agriculture exports surpassed $110 billion, Joseph Glauber, chief economist at the U.S. Department of Agriculture, told attendees of the U.S. Grains Council’s 50th Annual Board of Delegates Meeting.

“It’s a very big market,” he said.

The exchange rate is positive for U.S. exports, Glauber said, as the dollar versus export competitors’ currencies is favorable – and certainly better than the 2000-2003 period. He also referenced IMF data that showed the United States and Euro zone economies contracted in 2009 but recovering and turning positive this year and in 2011.

Glauber said there remains some question over how quickly the economic recovery will move forward – or whether it will falter. While sluggish growth continues in developed countries, developing countries like China and India are growing at a high clip. “We hope that continues … we need those economies to be strong,” he said.

Corn and Ethanol
While reviewing the status of the corn crop and how much of that crop goes to ethanol production, Glauber said it is important to realize that “we had a big transition” with the phase out of MTBE and a rapid increase of ethanol production from 2006 to 2008.

“The growth rate has tailed off a lot,” he said, and increases won’t be as large in the future as those seen during that period.

As the corn ethanol industry gets closer to a production capacity of 15 billion gallons – the threshold spelled out in the Renewable Fuels Standard – the growth of corn going to ethanol will slow down even further, he said, although there may be potential for corn ethanol to move beyond that 15 billion gallon limit. That depends on other factors, however, including corn ethanol being designated as an advanced biofuel and the ability of ethanol to get past a blend wall, which it is reaching already.

U.S. Grains Council Elects New Board, Officers; Vinduska Named Chairman 
A new slate of officers and Board of Directors were elected at the U.S. Grains Council’s 50th Annual Board of Delegates Meeting. Terry Vinduska, a corn farmer representing the Kansas Corn Commission, was elected chairman for the 2010-2011 fiscal year.

A native of Kansas, Vinduska graduated with honors from Kansas State University in 1972 with a bachelor’s degree in agriculture. He’s had a varied career in agriculture since that time. He worked for Hesston Corporation in field test engineering before returning to the family farm. He currently grows corn, sorghum, soybeans and wheat and is vice-president of S and V Family Farms LLC. Vinduska also serves as a sales representative for Pioneer Hi-Bred International Inc.

Vinduska served on the USGC Rest of the World Advisory Team (A-Team) and was the Board liaison to the Biotech and Asia A-Teams. He also served as part of the Structure Task Force, the Funding Task Force and numerous other committees within the Council. He takes over the role of chairman as Rick Fruth, a farmer from Ohio representing the Ohio Corn Marketing Program, transitions into the past chairman position.

Thomas C. Dorr, USGC president and CEO, said, “As the U.S. Grains Council begins its 51st year, we are fortunate to have strong, active leadership in place. Our new chairman, Mr. Vinduska, the Board of Directors, Board of Delegates, A-Team leaders and state liaisons provide excellent insight into the challenges and opportunities in the international market arena. The Council’s success over its first five decades is attributable to a long tradition of farmer and agribusiness leadership that’s determined to see the Council succeed.”

Other officers elected include Wendell Shauman, representing Illinois Corn Marketing Board, as vice chairman; Don Fast, representing Montana Wheat & Barley Committee, as treasurer; and Julius Schaaf, representing Iowa Corn Promotion Board, as secretary.

Alan Tiemann, of the Nebraska Corn Board, was re-elected to the Council’s Board of Directors. Newly elected Board members include James Tobin of Monsanto; Bill Kubecka of United Sorghum Checkoff Program; and Jere White of Kansas Corn Commission.

As Incomes Rise, Future Looks Bright 
The United States supplies more than 60 percent of the global corn demand – and more than half of the global demand of all feed grains. “There are a lot of pigs and chickens around the world that depend on U.S. supplies,” Daniel R. Pearson, vice chairman of the U.S. International Trade Commission, told attendees at the U.S. Grains Council’s 50th Board of Delegates meeting in Boston.

The value of U.S. ag exports have doubled over the last 20 years, he said. “Importers depend on us, competitors respect us and the rest of world watches us,” Pearson said.

Prior to the meeting, Pearson said he had researchers pull current data on per capita gross domestic product for different countries around the world. What they found surprised him.

“Relatively poor people have been earning more money,” he said. “This has important implications for the U.S. Grains Council.”

While 80 percent of the world’s people live in countries earning $4,000 or less average per capita income, there has been an upward movement on the chart. India and Indonesia moved up to $2,000 per capita income since 2002, and China moved up to $4,000.

When people earn less than $4,000 per year, he said, 40-60 percent of their income goes for food. If these people earn an extra dollar, Pearson said, half of it goes to food. “Think of the demand effect as low income people earn more money. As more people’s incomes go up, the future for us is really bright,” he said.

Doha, Korean FTA on Trade Agenda
The Obama Administration remains committed to the Doha Round of multilateral trade negotiations, but in exchange for opening the U.S. market to foreign goods, “real market access” needs to be granted by developed and advanced developing countries, said Ambassador Islam A. Siddiqui, chief agriculture negotiator for the Office of the U.S. Trade Representative.

Siddiqui, speaking at the U.S. Grains Council’s 50th Annual Board of Delegates Meeting, said more balance is needed in the Doha negotiations. “Since it started in 2001 – nine years ago – the political and economic reality has changed,” he said, noting that countries like China and Brazil have seen their markets and economies and their related role in the global economy change significantly during that time.

“We’re not asking for market access in the least developed countries,” Siddiqui said. “We’re talking about the 35-40 countries that are developed or advanced developing countries.”

Efforts at the World Trade Organization talks now include discussions surrounding unresolved issues, including details on special safeguard mechanisms. These measures allow countries to fight import surges when and if they occur, Siddiqui said. While the United States supports the abilities for countries to have tools that prevent others from flooding certain markets, “we don’t want a tool that can be abused.”

He said some of the more advanced developing countries are hiding behind the least developed countries so they have the ability to enact safeguard mechanisms like raising tariffs whenever they want.

Siddiqui said the bilateral talks going on now are good and the U.S. trade team is meeting with different trade teams from around the world. “The United States is committed to engage and reach an agreement in Doha that is ambitious and balanced,” he said.

Turning next to the topic of bi-lateral free trade agreements (FTA), Ambassador Siddiqui noted that trade officials from the United States and Korea are meeting and working on resolving the remaining obstacles to finalize the FTA between the two countries. Siddiqui said the goal is to have all remaining issues resolved by the time the Asia-Pacific Economic Cooperation meeting is held in Korea this November.

The Korean FTA removes many barriers to trade between the two countries, with two-thirds of Korea's agriculture imports from the United States becoming duty free when the agreement is enacted. That could increase sales of U.S. agricultural products by some $1.8 billion per year.

Siddiqui, who said the agreement is “robust for agriculture in terms of access,” noted the remaining tariffs, including those for pork and beef, would be phased out over time.

While discussions on resolving issues are ongoing, he said the Administration has not made a decision as to when the FTA would move to Congress for final approval. There has also been no decision as to when two other signed FTAs – with Colombia and Panama – will move to Congress.

“The President has said he’d like to move all of these forward,” he said, but the announcement was made to begin efforts with Korea. “We had to start somewhere,” he concluded.