It has been 40 years since the Russian wheat deal shook up the U.S. commodity market, and since then producers of both grains and meats have become increasingly interested in and reliant upon the export market for adding value to their commodities. In recent years growing economies have transformed developing countries into major consumers, and many of those have great impact on the value of U.S. farm products as well as the supply available to U.S. consumers. Many of the international trade issues were brought to the table this past week at the USDA’s annual Outlook Forum.

China

William Westman, Vice President for International Trade, with the American Meat Institute, in Washington, said China is challenged with its efforts to feed over 1 billion people without the resources it needs to achieve that. Sixty-six percent of China’s land is a dry savanna, mountains or a non-farmable desert. In addition to 13% of the country that is cultivated, 21% is in forest. Even between sidewalks and buildings in large cities, there are efforts to grow corn. Over the past 25 years, there has been progress made in increasing crop yields. Corn yields have increased from about 57 to 83 bu./acre. Soybean yields have increased only from 24 to 27 bu./acre.

China needs improved grain and oilseed production to feed to livestock, which is a priority for the government. Fifty-one percent of the farms have less than 100 head of hogs being marketed, and that number is declining. Forty-nine percent of pork farms have more than 100 head and their number is increasing.

Consumers are increasing, particularly the middle class. When China became part of the international trading community in 2002, the number of households has increased from 50 million to just over 100 million today, with a prediction of 225 million by 2023. And they are eating out more often as the economy grows. Just 15 years ago, Chinese consumers spent 100 billion Yuan on food services, but increased to 1,800 Yuan in 2009. That was equal to the amount spent by Japanese consumers and half the amount spent by U.S. consumers on eating out. 2010 data indicated a 15-20% growth rate.

Westman indicated the increasing consumer demand is pointing to the need for food, but the Chinese infrastructure will have challenges in meeting the demand. Much of it may fall upon the U.S., not only for meat products, but for feed grains needed by Chinese livestock producers.