China’s Appetite Grows

China’s growing appetite for American agricultural products is transforming the port of Oakland, California.
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There’s perhaps no better evidence of China’s growing appetite for American agricultural products than the ongoing transformation of the port of Oakland.
China is increasingly looking overseas for food due to rising incomes, limited farmland, and polluted water and soil. According to the U.S. Department of Agriculture, agricultural sales to China doubled from 2004 to 2008 and doubled again from 2008 to 2012. In 2008, China became the largest overseas market for U.S. farm products, surpassing Japan, Mexico, and Canada.
“China’s agricultural demand is massive and cannot be overstated,” said Beth Frisher, the port of Oakland’s business development and international marketing director. Oakland wants to capitalize by embarking on a series of building projects that would link the U.S. farm belt to China. Meat, vegetables, and soybeans pass through its docks, providing a window into how China’s growing food demand is transforming U.S. agribusiness and infrastructure.
 
A “Direct Link” to the U.S. Farm Belt
From forks to iPhones to couches, “Made in China” products fill American stores. U.S. ports typically import far more from China than they export, but Oakland stands as a rare exception. In 2014, it shipped 392,612 tons of cargo to China compared to receiving 244,669 tons.
The port’s trade surplus is largely driven by agricultural exports. As the last stop ships make on the West Coast before departing across the Pacific, Oakland often has the shortest transit time to Asia, making it an ideal gateway for outbound foodstuffs, particularly frozen commodities. Refrigerated cargo is expensive, cooled by diesel-powered generators when at sea, so minimizing transit time is crucial.
Oakland is keen to build – quite literally – on its geographic advantage. On the site of the former Oakland Army Base, the port of Oakland is developing a logistics hub that will be able to accommodate four 8,000-foot trainsat a time. Last year, U.S. Transportation Secretary Ray LaHood presented a $15 million grant to modernize the port’s ship-to-rail exchange capacity with improvements expected as soon as 2016. Frisher said the port is also planning a new cold storage facility and a grain transload operation, which moves cargo from domestic 53-foot rail containers to 40-foot maritime containers.
The idea behind the slew of projects is to provide the most efficient way for shippers to go west and make Oakland the “gateway of choice,” said Frisher.
The 35-acre, $90-million cold storage facility by Lineage Logistics and Dreisbach Enterprises will keep meat and vegetables from the Midwest preserved while waiting to be loaded onto ships. Construction is slated to begin in the spring of 2016 and be completed as soon as 2017.
The grain transload operation, which Frisher said will be “hugely important,” will accommodate China’s skyrocketing demand for animal feed. In 2012, the Capital River Group, a Stockton-based international feed distributor, sent 2,500 containers of animal feed overseas through the port of Oakland; this year they anticipate sending 26,000 containers. CEO Todd Lush said that China’s rising demand is one of the major driving forces behind the quintupling traffic, and he recently approached the port’s board to approve doubling his company’s space in anticipation of even more growth.
China’s Appetite Grows
A combination of factors has prompted China to look overseas for agriculture imports.
While home to nearly one-fifth of the world’s population, China has just one-tenth of the world’s arable land. According to the World Bank, China has less than one-sixth the amount of farmland as the United States per capita (0.08 hectares compared to 0.49 hectares, respectively).
Water is also scarce. Water availability per capita is only one-quarter of the world average. Making matters worse, China’s land and water are increasingly polluted. Some statistics show that 16 percent of the country’s soil is too polluted to grow crops.
Meanwhile, China’s growing middle class is eating and traveling more, adopting diets heavier in meat, dairy, and wine consumption. China is importing more pork, chicken, beef, and fish, and vast amounts of soybeans – a key component for animal feed. Soybeans are the largest U.S. export of any type to China, accounting for 11 percent of the value of all U.S. exports and nearly half of all major agricultural exports to China in 2013. China’s imports of wine quadrupled from 2008 to 2013, totaling $1.3 billion, and Chinese investors are buying up vineyards in Napa Valley.
China has also been rocked by food safety scandals, shaking the public’s confidence in the integrity of the domestic food supply chain. Stomach-turning incidences ranging from fox meat disguised as donkey meat in Walmart to pork buns stuffed with chopped cardboard and pork flavoring sold by street vendors in Beijing have become all too familiar.
Opportunities and Challenges for U.S. Agriculture
Over the last decade, the United States has been China’s top agricultural partner and this relationship looks likely to continue and indeed strengthen.
Investment goes both ways. In 2012, China’s then- vice president and now president, Xi Jinping, came to the United States and visited a farm in Maxwell, Iowa (population 807), where he was pictured riding a John Deere tractor alongside the farm owner. China is now the largest market for agricultural machinery in the world, and U.S. firms hold a 44 percent share of imports. From 2009 to 2014, U.S. equipment exports for China’s livestock sector (meat and dairy) rose 27 percent annually.
In 2013, a Chinese company, WH Group, acquired Smithfield Fields, America’s largest pork producer. While there was much controversy from both those in favor and against the acquisition, what is often overlooked was WH Group’s valuation of the American company’s technological and management know-how in operating vertically integrated slaughterhouses. As China moves from a predominantly smallholder farm model to more massive, confined animal feeding operations or “factory farms,” vertical integration is a way to improve food safety at all stages of the supply chain, from production to processing.
Nevertheless, the path to integrating these massive markets is thorny. On the retail side, foreign companies such as Walmart and restaurants such as Kentucky Fried Chicken and McDonald’s report being scrutinized and audited more often in China than their domestic counterparts. And government interventions in key commodity markets, such as subsidies to domestic corn farmers, make it difficult for U.S. producers to accurately gauge the market. While this protectionism is not unique to China, the lack of accurate data and the sheer size of the world’s most populous nation mean even slight policy adjustments have massive ramifications.
For all the political tension between the United States and China, agricultural trade is an area of huge potential. It’s also a reminder of how closely tied the world’s two economic giants are already. News of China’s recent stock market crash sent commodity prices tumbling in the United States too, worrying farmers across the Midwest. The port of Oakland’s plans – and the ripple effects they will have throughout the U.S. agricultural sector – will only tighten this relationship in years ahead.
 
Source: The Diplomat
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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