What’s the potential for more soybean exports to China?

Kansas soybean harvest (Courtesy photo)

When it comes to international trade, farmers and ranchers cannot ignore that China is the biggest customer for United States agricultural exports.

U.S. agricultural exports to China in fiscal year 2022 reached a record $36.4 billion before trending downward as the Chinese economy slowed, according to the U.S. Department of Agriculture’s Foreign Agricultural Service.

You might not know about that sales relationship if you listened in on recent congressional hearings where complaints about China seem to be at an all-time high. Lawmakers are increasingly concerned about the Chinese buying U.S. farmland, stealing technology and listening into U.S. consumers via TikTok, and the Office of the U.S. Trade Representative recently issued a report containing a blistering assessment of trade practices with the People’s Republic of China.

So how is that impacting buying decisions and the sentiment in China? Agri-Pulse caught up with U.S. Soybean Export Council CEO Jim Sutter shortly after he returned from meeting with numerous officials in China and Thailand last week. China is the world’s largest soybean importer, accounting for nearly 60% of global trade and half of U.S. soybean export value.

One part of Sutter’s trip was to revisit a 2023 initiative. Last year, USSEC inked a memorandum of understanding with the Foreign Affairs Office of Henan Province, the Shangqiu municipal government and Henan University of Technology to develop the U.S.-China Soy Value Chain Innovation Center, supported by the soy checkoff. The SIC is located in China’s Henan province, a large livestock production region with an annual soy processing capacity of 3.8 million metric tons. When the center was launched in March 2023, USSEC staff said the center “will amplify the advantages of U.S. soy as curriculum explores intrinsic and extrinsic value of soy products and potentially spark “breakthroughs in cooperation and marketing.”

Sutter also met with USDA officials and the U.S. ambassador to China, Nicholas Burns.

Here’s what I learned from our conversation. Some answers have been edited for brevity.

Tell us about the Soy Innovation Center.

Sutter: It’s a virtual Innovation Center because we’re partnering with Hunan University of Technology to host courses. We found that it really works well if we have a partner university and we invite people from different places to come there for training. We can make use of the university facilities, and sometimes their professors get involved. They hosted a week-long course when we were there.

You also traveled to Beijing for meetings with industry leaders, the Foreign Agricultural Service and the U.S. ambassador. What did you learn?

Sutter: The feeling on the ground and the kind of business relationship or the farmer to importer relationship is very strong. I think the Chinese would like to be buying, and they want to have a close relationship. They’re appreciative of all the work that we’ve done. The soy family has been doing work in China for 42 years. When we talked to the ambassador, he said the relationship is significantly better today than it was a year ago at the working level, with various levels and departments of the government. Secretary Vilsack recently met with Minister Tang Renjian, China’s minister of agriculture and rural affairs, and that set a good tone for us in the agricultural arena.

Did they ask you about the criticism of China coming from U.S. politicians?

Sutter: In several of our meetings, we were asked “Why are people so negative toward China?” For us, and our perspective from working there for a long time and with a strong partnership, roots and history, we just say it’s election season, and who knows what will be said. Let’s just focus on our long-term partnership and continue to work on a win/win or mutually beneficial relationship.

What’s your outlook on future soy demand from China?

Sutter: I left China thinking they’re all getting used to their economy being a little bit slower than it has been in the past. It’s kind of leveling off, but I think there’s still optimism there that their economy is going to continue to grow albeit at a slower pace than in previous years. Maybe it’ll grow at 5% per annum instead of the 10% they were used to. But for a big economy like that, it’s still a lot of growth in terms of how many more dollars in their economy every year. They’re optimistic that their demand is going to continue to grow, although probably more slowly than we were used to. But they don’t see it going down. If anything, they see it continuing to go up.

China will be there to buy what the U.S. has available to sell to them at a competitive price. They like U.S. soybeans, but they’re not going to pay a lot more for them. They are pretty savvy, price-conscious buyers. When we’re competitive, they’ll take what we have to sell, but if we’re not competitive, they’re going to buy from a different origin.

You also traveled to Thailand on this trip to meet with customers and prospects. What were your key takeaways?

Sutter: We had a conference that focused on feed industry customers including livestock, swine, poultry and aquaculture producers throughout Southeast Asia. It was a big event done in conjunction with the U.S. Grains Council and U.S. Wheat Associates. The second part of the week, we had a food-related conference, which was also in Thailand. Sustainability was a very big talking point. The U.S. has a very compelling sustainability story to tell with the low carbon footprint and the farmer history we have here. Many more people around the world are interested in that, and we have a real advantage.

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Are buyers noticing a difference between U.S. and Brazilian soy on the sustainability scale?

Sutter: They do. We have signed a couple of MOUs with groups in that part of the world. One was last year with a large company called CP Foods, to advance sustainable sourcing practices for food and animal ingredients. Last week, we signed another MOU with the Thai Feed Millers Association, and they really look to us to improve their ability to deliver products that are verified sustainable to their customers. There are some suppliers out of Brazil that are able to do that, but it’s much more prevalent out of the U.S. They look to us and say we’re the leaders in this area. It gives us something new to really differentiate ourselves.

Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.