The boom in farm exports to China shows no signs of diminishing, and North Carolina farmers are determined to be part of it.
A group of them and their commodity association leaders joined an agricultural trade mission to China led by state Agriculture Commissioner Steve Troxler the first week of August.
Even though China purchased $271 million worth of North Carolina ag products in 2008, there is still “a huge amount of room for growth,” Troxler said on returning.
“North Carolina farmers desperately need new markets, and China is the largest potential customer in the world. I am confident we will open doors to new opportunities that will benefit North Carolina farmers — otherwise I'd have stayed at home.”
Soybeans, cotton and tobacco were the primary focus of this mission, which made stops in Beijing, Kunming, Guangzhou and Hong Kong. The delegates found promising prospects for all three of the basic North Carolina crops.
“We certainly have a good opportunity to sell more cotton in China,” said Billy Carter, executive vice-president of the North Carolina Cotton Producers Association.
“As a matter of fact, we could sell more soon: The ceo of a major Chinese denim mill will visit here in September, and he is looking to buy some part of this years' run.”
Counting all destinations, about 30 percent of North Carolina cotton production is already being exported, said Carter. “We believe exports are going to become much larger, with a significant amount going to China.”
China is already a major consumer of U.S. soybeans, said Charles Hall, chief executive officer of the North Carolina Soybean Producers Association. “And the demand is there to support an increase. It is the world's largest producer of pork, poultry and aquaculture.”
The farmers of the state have several things going for them, including the ability to send soybeans to China in containers. Containerized shipping results in less handling, which preserves quality during transit. It also allows buyers to order customizable amounts of soybeans instead of having to buy bulk shipments.
Many Midwestern soybeans are transported down the Mississippi River to New Orleans before they can get on a boat, and they have to be augured several times in the process. Tar Heel soybeans only have to be loaded once, at the elevator, into a container, and that can result in a definite quality advantage.
“We can put our soybeans in containers, then truck them right to the port,” said Hall. “You get a really clean soybean this way, because you eliminate a lot of handling. It gives a shipment that originates close to the farmer, which the Chinese like.”
Ports of choice might include Norfolk Va., Wilmington N.C., and Charleston S.C.
How good are the prospects for continued growth of U.S. soybean exports to China? Bill Northey, the Secretary of Agriculture of Iowa, recently visited China himself and said growth should continue despite the recession.
Demand for meat products like pork and chicken and livestock feed there remains constant.
“The Chinese are not going to be able to produce enough grain, certainly not enough soybeans, to feed their own people,” he said. “They're going to need imports. I really think that within the next few years they'll have a need to import corn as well.”
About half of China's soybean imports have come from the U.S. and about half from South America.
China is by far the largest tobacco producer in the world, so you wouldn't think it would be on the market for leaf imports. But since 2005, tobacco growers from all the American states have enjoyed increasing success in sending their tobacco to the PRC.
China is expected to buy 15,000 tons of flue-cured in the U.S. this year, up about a quarter from the 12,000 tons they bought in 2008, said Mike Lynch, senior vice-president of the U.S. Tobacco Cooperative in Raleigh.
Most of it is going into a number of regional cigarette brands the Chinese government is trying to turn into national brands. “I think that effort — to give these national brands a better taste — is where a lot of our leaf is going,” he said.
If Americans can get a solid place in Chinese brands, the future will be very bright. “The demand there keeps growing,” Lynch said. “Last year the rate was about 4 percent.”
Almost all the domestic cigarettes contain only flue-cured.
“The growers there want to increase production, but they are not going to fill their full domestic demand anytime soon,” said Troxler. “So they could buy very significant amounts from North Carolina very quickly.”
He met with Jiang Chenkeng, the head of China's State Tobacco Monopoly Administration, and several members of his staff and learned that the company is interested in sourcing high-quality leaf and is aware that North Carolina farmers can deliver it.
“The monopoly is interested in long-term planning to develop the relationship with North Carolina in a way that benefits us both,” said Troxler. “It really was a great visit, and I came away from the meeting confident that North Carolina and China can strengthen our trade relationship for tobacco.”