New US-China soy centre to share American agricultural expertise with Chinese farmers

In a bid to offer Chinese livestock and poultry farmers technical expertise as a means of promoting American soybean exports, a US trade association co-launched an agricultural cooperation centre in China this week.

Henan province in central China, in coordination with the 105-member US Soybean Export Council, on Wednesday opened the China-US Soy Value Chain Innovation Centre, a network of experts that includes council staff and is backed by the Henan University of Technology.

The network will teach farmers in the agriculture-intensive province how to give soy-based foods to fish, shrimp, poultry and livestock so those animals "perform" better and waste less, according to council regional director Zhang Xiaoping in Beijing.

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And analysts say that the sharing of information will help US exporters compete against rival soybean sellers in Brazil - the top soybean exporter to China - and Argentina.

Brazilian President Luiz Inacio Lula da Silva is visiting China this week with an eye on signing 20 economic deals. One agreement is due to cover commodities, which could include soybeans.

"This solution is unique," Zhang said. "I believe we can work through it to differentiate US soy and generate stronger interest."

Drought conditions in parts of South America, including Brazil, have hampered the country's soybean crops since last year.

With that drought in mind, China is looking to hedge its "risks" by continuing to import from the United States, according to Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Bank.

That means China will keep buying American beans despite festering trade disputes between the world's largest economies, Ding said.

"Brazil has its climate problem to worry about, so it's risky to over-rely on it," he said.

The US-China trade war has wiped out hundreds of billions of dollars worth of bilateral trade since 2018 while exacerbating political problems between the countries.

China imported 29.5 million metric tonnes of US soybeans last year, down 8.6 per cent from a year earlier, according to Ministry of Commerce data. It says US beans accounted for 32.4 per cent of China's total imports in 2022.

Also last year, China bought 54.4 million metric tonnes of Brazilian soybeans, accounting for 59.7 per cent of China's imports.

The need to secure sufficient soybean supplies to feed its people and livestock became even more critically important to China last year, as Russia's war in Ukraine hobbled exports of wheat, corn and sunflower oil from the two farm-rich countries.

However, the world's top soybean importer is also trying not to over-rely on American shipments, said Douglas Barry, a Washington-based consultant who follows China-US trade trends.

Beijing pledged to buy billions of dollars more in American agricultural goods as part of the phase-one trade deal that was aimed at easing the trade war. Soybean imports surged in 2019 just before the start of the agreement, which expired in 2021.

"China is more concerned than ever about food security and is reluctant to put all of their beans in the same basket, especially when the beans come from a supplier viewed as unreliable and hostile," Barry said.

The innovation centre emerged from years of relations between the exporter council and the Henan provincial government.

The US is Henan's largest trading partner, with soybean association members Cargill and ADM investing in the province already, provincial Communist Party committee deputy secretary Zhou Ji said at Wednesday's opening ceremony for the innovation centre.

"The cooperation between the US Soybean Export Council and Henan to establish the innovation centre is a major event to promote in-depth cooperation between the two parties and achieve mutual benefits and win-win development," Zhou said.

Their cooperation comes as Chinese officials have repeatedly been sounding alarms over food security. On Wednesday, the Ministry of Agriculture and Rural Affairs proposed setting soymeal rations in animal feed at under 13 per cent by 2025, compared with last year's 14.5 per cent.

"The trade war with the US and the hot war between Ukraine and Russia are sources of anguish for people in China who care about food security," Barry said.

Longer term, China aims to cut its reliance on imports by growing more of its own soybeans in Heilongjiang, a northeastern province particularly suitable for the crop. Heilongjiang set out last year to boost soybean production by planting 666,667 hectares (1.6 million acres).

China's soybean cropland reached 10.2 million hectares last year, up about 21 per cent over 2021.

This article originally appeared on the South China Morning Post (SCMP).

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