The ISA trade team included (from left) Karen Simon, Peter Mishek, Delbert Christensen, Kirk Leeds, Bill Northey, John Heisdorffer, Grant Kimberley, James Tsao and Pete Lombardo

This trade mission to China and Taiwan was eye opening for the participants. We were all impressed with the optimism of the Chinese people and their dedication to making a better life for everyone there. We were also encouraged at the commitment to a free market and the desire to do business with U.S. soybean growers. It’s a trip we’re not likely to forget, that we hope made progress in developing relationships with this growing market for U.S. soybeans.

On the way home, the group took time while in the Narita airport to offer perspectives on what was learned from the trip.

To hear Iowa Secretary of Agriculture Bill Northey’s perspectives on China’s market potential,
click here.

ISA CEO Kirk Leeds talks about the optimism of the Chinese people.
Click here.

ISA President John Heisdorffer talks about making our largest export customer
for soybeans happy.
Click here.

ISA President Elect Delbert Christensen offers his insights on the Chinese government’s
commitment to closing the gap between rich and poor.
Click here.

ISA Director of Market Development Grant Kimberley talks about China’s unique market.
Click here.

Peter Mishek, a consultant for AGP, comments about the potential of the Chinese market.
Click here.

Pete Lombardo, an agent for AGP, talks about Chinese buyers’ desire to do business
with U.S. soybean growers.
Click here.

And finally, I offer my perspectives on stereotypes and how we (the world population)
are more similar than we’d think.
Click here.

ISA CEO Kirk Leeds tries what appears to be a deep fried minnow.

I’ve had many questions about the food in China. I’d have to say I never went hungry . . . quite the opposite actually.

While we traveled in China and Taiwan our hosts treated us to many formal lunches and dinners. Most involve a large round table with a turntable in the middle. Course after course is placed on the turntable. While it passes you, the object is to grasp some of the food in your chopsticks and put it on your plate. Some of us were more adept with chopsticks than others. Fortunately, forks were usually brought out once the locals watched our pitiful efforts with chopsticks. Or our hosts grabbed the food for us and put a variety on our plates.

Chinatex hosted a very formal lunch one day that I caught on video. Click here to see what the meals were like.

Our hosts were generous, and the food was plentiful. However, most of the food was also unrecognizable, and the menus that might help us identify it were in Chinese. For the most part, I think it was better that way. The one food I could not make myself eat was goose foot. It was just too identifiable.

At some meals, an array of sushi varieties were served.

The trip highlighted a food phenomenon in the United States that I hadn’t thought about much. In the “old days” on the farm, we were very familiar with where our food came from and what it looked like, living . . . or not. My dad is fond of saying that when they butchered a hog they used everything but the squeal. These days, the food we buy in the grocery store is very generic. It really has no resemblance to the animals the food comes from. It’s been a long time since I’ve seen a fish head or a chicken beak . . . or a goose foot. It was interesting to try new things, and I’d do it again anytime. But the pizza I ate when I got home tasted mighty good!

Iowa Secretary of Agriculture Bill Northey observes the loading and unloading of containerized cargo at the Port of Kaohsiung

Taiwan is the fourth largest importer of U.S. soybeans. A stable, mature market, Taiwan is an important customer for U.S. soybean growers, and the ISA trade team had the opportunity to get to know these customers a little better today.

The group first toured the Port of Kaohsiung. This port does a great deal of containerized shipping, which has slowed significantly as a result of the economic downturn. However, we were able to see ships unloading and see how one company, Eastern Media International Corporation, manages freight in and out of the port, which unloads an average of 100 vessels per day. Soybeans are shipped by both containers and bulk into this port.

The trade team also met with representatives of Great Wall Enterprise Co., Ltd. This company started with a small soybean crushing plant in 1957 and is now the largest ag company and the second largest food group in Taiwan, as well as the largest buyer of U.S. soybeans here. David Wu, general manager of Great Wall estimates that demand will decrease about 5 percent this next year, due to the economy, but says that he anticipates that they will continue to purchase U.S. soybeans.

ISA CEO Kirk Leeds interviews Great Wall General Manager David Wu.

Iowa Secretary of Agriculture Bill Northey (left) and ISA President John Heisdorffer listen to a presentation by David Wu, general manager of Great Wall

While the market in Taiwan is mature, the companies here are progressive. Great Wall is investing in mainland China, as well as other Asian countries, and partnering with companies from around the world.  Even though historically there has been an adversarial relationship between the two countries, Taiwanese companies see investing in China as a good opportunity.

“They look at mainland China as an opportunity to grow,” says Iowa Secretary of Agriculture Bill Northey. “They look at their expertise of understanding the Chinese system and understanding capitalism in a way that potentially gives them an advantage when operating in mainland China.”

ISA CEO Kirk Leeds interviews Iowa Secretary of Agriculture Bill Northey.

The trade team wrapped up its final meetings for the trip this evening. Tomorrow we begin the 28-hour trip home. I’ll continue to file updated information when I return to Iowa. I hope you’ve enjoyed these reports as much as I’ve enjoyed writing them.

Today was a travel day for trade team participants. We flew from Guangzhou, China, to Kaoshiung, Taiwan, via Hong Kong. Upon arrival, we met with some of our major soybean customers here. Some of them have traveled to Iowa in the past to see where those soybeans are grown, and had fond memories of their travels in Iowa.

The ISA trade team meets with soybean purchasers in Taiwan.

Tomorrow, we will visit the Kaoshiung port, where all of Taiwan’s grains and oilseeds arrive, via by bulk or container. Taiwan buyers purchase up to 90 percent of their grain and oilseed from the United States.

In the afternoon we will visit with the Great Wall group, which is the largest feed group in Taiwan, and will see one of their feed plants.

During our travels, we have heard from several people that the soybean crushing industry in China continues to grow and has a very positive outlook for the future. China’s upwardly mobile population is a force to be reckoned with. It appears that even a global economic crisis can’t put the brakes on this trend.

Renault Quach from Guangzhou Green Oil Company met with the ISA trade mission participants.

“Statistics show that meat consumption is increasing in both rural areas and cities,” says Renault Quach, vice general manager of Guangzhou Green Oil Company, a soybean crusher in Guangdong Province.  “Even though the economic downturn might cause people to eat a little less meat, they still need to eat, and have to eat meat.”

Quach explains that the return on producing both hogs and poultry still have a positive profit margin in China. Raising more livestock means there is more need for soybean meal to be produced. Feed production has increased an average of 16 percent each year for the past 17 years. While that rate has slowed to growth of 7 to 8 percent in the past year or two, that is still very good. Green Oil Company is considering expanding, adding a third soybean crushing plant in the western part of the province to reach other areas of the country where livestock is raised. The expansion may take place next year.

While this is very good news for U.S. soybean growers, there is the potential for a short-term challenge. Quach foresees that livestock consumption will decrease during the spring and summer months, which is a normal trend. However, if the Chinese government decides to release some of its soybean reserves and the United States produces a large crop, soybean demand in China could suffer what ISA CEO Kirk Leeds calls a “triple whammy.”

There is also a change in policy that may cause changes in China’s row crop production in the future. According to Quach, the government now allows companies to either buy or rent land from farmers, enabling them to accumulate enough land to create economies of scale that could allow them to use mechanized equipment and other technology. While it is too early to tell what will happen, he points out that there could be long-term implications for soybean imports into the country.

For the full interview with Renault Quach, click here.

However, the long-term picture is bright. “China’s population is projected to increase until 2030,”says John Heisdorffer, ISA president. “Feeding all those people will be no easy chore, but more meat consumption and production mean more demand for soybeans, and I know we’re the best country to supply China with the soybeans it will need.”

The grounds are lush and park-like, but Guangzhou Lizhi Farms is not a park, it’s a 100,000 head per year hog operation. The ISA trade team visited a hog operation near the city of Guangzhou today to learn more about what livestock operations in China.

Kirk Leeds interviews ISA President Elect Delbert Christensen at Guangzhou Lizhi Farms.

The Guangdong Province of China is comparable in land mass to Iowa. Their farms also produce about the same number of hogs - about 32 million head per year. However, there are two major differences: Guangdong Province has millions more people to consume the meat they produce, and they produce very little animal feed.

It’s this demand for animal feed that Iowa soybean growers are hoping to meet, now and in the future.

According to Boxing Feng, vice general manager of the farm, there are many similarities between hog farms in China and the United States, but one major difference is having land available for livestock operations. Feng hopes to double the size of the facility in the next three years and is looking for land now. With urban development expanding at breakneck speed, finding land will be a challenge.

Two Iowa soybean growers who also raise hogs, Delbert Christensen and John Heisdorffer, were part of the tour.

“The technology used here is modern, the operation is efficient and the nutrient management is excellent,” says Christensen, who is ISA president elect. “Even though profits are down from last year, net profit of $7 to $8 per head is very good.”

To hear Kirk Leeds’ interview with Christensen at the hog farm, click here:

The trade mission participants also met with Renault Quach, vice general manager of Guangzhou Green Oil Industrial Co. I’ll write about that visit tomorrow while we travel to Taiwan.

Even though the men and women who do business in China are concerned about the global economic crisis, they are still optimistic that the future will be bright for them.

The ISA trade delegation met with representatives of Chinatex in Dongguan today. Chinatex is a soybean crushing plant that claims to be the largest importer of soybeans for their own use into China. The plant employs 150 people, and despite the economic slowdown, plans are underway to double the capacity. When asked about the impact of the current economic situation, staff there said trucks only have to wait three days to load, rather than five days before. They are confident that they will continue to grow. This is important to U.S. soybean growers because the Midwest, in particular, is Chinatex’s largest supplier of soybeans. We also toured the nearby Hai Sa Port on the Po river, which is where the soybean cargo ships arrive.

Delbert Christensen, Kirk Leeds, Grant Kimberley and John Heisdorffer were among those who toured the Hai Sa port on the Po River.

“China is a great customer for Iowa, and even though their growth may flatten out for the rest of this year, there is no reason to expect that next year they won’t be a strong buyer of U.S. soybeans,” says Peter Mishek, of Mishek, Inc., a consultant for AGP. “What has amazed everyone is that while the Chinese recognize the economic crisis, they seem to have a bigger vision of the future than we do. They seem to have a more optimistic attitude about the future, whether it’s just the press, or their awesome responsibility to feed so many people. Southern China in particular will be a good partner for Iowa for a long time to come.”

Click here to listen to ISA CEO Kirk Leeds’ interview with Peter Mishek.

In fact, despite the economy, China had purchased 40 percent more soybeans from the United States this year than last year at this same time, according to Phil Laney, China country director for ASA-IM.  Typically U.S. soybean sales to China slow during the spring and summer months because China can usually find cheaper alternatives, like soybeans from South America or palm oil.

Tomorrow the trade team will visit a hog farm near Guangzhou, then meet with representatives from the Dongling Group, which has two large soybean processing plants.

One focus of the ISA-hosted trade mission to China has been to develop relationships with potential customers for Iowa soybeans. However, it’s also about getting to know our customers in the larger sense. Who are our customers here? What is the potential? Why should we be interested in China?

A little girl poses for photos at the Chengdu Panda Research Center

People in China are the same as people anywhere else. In general, we have found the people here to be friendly, and a little curious about this little band of Westerners who sometimes really stand out in a crowd. As Iowa Secretary of Agriculture Bill Northey says, “The greatest part of what we see is the people, and the character and friendliness in their faces.”  (Click on the video below titled “On the Road in Chengdu” to listen to the interview.)

As we travel across country, hopefully we are learning a little about the people. They certainly know a lot about us. American culture is everywhere. And the Chinese want to enjoy it. KFC, Pizza Hut and Burger King are featured prominently in every city we’ve visited. So if we can introduce a more human element along the way, aside from the glitzy advertisements, fast food restaurants and one-sided news stories, that’s an extra-added benefit.

Two members of our group, Grant Kimberley and Peter Mishek, stopped at the McDonald’s in Shenzhen today for a burger fix. This particular restaurant is the first McDonald’s in mainland China, built in 1990. (Click on the video below titled “Cheeseburger in Paradise (Shenzhen) to see more.)

What impresses me is the vast potential, and challenge, of feeding so many people. American farmers must play a vital role in producing the best and most abundant crop possible, to meet the demand that will only increase with time.

So to catch up, Saturday we toured one of New Hope Group’s feed plants near Chengdu. There we met with representatives from the company, and in the plant saw raw product from across the globe. They treated us to a tour of the Chengdu Giant Panda Research Base.

Today we traveled to Shenzhen, where we met with Mr. Zhu Kunming who owns fish farms and is involved in soybean meal and grains trade.

Tomorrow the group will travel by bus to Dongguan where we look forward to seeing the Chinatex soybean crushing plant and a port where soybean cargo arrives. We will then head to the city of Ghangzhou.
 
Flickr Video
Flickr Video

Iowa Soybean Association CEO Kirk Leeds’ perspectives on Day 3 of an Iowa trade mission to China.

Outside my hotel window in the city of Chengdu, construction workers pound and weld, building what appear to be high-rise apartment buildings. There are at least three such projects nearby. While I have no frame of reference to the past, it appears that there is currently no shortage of building projects.

There are at least three major construction projects within the view from my hotel window in Chengdu.

China’s economic engine appears to keep chugging away, despite doom and gloom stories from the United States and other countries. While the World Bank has predicted that China’s economy will slow to 6.5 percent growth, USDA-FAS officials believe it will be closer to 8 percent. Why? Because China’s central bank has set 8 percent as its target, and it’s likely that the government will do what it takes to reach that goal.

While 6.5 percent growth seems favorable given the current world economic picture, for the first time in 20 years China will not experience double-digit growth. In light of this situation, managing the expectations of the people of China may be a challenge.

Part of managing expectations may be managing the message. The headline of one of the top stories in the China Daily, the national English language newspaper reads, “Stimulus steps prove effective.” According to the article, the central bank governor said that the government’s “prompt moves to stimulate the economy have taken effect and appear to have arrested the drastic economic slowdown.” The article says that in contrast, Western countries reacted too slowly to be effective. While this report may seem a bit over-optimistic and one-sided, I wonder if there is something to speaking positively about the economy.

Tomorrow, the group will tour the New Hope Group’s Guanghan feed plant and the Chengdu research center for giant panda breeding.