ISGA Mission to China Reinforces Customer Commitment
- General News
USSEC, together with members of the American Soybean Association (ASA) and the United Soybean Board (USB), represented U.S. soybean farmers as the International Soybean Growers Alliance (ISGA) met in Beijing from March 26-28. The team consisted of ISGA members from the U.S., Brazil, Argentina and Paraguay and met with Chinese officials to address the issue of biotech approval in that country. Members of the U.S. delegation included USSEC CEO Jim Sutter; USSEC’s Marketing Manager Lead on the USB Freedom to Operate (FTO) Action Team Randy Olson; ASA President and Iowa soybean farmer Ray Gaesser; USB Treasurer and North Dakota soybean farmer Jared Hagert; and ASA CEO Steve Censky.
While the five countries that make up ISGA typically compete for a piece of China’s soybean market, the mission of the group is to collaborate in the development of select soybean markets and to speak with a unified voice opposing market restrictions, scientifically unsound non-tariff barriers to trade relating to health, environmental, chemical residues and biotechnology approvals. ISGA contributors work together to maintain the solid market position of soy against other competitor oilseeds and to communicate the social, economic, and environmental sustainability of the soybean chain. Estimates are that China will need an additional five million metric tons (MMT) of soybeans annually to meet increasing demand.
The first day of meetings took place at the China Entry-Exit Inspection and Quarantine Association (CIQA), where the group was hosted by Secretary General Bao Junkai. CIQA functions as the trade association for agencies that regulate imports and exports. Secretary Bao explained that the role of CIQA is to serve member companies, serve the government and to function as a liaison between the government and traders.
Ricardo Tomczyk, Vice President of the Association of Soy Producers in Brazil, expressed to Secretary General Bao that the group is committed to partnering with China to help the country meet its food security needs. ISGA member countries represent over 90 percent of the world’s soybean production and provide over 99 percent of the soybeans exported to China. Farmers must rely on access to new technologies to in order to produce more soybeans in a sustainable manner. Mr. Gaesser asked Secretary Bao how ISGA members could improve their partnership with China. “We are working towards a smooth, stable, sustainable trade relationship with our countries,” Secretary Bao replied. “We need to cooperate in things like information exchange. We can provide you with information on regulations that are happening in China and problems within the ports. In return, you can provide us information how to better solve some of our import issues.” Secretary Bao also told ISGA members that the Chinese are supportive of new technology in agriculture production in order to supply enough food to China.
On the second day of meetings, the ISGA team visited several Chinese agricultural associations.
Sinograin, a state owned enterprise (SOE), was the delegation’s first stop that day. The company, established in 2008, is involved in managing the state owned grain reserves in China. Sinograin first ensures that there is enough good quality grain for the government and people. Next, through its commercial function, they regulate the supply and help control the price and the reserve of the grains and oilseed. In addition, Sinograin is involved in oilseed processing and is an importer of soybeans. Sinograin is one of the top ten grain handling facilities in China but hopes to be in the top three by 2017.
Sinograin Vice President Song Zhiyuan told the delegation that because the company handles both marketing and the reserves, they are in a unique position to help improve the health of the entire industry. One of their goals is to establish a market chain from storage to logistics all the way through trading.
Mr. Hagert commented that Sinograin’s plan is aggressive but excellent for soybean farmers. “They are projecting imports to increase by 4.7 percent per year with a total import volume projection in 2017 of 75 MMT,” he said. “This presents a great opportunity for soybean farmers in the Americas to partner with China to continue meeting their food security goals.”
The China Feed Industry Association was the delegation’s next stop. Secretary General Li Xirong expressed concern over the controversy in China surrounding biotechnology. As a new government settles in, however, he noted a more positive attitude towards biotechnology. Secretary Li told members of ISGA that this week’s meetings were an opportunity to build a bridge between the producers and the buyers. The delegation also inquired about the future of a Low Level Presence regulation in China. “In China, so far, we believe it is zero tolerance,” said Secretary Li. “If it is inspected and they find material, it is rejected. That may change in the future.”
The second day’s meetings concluded with a visit to the Central Working Leading Group (CWLG). The role of CWLG is to establish the central government’s rural agriculture policy. Director General Zhang Dongke said it is impossible to imagine how China’s soybean market would look without the ISGA countries. Director Zhang outlined some of the future trends he anticipates for China’s soybean demand. A population that is expected to grow through 2030 is the number one driver for soybean demand. “You can see the demand from China will continue to grow for the next 20 years,” he stated. “All of these factors provide a really good opportunity for ISGA countries and soybean production.”
On the final day of the mission, part of the group traveled to the Chinese Ministry of Agriculture where they met with the Deputy Director General of Science, Technology, and Education Shi Yanquan. Director Shi explained the Chinese administration’s new policy on food supply and food security. China’s goal is to rely on domestic production for their food supply, import appropriate amounts of food, and to actively rely on technological advancements. He told the delegation that this is the first time China has incorporated words like “import an appropriate amount of food” into their strategy. Public acceptance of biotechnology has been a challenge in China. But Director Shi noted that when China approved three new GMOs last year, the government told consumers the varieties had already been approved in several countries which helped answer questions and increase acceptance of the products.
The other part of the delegation visited with COFCO, China’s largest soybean importer and crusher. The group was greeted with a sign welcoming the ISGA. During their visit, COFCO members told ISGA growers that “GM technology is indispensable to China” but also continued to emphasize that the Ministry of Agriculture still controls the approval process. COFCO inquired about Argentina’s intentions for this year's crop. They were interested whether or not farmers would be selling their crop or storing it due to inflation concerns.
Following those meetings, the full delegation reconvened at the Development Research Center (DRC), the official think tank of China, which provides policy research. The DRC informed ISGA members that they do not intend to paint a negative attitude toward GMO food and told members that China will not abandon GMO soybeans in the future as long as the GMO has approval and the safety of the food can be guaranteed. Acknowledging China’s concern for quality and quantity for soybeans, Karsten Friedrichsen, president of the Oilseed Producers Association of Paraguay, said they want to ensure they can continue to supply China with the beans they need. Mr. Friedrichsen stressed that biotechnology is the only way to ensure the best quantity, quality, and price for soybeans.
The delegation’s final visit was to the State Administration of Grain where they met with Administrator Ren Zhengxiao. Administrator Ren emphasized China’s efforts to be self-sufficient in domestic production of cereals and continue to import soybeans. “Soybean traders have a high regard for soybeans from ISGA countries,” he said. “Ninety-nine percent of those soybeans come from ISGA members. Of the 63.38 MMT of soybeans imported, roughly 50 percent came from Brazil, 35 percent from the US, and 10 percent from Argentina.” When it comes to importing, Administrator Ren said the ISGA has played a very important role in China’s soybean imports and the opportunity is there to maintain a long-term soybean partnership.”
Mr. Gaesser was optimistic about ISGA’s China mission and reiterated that the group has big hopes for the future of agriculture in China. “It’s a group of nations and farmers from those nations that have like initiatives and very similar goals for modern agriculture,” he says. “That means the use of biotechology, the use of environmentally friendly practices in all of our countries. Our farmers are quickly accepting the biotechnology.”
Two years ago, the group met with officials in Europe to share their thoughts about the importance of biotechnology with the European parliament. Mr. Gaesser says similar thoughts were shared with officials in China. “Our message to the Chinese was about the benefits they will receive from biotechnology,” he says. “That means having a more certain soybean supply for their needs—not only for their animal agriculture but their citizens.”