INVESTING CHECKOFF DOLLARS
OV E R S E A S OBSTACLES M A R K E T ST U DY T R I P R E V E A L S C H A L L E N G E S I N C H I N A , JA PA N M A R K E TS BY BETHANY BARATTA
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n ongoing trade war between U.S. President Donald Trump and China’s President Xi Jinping has essentially stopped soybean trade between the two countries. Soybean buyers and sellers would like to do business with each other, but a 30 percent tariff on U.S. soybeans has forced Chinese buyers to look elsewhere to meet their soy needs. At the same time, an aging and declining population in neighboring Japan means opportunities may be limited to sell more soybeans there. These were just two of many takeaways from a recent trip of several Iowa Soybean Association (ISA) board members to the two countries. It was part of the ISA board development program, which allows directors to experience soybean markets that buy from or compete with the U.S. “These trips are about making sure farmers who volunteer to serve on our board understand key markets,” says ISA CEO Kirk Leeds, who led the trip in July.
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Tariff roadblock Discussions with grain buyers in China reiterated their preference for U.S. soybeans. “Everybody we met with wanted to buy our soybeans. They appreciate the quality, consistency and availability of Iowa and U.S. soybeans,” says Leeds. “But, until there’s a resolution to the trade dispute, they won’t buy with 30 percent tariffs. Nobody wants to be left holding the bag by ordering or buying with this uncertainty.” In addition to the tariffs, African swine fever (ASF) is eroding the demand for soybeans in China. “Clearly, one of the reasons China has been able to source soybeans so easily from other countries is because of the reduced demand for soybeans due to ASF,” Leeds says. Some analysts estimate the Chinese hog herd has been cut in half due to the disease. “ASF is a significant problem, and it’s not over yet. Most representatives we met with were saying it’s caused a
25 to 30 percent reduction in the hog herd; Rabobank estimates a 50 percent reduction,” Leeds says. The country’s immense population of nearly 1.4 billion is difficult to fathom without experiencing it firsthand, says Casey Schlichting, ISA district 2 director from Clear Lake. “You can’t understand the population until you physically get there and see it,” says Schlichting. “It’s just unbelievable. “Beijing is a city of 23 million,” he continues. Iowa has a population of 3 million. It’s overwhelming to wrap your head around how many people they have to feed.” For a country that large, ISA District 3 Director Rick Juchems expected to see modern soybean handling facilities. “Their crushing facilities are large, and very automated, but their handling systems leave a lot to be desired,” says Juchems, a crop and livestock farmer near Plainfield. “In the plants we visited, they were handling all their soybean meal by hand, putting them in bags and also moving the bags by hand.”
