Assistant Editor

BEIJING, China — Maintaining a fourth of the world’s growing population would likely put a strain on any country’s food production capabilities, but coupled with an expanding middle class demanding better and varied nutrition, China’s demand for meat, especially, is on the rise.

“They have a real curve on them to increase livestock production,” said Gary Clark, director of market development for the Missouri Corn Growers Assoc. and the Missouri Corn Merchandising Council. He estimated the country’s single largest usage of corn is as livestock feed, though he said some also goes to people and to four ethanol plants. About 70 percent of the country’s corn is grown in nine northern and northeastern provinces, which Clark toured recently with Dr. Todd Meyer, senior director of the U.S. Grains Council (USGC) in China. Missouri Corn contracts with USGC to expand its marketing opportunities abroad.

While USDA expects United States corn production to top last year’s harvest by nearly three billion bushels, China is likely to see a drop of more than 250 million, according to USGC estimates, despite having planted almost three million more acres than last year’s 67.5 million acres. (Note: Measurements for this article have been converted from metric using a USDA conversion chart.)

Last year, Chinese farmers harvested more than 5.7 billion bushels of corn, including those in southern provinces.

This year, USGC predicts fewer than 5.5 billion bushels, even though the China National Grain and Oils Information Centre has not lowered its official estimate of more than 5.8 billion bushels. “This process is full of all kinds of potential error,” admitted Meyer of USGC’s estimation method, “but we try to do the best we can.”

USGC’s isn’t even the lowest contradictory estimate – Meyer pointed out another reporting agency two weeks ago predicted only 5.3 billion bushels. “Depending on how the quality (of corn) turns out, it could go down further from where we are, but I feel pretty comfortable” about USGC’s numbers, he explained.

Meyer’s and Clark’s estimate came from touring fields in each province and speaking with growers. Proving that not much changes from one side of the world to the other, Clark noted, “Farmer folk tend to be a little more pessimistic than others.” Still, “This wouldn’t be the worst year in recent history,” Meyer explained.

That notoriety belongs to 2001 within the past several years, which saw much lower yields in the northeastern provinces of Jilin, Liaoning, Inner Mongolia and Heilongjiang. (2003 was a bad year for northern provinces Hebei, Shandong, Anhui, Jiangsu and, especially, Henan, which only saw half its anticipated production of 2007.)

Trade

“We may not see prices significantly above what they are for a while,” Meyer said, explaining that traders don’t yet know what China’s beginning and ending stocks are.

He did say there’s room for a “significant number” of dried distillers grains (DDGs) to be imported from outside Asia for livestock, perhaps as much as 3.3 million to 4.4 million tons. Clark noted while DDGs have had a “bad rap” for short shelf life, he said production processes at ethanol plants have changed, resulting in better consistency, moisture levels and shelf life.

He explained there is no long-term history of trading grain with China because the country – until recently – has traditionally been more of an exporter. With a growing population, however, “It puts more of a strain on their grain supply, but also, meat,” he said, adding DDGs may be a solution.

The USGC corn tour, which Clark said has been a fixture for at least a decade, began as a result of not getting reliable numbers and estimated production from the Chinese government. Clark said it has traditionally been tight-lipped about its trade needs before actually announcing them, and there is not the communication between government and farmers via agencies such as American growers have.

“It’s quite a bit different than how we do it in the U.S.,” he said. “(The government does not) have that direct liaison to their farming community.”

For the past three years, however, he said the government has given China’s grain importers standing approval on certain volumes of grain each may import as it deems necessary. USGC figures there is a strong probability China will import from the U.S. Clark added the U.S. “should have plenty (of corn) to meet all demands” and still end up with higher ending stocks than anticipated.

This farm news was published in the Oct. 10, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.