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Major U.S. export competitor in the distant future: EU? Brazil? It could be China!
by Daryll E. Ray
(Monday, July 21, 2003 -- CropChoice guest commentary) -- Back in April we reported on a USDA Foreign Agricultural Service (FAS) study that conservatively estimated that Brazil could bring an additional 420 million acres into crop production. By way of comparison, U.S. total
crop acreage hovers around the 250 million acre figure.
We have already seen the impact of Brazil's entry into the soybean
marketplace. As recently as 1970 Brazil exported a mere 8 million bushels
of soybeans while the U.S. exported 434 million bushels. For the 2002 crop
year it is expected that Brazil will export 764 million bushels of soybeans
with the U.S. export level coming in at 1,010 million bushels. This past
year, for the first time total soybean exports from Brazil and neighboring
Argentina surpassed U.S. exports.
As a major competitor in the export of soybeans, Brazil should not be
overlooked. On the other hand a look at the rest of the world suggests that
there may be other countries out there who may match or exceed Brazil's
recent performance. And key among the possibilities is China. Despite all
the hype surrounding China's entry into the World Trade Organization and
the positive impact this may have on the prospects for U.S. farm exports,
China has the potential to become a major agricultural export competitor.
Corn provides a case in point. At the time of the adoption of the 1996 Farm
Bill all major providers of agricultural baseline projections, including
FAPRI, saw China's imports of corn on an upward trend (Figure 1). By the
1992 crop year, it was projected that China would be importing 536 million
bushels of corn that would be fed to pork and poultry to meet the demand
for animal protein by a growing middle class. Current USDA estimates of
China's corn trade shows China EXPORTING 531 million bushels of corn.
That's a net gap of nearly 1.1 billion (with a "b") bushels of corn. Even
in the face of the experience of the last seven years most baseline
providers still view China as a potential customer.
The one crop where China is a major customer is soybeans. China's
importation of soybeans began an upward trend in 1995 zooming to 624
million bushels for the 2002 crop year. Will this trend continue or is
China simply using soybean imports to build up its crush capacity in
preparation for an increased level of domestic soybean production? Only
time will tell, but given the developments taking place in Chinese
agriculture, I would not want to bet the farm on China remaining an
importer of soybeans.
As I have reported in other columns, Chinese researchers report cutting
edge research in crop genetics, including a variety of crops that can be
grown on arid, alkali soils while achieving impressive yields. If that
research pans out in field trial it could open up a reported 250 million
acres of land in western China to agricultural production.
In eastern China, policies are being put into place to encourage rural
development so that the number of people working the land can be reduced.
This will allow for the introduction of U.S. style production agriculture
in areas that have been dominated by tiny family plots.
The level of investment in China by transnational agribusinesses continues
to increase with all the major firms establishing facilities there. The
technology that has been responsible for the growth of agricultural
production in the U.S. is quickly being transferred to China by firms like
Cargill and John Deere. In addition the Chinese are improving their
satellite mapping and imaging capability, so that they will be able to
apply the benefits of precision agriculture to their fields.
Given all this, I would not be surprised if over the next 20 to 30 years,
China emerges as the major player in the international grain trade. China
may even surpass Brazil, Canada, Australia and the EU as a major competitor
to the U.S. China, after all, has both the land and the human resources
necessary to get this done.
Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural
Policy, Institute of Agriculture, University of Tennessee, and is the
Director of UT's Agricultural Policy Analysis Center. (865) 974-7407; Fax:
(865) 974-7298; dray@utk.edu; http://www.agpolicy.org . | |
