Two U.S. farmers trek to Asia to promote our products

Kenny McNamar calls his trip last fall to China an eye-opener. At a feed mill near Shanghai, he was surprised to see how corn arrived.

“They opened the back of the truck and it was filled with gunny sacks,” said McNamar, who farms near Gorin, in northeastern Missouri. “Workers cut open the bags by hand to dump the corn into the pit.”

This is just one example that McNamar witnessed of the labor-intensive nature of Chinese agriculture, leading him to believe that there’s great hope for U.S. ag export growth. It helps explain why McNamar found that the price farmers receive for corn in China runs higher than the U.S. price. “It would be cheaper for them to import corn than to grow it,” he said.

McNamar, president of the Missouri Corn Growers Association, raises 700 acres of soybeans and corn and 150 beef cows, with help from his wife, Donna and son, Chris. He traveled to China, Japan and Taiwan to promote U.S. ag exports with three other farmers, two corn staffers and representatives of the U.S. Grains Council.

McNamar thinks this type of promotional effort is well worth it. “Most farmers don’t realize the importance of exports,” he said. “Exports help stabilize the price we receive for our products.”

As you look over your fields, consider this: In the U.S., about 20 percent of your corn and 59 percent of your soybeans go to export markets, according to the U.S. Grains Council and the Missouri Soybean Association.
Gary Marshall, CEO of Missouri Corn Growers Association, explains how farmers like McNamar, who live near the Mississippi River, especially benefit from exports. “The corn market is 20 to 25 cents higher within 75 miles of major users and/or river terminals,” he said. “With Missouri having the good fortune of two major rivers, we also have a distinct advantage over other corn states in transportation costs.”

Kansas grower sees rising demand
Keith Miller of Great Bend, Kan., lives about 250 miles from the nearest river grain hub, but he, too, benefits from exports. He raises wheat, corn, soybeans, milo, alfalfa and 350 head of Angus on 7,500 acres. Like McNamar, he’s seen export opportunities first-hand, trekking to Asia several times as president of the U.S. Meat Export Federation. In addition to meeting with trade officials in urban centers, he traveled through the Chinese countryside by train.

“Things are still done by hand,” Miller said. “There’s no

electricity, no running water; it’s primitive, and that’s why young people are going to the city for a better life. They want better diets. China already produces about half of the world’s pork. They would like to be self-sustaining, but we don’t see that happening.”

Already, Miller reports that about 13 percent of all U.S. beef, and one of every four U.S. hogs, go to export markets. “Cattle exports bring us an added $140 per head, and for hogs, it’s about $44,” Miller said. “We would have to cut hog production by 20 percent to stay at the same price level we see today.”

Meat exports help all farmers
Beyond helping livestock growers, meat exports also benefit farmers who grow feed. That’s why Miller works so passionately to push meat exports. “I’m trying to make a difference for all of agriculture,” he said. 
China already buys a lot of U.S. soybeans as feed for its booming domestic pork production industry. China also buys an increasing amount of U.S. pork, except for a brief dip in 2008 when the country banned pork imports due to H1N1 concerns. But the country refuses to buy U.S. beef, purportedly due to concerns about disease. It also bans imports of some genetically modified organisms including some corn varieties. U.S. ag export organizations are working to clear these obstacles. As Miller said, “Our biggest challenge is access to markets.”

Another challenge is getting nations to adopt universal standards for animal health. “We’re trying to move toward science, not politics, as a basis for trade,” he added.

Miller pointed out that the more we convert feed into value-added products like meat for export, the more it helps all Americans. Exports create jobs for those who process feed, feed livestock, pack meat, trade and ship ag products. “Especially in the middle of America, where most livestock is raised,” he said.
This is one area where livestock and feed growers agree. “We’re exporting jobs, economic development and tax revenues when we export grain without adding any additional value,” said Marshall. “We’d love to see more corn exported through livestock and poultry.”

After hitting a bump in the road a couple years ago because of the global recession and the H1N1 crisis, meat exports continue to trend upward. “We need to do more, because that’s where the profit’s going to come from for agriculture,” Miller said.
The U.S. Census Bureau projects that the world’s population will rise from almost 7 billion today to more than 9 billion in the next four decades. “Here in the U.S., we have been increasing our production per acre,” Miller said. “But by 2050, we’ll have to double production to meet demand. We have the technology to increase production faster than other countries.” 
Marshall uses the example of corn to expand on America’s edge. “Who would have dreamed we’d be producing enough corn for our markets on fewer acres with fewer inputs? With our biotechnology and better plant breeding, along with the tremendous expertise of the American farmer, we are working hard to provide corn to all of our markets.”

China demand grows
American livestock and crop growers benefit from many long-standing export customers, including Canada, the European Union, Mexico, Brazil and Australia, to name a few at the top of the list. But U.S. farmers get especially excited when they talk about providing for the growing needs of China’s 1.3 billion people.
A recent report by Rabobank, a lender to many of the world’s biggest food concerns, predicts that China will reshape the global grain market as its demand for imported corn soars to about 25 million metric tons annually by 2015, up from this year’s 1.3 million metric tons, according to a Dec. 10 article in the Wall Street Journal. The U.S. Grains Council reports that in 2009, the U.S. grew 39 percent of the world’s corn, producing 307 million metric tons, compared to China’s corn production of 166 million metric tons.

But soybeans are the big success story when it comes to crop exports. The U.S. Soybean Export Council reports that 59 percent of the U.S. crop was exported in the 2009-2010 marketing year, setting a record for the fourth consecutive year despite the recession. China, America’s top soybean customer, took about a quarter of the 2009-2010 crop, or one out of every four rows of our soybeans.

Until 2010, America’s two largest export partners were Canada and Mexico. But last year, China surpassed Mexico to become the number-two market for U.S. agricultural exports, according to a Dec. 20 USDA Foreign Agricultural Service report. “Record soybean shipments along with strong Chinese demand for cotton and distillers dried grains contributed to the overall record in U.S. exports to China,” the report said, adding that at $15.1 billion for fiscal year 2010, ag sales to China in FY 2011 are forecast to reach another record at $17.5 billion. “Although ag exports to Mexico and Canada have grown impressively over the past decade, sales to China have grown faster.”

Quality a big concern
Beyond China, McNamar also visited long-standing trading partners in Asia, including Japan and Taiwan. “Our whole point was to allow them to meet the people who grow the corn they buy,” McNamar said. His group visited traders, livestock producers and feed mills.

“In Japan, the U.S. has 98 percent market share,” he said, adding that Japan stands as the largest buyer of U.S. corn. “They like our quality.”  The 2009 crop’s quality dropped a bit—a wet U.S. harvest resulted in lower protein and more grindings in the mix.

“They had concerns, but we assured them the 2010 crop would be better.”
McNamar appreciates strong trading partners like Japan, but he admits that this market’s leveling off, and we need to expand trade to other places.

In Taiwan, McNamar visited a farmer to promote use of DDGs. The farmer sells pork to a local grocery store, where a bar code on each package tells consumers the name of the farmer who raised it and where it was raised.  “He’s relating right to the consumer,” McNamar said. “They’re very concerned about food safety.”

Miller runs across the same type of traceability in his overseas travels. But mandatory identity preservation isn’t popular with all U.S. farmers due to concerns over costs and the hassle factor.
“The U.S. is one of the only major export countries with no mandatory traceability,” Miller said. “I’m not promoting traceability—I’m not going to tell farmers what they have to do. But if we want to stay in the export market, we will have to do it.”
The future of exports

Whether U.S. farmers adopt traceability or not, the outlook for U.S. ag exports seems positive, especially with leaders like McNamar and Miller promoting our products. The recession brought a drop in U.S. ag exports, but agriculture remains a bright star in the U.S. balance of trade. USDA’s Economic Research Service reports that export values rose 13 percent in fiscal year 2010 over FY 2009.

Growers hope that exports help support corn prices as ethanol did in recent years. While most all U.S. ethanol is sold domestically, ethanol now plays a role overseas as well through increased exports of DDG, an ethanol by-product and a popular livestock feed. In fact, China recently launched an investigation of U.S. exports of DDG, accusing the U.S. of dumping the product in violation of trade agreements. Two years ago, China hardly imported any DDG; in 2009, it imported 652,000 tons; and imports stand poised to rise to 3 million tons for 2010.

With all of the politics and regulations involved, export sales can be complex, and global markets remain volatile. It remains to be seen if China’s DDG investigation will result in reduced sales, for example.
U.S. export promotion groups maintain offices in other countries to take care of the technical details involved in getting U.S. products to market, and to help U.S. government trade negotiators do their jobs. As foreign markets open up, private traders, called purveyors, handle the actual sales.

American farmers like Miller and McNamar don’t get involved in the details, but their visits to foreign markets can help smooth the way. “The connections we’re making are important,” McNamar said. “We produce more grain all the time, and we need to find new markets.”

Miller lists three reasons why he’s interested in promoting exports—his three daughters, all grown and married. “I want them to have the opportunity if they want to farm,” Miller said. Before any of their families join his operation, he wants to make sure a larger operation will be profitable.

“Things look optimistic for the next generation,” Miller said. “The demand will be there.”

For more information
Missouri Corn Growers Association: www.mocorn.org
Missouri Soybean Association: www.mosoy.org
U.S. Grains Council: www.grains.org
U.S. Meat Export Federation: www.usmef.org
U.S. Soybean Export Council: www.ussec.org