Milling & Baking News - May 26, 2015 - (Page 28)

Exports and Trade Issues Growth in China's imports of U.S. agricultural goods slows...for now WASHINGTON - While exports of agricultural products, including grains, to China have grown dramatically over the past 20 years and trade is expected to grow further in the future, economic reforms that are being implemented in China are clouding nearer-term prospects for trade, said Fred Gale, a senior economist with the Economic Research Service of the U.S. Department of Agriculture. Mr. Gale offered an in-depth look at changes in the U.S.-China farm trade relationship in an article in the current E.R.S. publication Amber Waves. The pace with which China has of China into a major and broad importer, Mr. Gale cited the country's 2001 accession to the World Trade Organization as a key turning point. While in the 1990s, China was a net exporter of soybeans, today it accounts for 60% of global imports with 40% of those coming from the United States. Domestic agricultural production in China has not suffered during this period of burgeoning imports. With its entry into the W.T.O., China established tariff rate quotas on imports of cereal grains and focused domestic farm-support policies on U.S. agricultural exports to China $30 $25 Rapid growth in U.S. agricultural exports to China ended during 2013-14 in billions $20 $15 $10 $5 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: U.S.D.A., Economic Research Service using U.S.D.A., Foreign Agricultural Service, Global Agricultural Trade System emerged as the leading importer of U.S. farm goods has been breathtaking. As recently as the 1990s, China accounted for only 2% to 3% of U.S. farm exports. In 2012-14, China's share ranged from 16% to 18%, catapulting the country past the traditional leading customers of the United States - Canada, Mexico and Japan. Similarly, the United States is the leading exporter to China, accounting for 24% of the country's imports in 2012-13. The United States holds the top rank in China as a supplier of soybeans, cereal grains, distillers dried grains, cotton, meat, cattle hides and hay. China in rapid growth Recounting this transformation 28 / May 26, 2015 Milling & Baking News production of wheat, rice and corn. Overall grain output expanded each year between 2004 and 2014, an unprecedented string of increases, Mr. Gale said. Even with these extraordinary gains, China has emerged as a major importer of grains, he added. The key to this expanded appetite for grains has been growth in consumption of meat and dairy products, fueled by the country's economic growth during this period. "China's rapidly growing livestock sector has stimulated a growing demand for feed and forage," Mr. Gale said. "The country has emerged as the largest overseas buyer for distillers dried grains - the byproduct of corn ethanol production; it is also a major buyer of sorghum and alfalfa. Imported breeding animals and poultry are the foundation of a livestock sector that converts feed to meat more efficiently than in the past." Effects of economic slowdown With a more recent period of slowing economic growth in China has come a parallel slowing of agricultural trade, beginning in 2013-14. "China has entered a key period of transition in which economic growth is slowing at the same time Chinese leaders are pursuing numerous economic reforms, a period they describe as the 'new normal,'" Mr. Gale said. "During this period, consumption patterns and China's approaches to policy and regulatory enforcement are undergoing changes that could influence the further development of the U.S.-China agricultural trading relationship." This transition in economic policies has been progressing in fits and starts, Mr. Gale said. He noted that in 2013-14, imports of certain agricultural commodities expanded even as overall demand growth slowed. This situation reflected stockpiling of commodities and moves taken by government officials to keep domestic prices from declining, even as global prices fell. For example, China imported 19 million tonnes of grain and 5.6 million tonnes of distillers dried grain in 2014. The large volume of imports may suggest domestic tightness, but Mr. Gale said that was not the case. In fact, the country faced a grain surplus. "Chinese authorities reported purchasing 125 million tonnes of domestic grain - about 20% of that year's harvest - to prevent prices from falling," Mr. Gale said. "In early 2015, Chinese officials said that reserves of corn, wheat, and rice exceeded 50% of annual consumption - a volume that far exceeded storage capacity - due to the large purchases to support prices." Importing even with domestic surplus Explaining the market distortions associated with these moves, Mr. Gale said domestic support in the years after China entered the W.T.O. included tax cuts and direct subsidies for grain growers. "Several years later, officials began to rely on price supports as a means of supporting farmers when subsidies did not offset the impact of /

Table of Contents for the Digital Edition of Milling & Baking News - May 26, 2015

Milling & Baking News - May 26, 2015
Ingredient Update - Winds of change blow through ingredient fundamentals
Stay true to the science, grains group tells guidelines committee
Late News - Campbell baking and snacking unit strong
Table of Contents
News Comment - Asia trade pact crucially important to farm sector
Editorial - Flour output data point to eating trends
Late News
Business - ConAgra Foods to close Wisconsin cookie plant
Mondelez considering changes at Chicago bakery
ADM to acquire Chinese sweetener business
Ardent Mills showcases capabilities with bakery, kitchen on wheels
General Mills wants more from the core of its business
Kellogg’s Bryant: Signs show that cereal trends are improving
Financial Results - Investments a drag on Weston Foods first-quarter income
Post Holdings embraces move to value-oriented R.-T.-E. cereal
Post consolidating cereal businesses
News Feature - Baking mix brand conquers challenges in gluten-free innovation
Exports and Trade Issues - Growth in China’s imports of U.S. agricultural goods slows…for now
People - Former Darden executive to president of Panera Bread
Steve Cooper joins Schwebel Baking as chief operating officer
William Fife, longtime A.S.B. and B.C.C. member, dies
IFIC survey again finds people seek whole grains, fiber
Washington - The unsettled G.M.O. world
Weather Outlook - U.S. Plains rain puts end to multi-year drought
Guidelines timeline
Education and Research - Global warming seen causing wheat yield declines
Supplier Innovations
Ingredient Market Trends - Winter wheat harvest under way
Ingredient Week
Marketplace Business Network
Ad Index

Milling & Baking News - May 26, 2015