Panelists at the Raven Innovation Summit near Baltic, S.D., told producers that China has a voracious appetite for U.S. agricultural products and services, but they also warned that competition is keen with other countries for their business and improved relationships with the Chinese are needed.
The panelists were on a six-day trade mission this past spring with South Dakota Gov. Dennis Daugaard to China and discussed their impressions at Raven’s annual gathering.
Former state Secretary of Agriculture Walt Bones said he was “cautiously optimistic” about trade. He said the opportunity to sell U.S. ag and other products to the Chinese is that the people there crave American-produced goods.
“I think ‘Made in America’ has more value in China than in the U.S.,” he said.
However, he said South Dakota and the rest of the nation needs to keep investing in research, produce the best and safest product they can and listen to customers there as to what they want. He pointed out that 95 percent of all consumers live outside the U.S.
“Sometimes I think we have the cowboy mentality that, ‘Here’s what I’m producing, and ... you better buy it if you want it.’ I don’t think that’s the way you improve relationships with customers,” Bones said.
Bones also knows that despite confidence in the U.S. economy and its safe products, the Chinese are buying farmland and ag processing operations in other countries – including the pending sale of Smithfield Foods and its Morrell pork processing plant in Sioux Falls – so if times get tough, they know they have a place to get food for their people.
Ryan Budmayr, an international business development specialist for the state, said that China is a priority trading partner in Daugaard’s eyes and that it’s the third largest South Dakota trading partner. He said the governor is excited about international trade and is willing to open doors, perhaps unlike some other governors in the nation, to create more jobs here and to bring more value to South Dakota ag and other goods.
Budmayr said this was the third trip to the country of 1.3 billion people by a South Dakota delegation, with more missions hopefully to be made.
Panelists agreed that building relationships with the Chinese and making more trips there are well worth the effort with opportunities abounding. The trip was financed by a federal grant with the 11 business executives who accompanied the governor, ag group officials and aides paying part of their own expenses.
Event moderator Jim Woster asked panelists what most surprised them on the mission.
Michelle Lavallee, director of sales and marketing for Raven, said she was surprised that the country was “about 10 years behind” the U.S. in precision ag technology and that it’s a “wonderful time” for the 1,400-employee, 59-year-old Sioux Falls company to enter the market and make headway there. She learned that the Chinese government is offering 30 percent rebates to farmers willing to use different precision ag equipment.
Les Moeller, first vice president of the South Dakota Pork Producers Council and a St. Lawrence hog grower, said he was surprised by how friendly and fun the people were. He had several discussions with Chinese counterparts in the hog industry. And although Americans need to educate foreigners about U.S. livestock and crop practices and the safety and environmental steps taken to keep the food supply safe, he said perhaps sometimes “we don’t listen (to them) so well, and we need to do more of that” to improve relationships and sales.
Bones said the inefficiency of the meat system in China surprised him. He said he was in a supermarket and saw a cut of beef marked that it was corn fed for more than 600 days, quite the difference from the 12 to 13 months cattle are fed here.
He said even though “politics” is keeping U.S. beef out of the direct Chinese market, the Chinese still are getting American beef through Hong Kong and the Philippines. “They want our beef,” he said.
Marc Reiner, vice chairman of the South Dakota Soybean Research and Promotion Council and a producer from Tripp, said he was surprised about the information gap between the two countries’ people, which shows the need to improve relationships. He gave an example about visiting a soybean crushing facility in Shanghai and hearing someone mistakenly say that the U.S. shipped all of its genetically modified (GMO) crops to China and kept the non-GMO products for people in the U.S.
In that same vein, Mark Gross, president of the South Dakota Corn Growers Association, said he was surprised and disappointed when he was grilled by a Chinese host about the quality of corn from the U.S. “If it’s dirt or whatever, it’s not the same (clean) product I’m bringing to the elevator,” he said.
Panelists, however, said South Dakota has a quality product to offer, and there’s not much dispute about that. “We have to keep telling the world that we have the safest, most environmentally sound product, whether it’s corn or pork or whatever,” Moeller said.
Lavallee told a story of how 26,000 diseased pigs were found in the Shanghai River, a source of drinking water. “They know we don’t do that type of thing here,” she said. She also told of how an intern working for the company in China had become sick twice from eating pesticide on apples.
To point out the inefficiencies in the Chinese ag system, Gross said he was told that 40 percent to 50 percent of food products are never eaten by the Chinese people because of the lack of refrigerated storage and transportation difficulties.
In the end, the panelists agreed that trade missions are worth the effort and more visitors should be invited here. Reiner said bringing foreign customers here is one way to show them directly the high quality of ag products produced here as well as the incredible farming and processing facilities.
Meanwhile, Reiner said the opportunities are amazing in China, considering it really opened to trade only 10 to 15 years ago. He said the first national soybean association trip to China was in 1982, with no beans sold there until the late 1990s.
The market is huge, he said, as the Chinese are at about only 50 percent of their soybean crushing potential in their existing plants.