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China courted as long-time Iowa client

By Staff | May 1, 2009

They went; they listened and liked what they heard.

According to Bill Northey, Iowa secretary of agriculture, a soybean trade mission to China that ended in late March, left soybean growers and marketers enthused about the future partnership in meeting an ever-growing demand for soybeans in that country.

The Chinese have already purchased a record amount of soybeans and soybean meal from the U.S. in 2009, Northey noted, despite a stronger dollar over the previous year. He said that because China ties its money close to the dollar, then weak or strong dollars wouldn’t significantly affect its purchasing power.

But what does remain strong is that country’s ever-expanding need for food, which includes soybeans for both human consumption and as livestock feed.

Northey said in various regions around China grain crushing facilities are being built or expanded, as feed mills gear up for accelerated growth in the next few years.

“The Chinese middle class wants more meat in its diet,” said Peter Mishek, a consultant for Ag Processing Inc,, based in Omaha, a farmer-owned cooperative for procuring, processing, marketing and transporting grain.

“China has 1.4 billion people,” Mishek added. “It’s a tremendous job to feed them.

“Their need for land development and housing has to be pressuring their acres for food production.

As a result the delegation was looking to sell Iowa soybeans directly to Chinese markets.

Mishek said the Chinese eye Iowa as a good match for its long-term food needs since the state leads the world in corn, hogs, soybean and egg production.

“Midwest soybeans tend to test higher in protein,” said Northey. He indicated that the Chinese found Pacific Northwest beans tested lower in protein. The Chinese also complained that soybeans from the Mississippi Gulf Region contained significant amounts of foreign matter.

Northey said Ag Processing Inc., is studying the possibility of creating an export loading facility in Gray’s Harbor in Washington. “We can sell soybeans, corn, DDGs directly to China. It’s is a huge niche market,” Northey said.

According to Mike Maranell, vice president of communications for AGP, building new storage at the company’s Gray’s Harbor loading facility is still in the conceptual phase.

“AGP is researching and watching how the markets will work,” Maranell said. “New storage is being considered, but we’ll wait and see how the economics work.”

Chinese to visit Iowa?

Northey said some Chinese grain buyers are looking to tour Iowa. “They want to meet the producers,” Northey noted. “They want to meet the producers, know the source of the grain, watch it being loaded and buy it directly, rather than through a stray commodity purchase.”

This was the second soybean trade mission in two years for the ag secretary with Iowa Soybean Association members tagging along. “They (Chinese) have a real interest in buying high-quality soybeans.”

During last year’s trip, the secretary said the Chinese were primarily concerned with the long-term supply of soybeans. “But we heard none of that this year,” Northey said. “They were asking about quality more than supply.”

Contact Larry Kershner by e-mail at kersh@farm-news.com.

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