The best USDA trade mission ever?

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, May 21, 2014 - In the past, Northeast China has been a difficult market for U.S. companies to crack. The region is traditionally an area of farming and manufacturing, making it difficult to find a place for U.S. agricultural exports, notes USDA's Foreign Agricultural Service (FAS).

But from May 5-13, representatives from nine state departments of agriculture and 28 U.S. companies shook lots of hands, held meetings and toured facilities - part of a USDA trade mission to learn and explore the opportunities for trade in the region led by Under Secretary Michael Scuse. In interviews with participants after the trip, Agri-Pulse learned that they delivered a one-two punch, focusing on a wide variety of farm and food exports during the first part of the trip, with a more focused effort on ethanol and its by- products during the second part.

Lets Talk Food

“This has the potential to be the best trade mission we've ever done,” exclaimed a clearly upbeat Scuse during a call to the mainland during the last few days of the trip.

Under Secretary Michael Scuse views one of the many U.S. products offered on the shelves at Metro, a leading grocery retail chain with locations across China.

China is already the largest international market for U.S. food and agricultural products, with exports reaching a record $23.5 billion last fiscal year. During the mission, the USDA delegation traveled to the northeastern provinces of Dalian, Shenyang and Changchun to learn about market conditions and business opportunities. U.S. agricultural exports to the region have grown 18 percent annually since 2009 and demand for soybeans, red meat, dairy and sugar have all seen double-digit growth over the past five years, according to FAS.

Scuse had just completed a visit to a 200,000 cow dairy with plans to increase to 500,000 cows, prior to his call with Agri-Pulse.

“They have a great deal of interest in beef and dairy genetics,” he noted. But the list of potential sales of U.S. products is long and diversified.

For example, Dragonberry Produce, from Canby, Oregon distributes fresh fruits and vegetables grown in Oregon and the Pacific Northwest. Their president participated in the trade mission as a way to build a stronger relationship with Chinese customers.

“I feel that the United States has many excellent quality products that can be attractive to the new generation of Chinese consumers. We have a branded apple - the Green Dragon Apple - that is crunchy, sweet and aromatic that we feel can do well in this market,” said Amy Nguyen, presi- dent of Dragonberry Produce. For a list of participating firms and organizations: http://www.fas.usda.gov/newsroom/usda-trade-mission-open-new-doors-us-agriculture-northeast-china

The last few days of the trip were clearly a way for USDA to promote ethanol exports and by- products like Distiller's Dried Grains (DDGs), while trying to counter some of the negative pushback the White House has been getting from rural interests since the Environmental Protec- tion Agency (EPA) proposed lower levels for the Renewable Fuel Standard (RFS). In November 2013, the EPA released a proposed rule that would reduce the renewable volume obligations

(RVOs) under the RFS. The final rule for 2014 is expected to be released in June.

“This (trip) came as a direct result of the misguided proposal from EPA,” noted Roger John- son, President of the National Farmers Union. “The ethanol market appears to be quite large and when it opens, the opportunities could be substantial.”

There's only one problem: Chinese leaders - with a focus on building their own renewable ener- gy industry - do not currently allow U.S. ethanol into the country. And exports of DDGs have been hung up at times, over issues related to acceptance of biotech traits already approved in the U.S. but still waiting for Chinese approvals.

But that could all change. With Ag Secretary Vilsack's decision in February to designate that his agency would be responsible for promoting ethanol exports - making the commodity eligible for a host of USDA export programs - Growth Energy's Vice President Jim Miller says that USDA could move the needle in ways that some might not have expected. In the past, USDA has used its trade promotion tools to promote exports of DDGs, but not ethanol exports.

There is tremendous potential to penetrate the market with fuel ethanol as well as expand the market for DDGs,” says Miller, who frequently traveled to China while he served as USDA Un- der Secretary for Farm and Foreign Agricultural Services. “But it's going to take some patience and persistence. And the Chinese will need some flexibility.”

“China is clearly a potential market for U.S. ethanol,” says Bryan Lohmar, U.S. Grains Council director for China. “Policy makers in China are committed to improving air and water quality as well as reducing public health hazards. Based on these criteria, ethanol as an oxygenate additive in transportation fuel has superior qualities compared to the additives currently being used in China.”

China has put a moratorium on producing additional ethanol from grain, and the capacity to meet potential demand with domestic ethanol from other feedstocks is limited, Lohmar points out. To- gether, these trends will likely result in ethanol import demand.

“U.S. ethanol exports to China would be mutually beneficial and strengthen the trade relationship between the two countries” Lohmar said, “We think these opportunities are real and look forward to working with partners in China to bring these benefits to both countries.”

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