China opened its market to U.S. beef last year for the first time since 2003, and Nebraska provided the first shipment of American-grown beef.
New analysis by Wendong Zhang, an Iowa State University expert on China's economy and agricultural sector, points to potential opportunities for Midwest ag products such as beef and corn, complementing robust export opportunities for soybeans and distillers grains.
International competition for the Chinese agricultural market is strong, especially from Brazil. But Zhang's analysis indicates that the United States should be able to realize trade gains, long term, through smart marketing and by tailoring products to the Chinese market, plus diplomatic pressure for China to reduce trade barriers.
China provides a huge market for several of Nebraska's main agricultural products. That Asian nation buys 43 percent of Nebraska's exported soybeans and soybean products; 93 percent of sorghum, 54 percent of distillers grains and 57 percent of hides and skins.
The surge in China's demand for soybean and soybean-product imports has been spectacular, going from $5.5 billion in 2005 to almost $25 billion by 2016.
The growing Chinese demand for beef is also striking, as that country sees major increases in middle-class living standards. Zhang notes that since 2008, Chinese per-capita beef consumption has increased by about 27 percent, from about 10 pounds per person in 2008 to about 12.7 pounds now.
Although that's modest when compared to the U.S. figure of 79 pounds per capita, the important thing is that beef demand in China — a nation of 1.3 billion people — is increasing significantly. In 2012, they totaled 87,000 metric tons. The figure for 2017: some 950,000 metric tons.
A large portion of the increased imports are from live cattle from Australia and New Zealand, where Chinese investors have made major investments in cattle operations.
Zhang's analysis also showed that the U.S. overall market share in China for all meat exports (including pork, chicken and beef as a whole) has fallen greatly in the past three years as China seeks to diversify its meat imports. That foreign competition, plus China's technical requirements for beef imports, present challenges for U.S. producers.
Nonetheless, U.S. producers have significant long-term opportunities, given the immense size of China's market and the growing demand of its middle class for meat products.
U.S. corn producers also have the potential for long-term export opportunities, though our country's corn sales to China are far smaller than U.S. exports of, say, soybeans. Nebraska's $820 million in 2015 soybean- related exports to China in far exceeded our $20 million in corn exports.
Zhang writes: "As the Chinese people demand more pork and beef with rising per-capita income, China will likely need more corn and corn substitutes in the future. . . . The United States, along with Ukraine and Brazil, would likely be a major player if that were to happen."
China offers promising opportunities for U.S. producers, if we pursue well-chosen marketing and diplomatic strategies.