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USSEC Efforts to Promote Soybean Exports to China Face Obstacles

08/13/2019

Despite the deteriorating trade relationship between the U.S. and China, USSEC is justifiably still maintaining promotional efforts in China as an investment for the future. The Council recently reported on promotional activities directed to soybean food processors.

Obstacles to exports obviously include the now blanket ban on imports of all U.S. agricultural products, competition from local varieties suited to production of tofu and yuba and a strict embargo on GM-origin soybeans.

It is questioned whether contacts with the Jiangnan University School of Food Science and Technology and major food companies in Nanjing, Jiangsu Province will in fact generate goodwill. Providing technology to Chinese institutions and business entities, many of which are state-managed is simply transfer of know-how ultimately to the detriment of the U.S.

During the 1990’s the American Soybean Association promoted exports of soybeans to India, China and other nations by providing live-bird and hog technology to develop domestic livestock industries. This resulted in increased demand for soybeans frequently supplied by Brazil and Argentine. The result of seminars, farm and plant visits and advice especially on processing contributed to a rise in domestic production reducing the market for U.S. exports and in some cases even generating competition for export markets supplied by U.S. producers. The USSEC should recognize that U.S. hog, broiler and egg producers are their main market and that the long-term interests of users of soybeans should be considered.

The 1990s ASA model of promoting domestic production to stimulate exports of U.S. soybeans may have generated a short-term benefit, but providing technology especially in the area of post-harvest poultry processing, as requested by China, has been contrary to the interests of our domestic poultry industry.

At the end of the day, soybeans are a commodity, despite the attempts by USSEC to promote superior nutritional value. Irrespective of claims to the contrary, landed price is the principal motivation to purchase corn, wheat and oilseeds. Sustainability, is a justified attribute and is worthy of promotion but probably is not considered in the purchase decision. Quality depends on scrutiny by USDA personnel at export terminals and is probably equivalent to soybeans from Brazil, Argentina and the Ukraine given international standards. Major purchases by potential importers are based on landed price and availability and attempts at product differentiation of what is essentially a commodity may be akin to pushing a piece of string. Either way it plays well in Peoria, since the expenditure on promotion, personnel and logistics is derived from check-off funds relying on the goodwill of farmers.