The American Soybean Association (ASA) testified last week on the importance of the China export market to U.S. soybean growers at a hearing of the U.S. International Trade Commission.

(For ASA testimony on farm legislation click here.)

Last year, the value of U.S. soybean exports to China reached a record $9.2 billion. U.S. soybeans represent more than half of the total value of U.S. agricultural exports to China.

"It is impossible to overstate the importance of China as a market for U.S. soybeans," said ASA Vice-President Randy Mann, who is chairman of ASA's Trade Policy and International Affairs Committee. "More than half of the world's soybean exports are purchased by China. The 22 million tons of U.S. soybeans expected to be exported to China in 2010 represent over 50 percent of all U.S. soybean exports and 25 percent of the U.S. soybean harvest. In other words, one of out of every four rows of soybeans grown in the U.S. is exported to China."

Prospects for continued growth in Chinese soybean imports are excellent. As a result of dynamic economic growth, more Chinese consumers are seeking and can afford a higher standard of living, including more protein and vegetable oil in their diet. China's ability to supply these needs through increased production of soybeans and other feeds and oilseeds is limited, so most of the increase in demand will be filled by imports.

"U.S. soybean farmers are most appreciative of China's expanding import market for soybeans," said Mann. "China is, by far, our single largest export customer. We are pleased there have not been any recent disruptions in the soybean trade between China and the U.S. However, like any trading relationship, issues arise from time to time that need to be addressed."

One area that could impact China's imports of U.S. soybeans is a lack of understanding concerning quality and safety of U.S. soybeans and soybean products. Chinese authorities have from time to time been concerned that some shipments of soybeans, due to their coloring, may include planting seed that is coated with a pesticide treatment. However, in some instances, soybeans are naturally discolored during growing and harvesting.

"ASA is very pleased with the recent announcement by U.S. Agriculture Secretary Tom Vilsack that China and the U.S. have agreed to address inspection, quarantine, and quality and safety of U.S. soybean exports to China," Mann said.

Another issue that has affected U.S. exports of soybean products is China's requirement of a phytosanitary certificate for all imports of soybean oil. Due to extensive processing, which eliminates any risk of soybean oil harboring injurious plant pests, the U.S. does not require or issue a phytosanitary certificate for imports of soybean oil, and international standards do not call for a phytosanitary certificate on soybean oil.

"For several months, USDA officials have been working closely with Chinese officials to identify an alternative approach that would be acceptable to both countries," Mann said. "We are appreciative that an interim solution to allow U.S. exporters to sell soybean oil to China has been developed, and that U.S. sales of soybean oil have taken place in recent weeks. We are hopeful that a long-term solution where no phytosanitary certificate is needed can be agreed upon by U.S. and Chinese agencies in the future."

Another key area which has affected China's imports of U.S. soybeans in recent years is its policies regulating registrations of ag commodities derived through biotechnology. China's regulatory approval process for commodities containing biotech traits sometimes has been unpredictable and opaque, causing concern in the U.S. soybean industry about obtaining trait approvals prior to commercialization. ASA is actively supporting efforts to encourage China to allow applications at the time they are made in the U.S. and other countries.

"Fortunately, China has embraced biotechnology for its own agricultural development," Mann said. "This acceptance, and its importance as the largest importer of biotech soybeans, makes China an ideal and necessary partner in addressing and resolving current and future biotech-related issues."

In addition, ASA expressed that Differential Export Taxes (DETs) utilized by Argentina preclude U.S. soybean oil exporters from effectively competing in the Chinese market on a long-term basis. China's market for soybean oil has been dominated by Argentina primarily because of the subsidies that Argentina provides to its oilseed processors and exporters through the use of DETs.

"Twenty-eight years ago, ASA established an office in Beijing to develop what was then a small market for soybeans," Mann concluded. "Working in partnership with the U.S. Department of Agriculture's Foreign Agricultural Service and the soybean check-off, ASA International Marketing has undertaken a variety of programs to educate the Chinese on the economic, nutritional, and other benefits of utilizing U.S. soybean meal for animal feed and soybean oil for human consumption. Our partners in China range from feed mills, livestock and marine aquaculture producers to soyfood companies. Our efforts have clearly paid off."

ASA's complete testimony is available at http://www.SoyGrowers.com/policy/ASA_ITC062210.pdf.