If you walked into a retail outlet today and made a purchase of a non-perishable product, what country do you think it would have been made in? Chances are it would be China. Countries across the globe establish trade relationships and continuously import and export a variety of products that consumers want. In recent years, China has become a top producer of consumer products. Why is that?
There is good news on the agricultural front as far as U.S. exports to China. With the Chinese economy booming in recent years, their consumers have more money in their pockets and are able to purchase food that includes more protein in their diet. This basically translates to more meat in a diet, and that's what the Chinese population is purchasing with the additional discretionary dollars earned through their hard work in growing Chinese factories and businesses.
In the past, China exported their surplus grain, such as corn, to foreign countries, but in recent years, China has become a net importer of corn. Both corn and soybeans are in strong demand there as these grains are processed and fed to a large and growing livestock industry. Chickens, pigs and cows all consume huge amounts of corn and soybeans, which happen to be the top two crops produced by farmers in the Midwest. That's good in helping our trade deficit, and it has given a tremendous boost to the U.S. farm economy. This translates to the general economy as farmers make additional purchases for machinery, buildings, storage facilities and transportation equipment.
In 2010, U.S. farmers harvested 81.5 million acres of corn for grain. With an average yield of 153 bushels, total production was approximately 12.5 billion bushels. And the numbers look similar for the 2011 crop that is nearly harvested. China, on the other hand, is estimated to harvest 76 million acres of corn, according to the U.S. Grains Council. This is only six percent less acreage than the U.S., yet their total production is estimated to be just 6.6 billion bushels, about half of U.S. production. Using these numbers, China would average 86 bushels of corn per acre, significantly less than the U.S. average.
Why are the numbers so much lower in China? Chinese farmers use older single-cross hybrids, plant only 23,000 plants per acre (compared to 30,000 in the U.S.) and harvest anywhere from 60 to 80 percent of the corn crop by hand. It is likely just a matter of time before Chinese farmers begin adapting to the many technological and agronomic advancements available to farmers in the U.S.
Typically, China has enough corn in surplus to satisfy 25 percent of the demand, but its stock last month dipped to just 15 percent of demand. The reason: their domestic corn use has exceeded corn production in six of the last seven years.
Last year, for the first time in history, China surpassed Canada to become the largest importer of U.S. ag products worldwide. In 2010, China purchased $17.5 billion worth of U.S. farm products, which accounted for about 15 percent of total U.S. farm exports, according to the U.S. Department of Agriculture.
With 1.2 billion mouths to feed in China, just a one-percent increase (or decrease) is of major significance. China has over 20 percent of the world's population, and it will continue to play a major role in demand for U.S. farm products. iBi
