China has the world’s largest population and it brings with it the world’s largest appetite. What’s even more stunning is the fact that it will only grow. While that applies to China’s human population, it also applies to its livestock population.
Currently the Iowa Soybean Association is on a trade mission to China, and according to reports, the producers have gotten some pretty remarkable estimates on the amounts of corn and soybeans that the Chinese may be buying in the future.
Based on discussions with importers in the country, China’s soybean purchases could increase by approximately 13 million metric tons over the next five years— that’s equal to Iowa’s annual soybean production, Grant Kimberley, ISA’s market development director told Brownfield News. “At the end of this year, they’ll be importing about 55 million metric tons.”
“People don’t realize how big of a number that is,” says Dermot Hayes, Iowa State University agriculture economist, who has traveled and researched China extensively. “If they (China) buy anything, it’s a big deal.”
Just this week, an official with the United Nations Food and Agriculture Organization estimated that China’s corn imports could reach 2.5 million metric tons by the end of this crop year, according to a Dow Jones report. That would be the third highest level in 50 years. The record stands at 4.3 million tons in 1994/1995, which was spurred on by a disastrous harvest in China-- the world’s second largest corn producer.
Kimberley reports that Chinese importers told the ISA group that by year’s end, they could import about 4 million metric tons of corn. “And by 2015, they’re going to have to start importing over 20 million metric tons of corn,” he adds.
However, FAO’s Abdolreza Abbassian, is less convinced about this year’s corn purchases. As he told Dow Jones, “The supply and demand balance that I see in China doesn’t convince me they will post a big import figure this year. I would say China this season may buy 2 to 2.5 million tons.”
In the end, much will depend on weather and this year’s crop in China and in the United States. China did face a drought-reduced corn harvest last year. While there are often questions about the accuracy surrounding numbers reported out of the country, state-held inventories are thought to be below 10 million tons.
Pork is the Chinese people’s meat of choice, and supplying it to a population that’s increasing its buying power and upgrading its diet is a challenge. Even with a swine herd that’s already four times larger than that of the United States China has to import some pork. In 2008, a record year for U.S. pork exports, China purchased 5 percent of the United States’ production. In 2009, issues over the Novel H1N1 influenza virus essentially closed the market, which has since made a slow comeback.
China exports some of its pork now and would like to export more. The Chinese currently spend about half of their income on food, Hayes notes. Food inflation can make for a restless populace, which is something the Chinese government does not want to see. The government is committed to expanding the country’s pork production, and growth is happening, but it’s still questionable whether it can seriously approach sustainable levels.
The big long-term question for China is whether it should or will continue to buy high-priced corn and soybeans or if importing pork would be a better value. “Our pork will always be less expensive than China’s because their production costs are so high,” says Hayes.
Regardless of the commodity, one thing rings true-- China’s appetite is already large, and it’s growing.