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Historic,

Do

not

Archive Document

assume content

scientific

knowledge,

reflects current

policies, or practices.

United States

Department

of Agriculture

Foreign Agricultural Service

Changing Face Of

Chinese Agriculture

Foreign Agricul

2

Foreign Agriculture/April 1985

Marketing

New Taiwanese Baking School

In

Puts Icing on the Cake

new baking

News

Taiwan, the China Wheat Products Research and Development Institute recently opened a school, and school officials chose a cake decoration course as the first to be

taught.

The 10-day course includes 60 hours

of

hands-on

training covering

wedding cakes

to

petit fours.

The in

school, which has graduated over 3,600 students since

part by U.S.

Wheat Associates. According

to U.S.

opened in 1967, is supported Wheat chairman Jim Jenks, courses it

taught at the school help increase the diversity of wheat-based products available to Asian customers. In 1984, Taiwan is expected to purchase over $100 million worth of U.S. wheat, making it one of the largest markets in Asia.

one key

success is that the institute has adequate staff and and training. “Classroom lectures can help set the stage for learning,” Jenks said, “but the student doesn’t really begin to learn until he or she actually begins mixing and baking.” Over 600 students will sign up to take one of 26 baking courses offered at the school in fiscal 1985.

Jenks said equipment

Korean Forest Products Officials Visit U.S.

that

to the school's

to give students individual attention

Korean industry and government forest product officials recently toured the United States at the invitation of FAS. The trip was planned to demonstrate to the Koreans that the United States is a reliable supplier with a variety of wood products available for export and to focus attention on the need for Korea to reduce its tariffs on processed wood products. In Washington and Oregon, the group visited the Western Wood Products Association, the American Plywood Association, the Weyerhaeuser Company, several plywood mills, housing construction sites and lumber producers. In Indiana, the team met with officials of the Fine Hardwoods/American Walnut Association and the Webb Veneer Company to In Washington, D.C., they met with USDA officials and representatives of the National Forest Products Association, to discuss the lowering of

see U.S. hardwood production. Korean

Japanese Steak Promotion Reaches One Million

Consumers

A

tariffs

on processed wood products and technical and research

activities.

Meat Export Federation (MEF) American Steak Fair in 45 Big Boy restaurants Japan reached more than a million customers. During the promotion, Big Boy restaurants, a $22-million-a-year sales company, sold 16 tons of U.S. beef in its restaurants in Tokyo and Osaka. MEF Asian Director Phil Seng said that the restaurant has indicated that will continue the promotion beyond the dates originally set for the fair. recent U.S.

in

it

MEF

Hosts Variety Meats in Mexico City

Luncheon

Mexican meat importers, retailers, processors and hotel/restaurant representatives attended an MEF luncheon in Mexico City in December. The luncheon demonstrated different ways U.S. variety meats can be served. sauteed in red wine and pork tripe sausage in mustard and cream sauce were among the dishes created and prepared by one of Mexico Oxtail soup, pork liver pate, calf kidneys City’s leading chefs.

tasting luncheon was the first activity of its kind to be held in Mexico, a major importer of U.S. variety meats, particularly of pork. During the first eight months of 1984, Mexico was the leading importer of U.S. pork offals, buying 7,236 tons 23 percent of U.S. exports. In 1985, Mexico is expected to issue import licenses for 50,000 tons of variety meats.

The



“Allowing importers and restaurant personnel to see and taste the quality of U.S. offals and showing them new ways to prepare variety meats should stimulate sales of U.S. offals to

Mexico,” said

Don

Hellbusch,

MEF

Latin

America/Caribbean

Director.

Foreign Agriculture/April 1985

Vol. XXIII No. 4

The Magazine

for

Business Firms Selling U.S.

Features

Farm

Products Overseas

China’s Farmers Shift Into High Gear

4

Published by

Department of Agriculture Foreign Agricultural Service

U.S.

In little over six years, dramatic changes system have reaped a huge success.

in

the structure of China’s agricultural

Managing Editor Lynn K. Goldsbrough

China’s Agricultural Gains Unlikely To Match Growth of Recent Years Design Director Vincent Hughes Writers

10

Although Chinese production of farm commodities will advance, projections next five years show a diminishing rate of increase.

for the

Robb Deigh David Garten Edwin N. Moffett Maureen Quinn Aubrey C. Robinson Geraldine Schumacher

may be reprinted Photographs may not be reprinted

Breeds and Feeds: The Future

of U.S.-Chinese

The phenomenal changes taking place in Chinese commodity makeup of U.S.-Chinese trade.

15

Trade agriculture

may change

the

Text of this magazine freely.

U.S. Oilseeds Scoring High With Asian

without permission. Contact the Design Director on (202) 447-6281 for instructions.

Use

of

commercial and trade names does not

imply approval or constitute endorsement by USDA or the Foreign Agricultural Service. The Secretary of Agriculture has determined that publication of this periodical is necessary in the transaction of public business reguired by law of this Department. Use of funds for printing Foreign Agriculture has been approved by the Director, Office of Management and Budget, through March 31, 1987. Yearly subscription rate $16.00 domestic, $20.00 foreign, single copies $2.75 domestic, $3.45 foreign. Order from Superintendent of Documents, Government Printing Office, Washington, DC 20402.

Six Asian markets

now account

for

Customers

nearly one-fourth of total U.S. oilseed

17

and

product exports.

Investing in Developing Countries

Developing countries offer

International Trade

many

Can Pay

Off

18

investment opportunities for U.S. agribusinesses.

Network Links Buyers and Sellers

20

USDA’s new Buyer Alert Program uses high-speed telecommunications to send announcements of U.S. food and agricultural products to interested

sales

buyers overseas every week.

Departments Marketing

News

Country Briefs

2

21

4

Foreign Agriculture/April 1985

China’s Farmers Shift Into High Gear

By

Terry Taylor

planning, private farm plots

and

markets are sanctioned by the Scoring phenomenal gains in agricultural production over the last six years, China has become the world’s No. 1 producer of wheat, rice, cotton and tobacco. With an arable land mass of 250 million acres and a population now over 1 billion, China has never lacked the need and potential for abundant farm output. However, since 1949 and the so-called “liberation”

under

Mao Zedong (Mao Tse-

When

rural

state.

the harder line elements of central,

in charge, cropping patterns, output targets and the size and location of areas to be sown are directly controlled. Private farm plots and rural markets are curtailed or forbidden.

or direct, planners are

China stresses an which seeks food everyone, a concept the

Central planning

in

egalitarian philosophy

security for

tung), the effort to tap China’s agricultural

Chinese describe with the slogan:

resources has been a struggle of two opposing economic philosophies. They

“Eating out of the

are indirect planning, which for private enterprise, in

and

which the state controls

How

the

makes room

direct planning,

same

big rice bowl.” In

contrast, indirect planning

same end interest

seeks the

but by encouraging self-

and personal incentives

to

spur

agricultural growth.

all.

Two Systems Work

China’s Agriculture Buffeted by

Opposing Approaches Indirect planning involves individual

contracts, taxes, price policy

and

state

control of credit. Prices are varied to

shape the market by providing incentives increase production and influence the distribution of crops. Under indirect

to

Proponents of the two economic approaches have vied for control throughout modern Chinese history, resulting in unpredictable ups and downs in

farm production.

photos

FAO

— Foreign Agriculture/April 1985

During the land reform era of 1949 to 1956, indirect planning was in vogue price controls and price incentives were used to allocate sown area and stimulate production.

A subsequent movement

to Agricultural

Producer Cooperatives (APCs) and the initiation of compulsory delivery quotas to the central government set the stage for direct planning and Mao Zedong's “Great Leap Forward,’’ which lasted from 1958 until 1960.

Under Mao, significant grain flows between provinces were curtailed to enforce regional self-sufficiency

in

and rural markets were abolished, and the use production. Private plots

of

price as a determinant of resource

allocation

was abandoned.

Misdirection by inexperienced party leaders, along with crisis in agriculture

famine

in

bad weather, led and large-scale

to

a

1961, a turn of events which

forced a revival of indirect planning and the importation of large

amounts

of grain.

Despite the setbacks and their negative impact on his influence, Mao by 1966 was ready for another push in his fight to make China more truly socialized. His new effort, known as “The Cultural Revolution,” lasted until 1976, bringing with it severe restrictions on personal initiative.

During this period, agriculture began to stagnate and national self-sufficiency in grain production became a dim hope. The death of Mao and the removal of the “Gang of Four" moved China’s economic policy back toward indirect planning.

A Time

for

Bold Changes

The Third Chinese Communist Party Plenary Session in 1978 removed some of the dampers Mao had placed on personal initiative and established a system promising bigger

profits for the

more successful farmers.

The

so-called “responsibility” or “contract

system" encourages more work, better organization and a more resourceful attitude.

Foreign Agriculture/April 1985

6

Larger profits also motivate farmers to try new, more efficient methods of farming. The use of hybrid rice, for example, rose by 50 percent from 1978 to 1983. During

China Introduces Policy

New Farm

Grain: Since the reforms announced in December 1984, China has been deemphasizing grain production, although

Changes

same period, wheat production became more efficient, rising 51 percent

In recent months, China has changed the ways in which its farmers produce

even while planted areas were cut by 5.5 percent. In fact, China has grown as

and market their commodities. Here brief rundown of the changes, by commodity:

the

much in

grain

in

the past five years as

it

did

is

it

a

the previous 20.

Advances

in

Cotton: State cotton procurement will be limited to 19.5 million bales in 1985.

production allowed

and specialization so that farmers could move into previously neglected areas, such as aquaculture. diversification

In turn,

specialization hastened the

change from subsistence farming market-oriented production.

And

to

in

1983,

three-fifths of the total agricultural

Moreover, the new policy calls for more extensive use of improved-quality cotton differentials for cotton quality.

Cotton production in excess of 19.5 million bales is to be sold in free markets with cotton-producing counties

commercial concerns intent of the program

selling directly to

production was sold at market, a sharp increase since 1978.

The

in

large cities.

is

to reduce surplus production while

improving the overall quality of Chinese cotton.

Working

Tobacco: Beginning Jan. 1, 1985, all tobacco-related import and export business is conducted by the China Tobacco Import and Export Corporation

system"

distribution principle: “To

each according

(CTIEC). This

is

a newly established

national foreign trade enterprise under

to his work.”

However described,

it

appears

to

be

working. Since 1978, China’s cotton output has risen 150 percent; oilseed crops, 84 percent; wheat, 58 percent; rice, 27 percent; and coarse grains, 19

the auspices of the China National Tobacco Corporation. CTIEC’s foreign trade organization registration will allow

conduct business directly with foreign trade companies. it

to

percent.

CTIEC

In rural areas, average per capita income rose to 270 yuan ($115) in 1982, a gain of 1 7 percent over the previous year.

products and

is responsible for importing and exporting leaf tobacco, tobacco

the negative points that have

been raised is a concern encourages smaller farm shrinking scale of

system and a operation, which may that the

plots

hinder modernization, especially mechanization. But so far that has not



Grain and other food processing both by individuals and government units is being encouraged for such items as bakery products, liquor production and bean curd making. In

the past, grain for feed use

was



not

a price subsidy, but now feed prices are being allowed to float

all

cigarette processing

is

empowered

on commodity movement between provinces and encouragement of middlemen in the marketing process. restrictions

Livestock: China’s emphasis

for the

be on increasing animal protein production and intake. next five-year plan

The

will

current price structure that

emphasis on feed production, procurement prices for meat also are being adjusted to consider quality and leanness

and packaging technology. The organization also

Rural marketing and distribution is being developed with the removal of

obstructs incentive for meat production is to be adjusted. In addition to

to enter

forms of economic and technical cooperation with foreign entities. The into all

Among

any actual

downward.

An Experiment Which Seems To Be

as a reflection of the socialist

of

Despite near-term surpluses, long-term needs are great. But certain areas, where grain surpluses exist, are being encouraged to increase cash crop area for such commodities as sugar beets and cane, peanuts and other oilseeds and fruits and vegetables.

eligible for

Personal Responsibility:

State officials describe the “responsibility

has stopped short

restrictions.

head office is located in Beijing. Branches are to be opened in Shanghai, Guangdong, Fujian, Hubei and Dalian.

in

addition to quantity.

China’s dairy industry is the weakest of the livestock subsectors. Emphasis will be placed on expanding the dairy cattle population with high-yielding cattle.

—Susan Scurlock,

former assistant

agricultural attache, Beijing.

been a problem. Personal incentives to produce more are not limited merely to the specialized households. Partial lifting of state monopolies has made it possible for private individuals to enter the trading sector. Rural workers now may sell surplus production on the free market, providing they have met their obligations

Recent legislation also has allowed farmers to transport their commodities for sale across provincial boundaries.

to the state.

addition to restructuring agriculture

fell

despite increased capital input.

Raising the prices the state pays for commodities, coupled with higher production rates, has greatly increased

Procurement Prices Boost Income In

income had been on the decline. Material incentives were so low labor productivity

in

1979, the Plenary raised state procurement prices by almost 25 percent. For three decades prior to then, farm

farmers’ incomes.

Foreign Agriculture/April 1985

—Abiding by the control targets. — Paying the team a portion crop

price of raw cotton, for example,

birth

increased by 15 percent in 1979 with little effect on planted area. When the

of its

profits for deliveries of

as

fertilizer

and

7

farm inputs such

price went up an additional 10 percent the following year, plantings increased

electricity.

the responsibility system has all done away with collectivization. Labor organization and the management of production and distribution have been left largely in the hands of individual families.

As

The

in the near future because they will pose more problems for the already burdened national economy.

In effect,

sharply.

but

have been income and getting farmers to

effective as price hikes

raising

plant

new

in

crops, additional price rises

are unlikely

government continues

central

develop plans

for the

to

production of

commodities but not to the extent that once did. For example, grain that the state contracted for accounted for only 15 percent of the total yearly production by peasant households in agricultural

it

1983.

Recent increases have accounted for percent of the government budget revenues. Moreover, policymakers are having second thoughts about the high cost of subsidizing the diet of urban

some 20

dwellers with

Government in

policy

comes more

artificially

low prices.

into play

Quotas Abolished

matters of a broader scope such as

technology distribution, determination of crop geography, procurement prices, relative agricultural investment,

responsibility system that puts a premium on family labor, conflicting with the birth control program, and the environmental impact of increased demand for tillable land, thus pushing cultivation into very

Specialized Farming on the Rise

combat the tremendous caused by mandatory state procurement and price subsidies, the Chinese government recently announced that will scrap its 35-year monopoly on food grain purchases and delivery.

By creating the incentives

The system

marginal (e.g. erodable) areas.

farmers to specialize in producing for the market, thus changing the traditional

The

division of rural labor.

development rates among branches of agriculture and the direction and speed agricultural development.

In

of

Additional concerns include a

state

still

assumes

collective

that

have

bolstered production, the responsibility

system has made

it

possible for

more

responsibilities like integrated crop

planning and management, the purchase of large machinery, pest control and water conservation.

The term

“responsibility

many forms

system” covers

of contracting

between

peasant groups and the state. The most usual form assumed its present character in 1981 with the demise of the collective distribution of income. Individual farm

can now contract with the production team for the land allocated to them and become totally responsible for their own profits and losses. families

In turn,

the family has definite

responsibilities, including:

— Supplying the state with a certain quota crops. — Paying the state agricultural of

its

tax.

About 85 percent of the farm families produce mostly for their own consumption, contributing no more than 20 percent of their harvest to the state by paying taxes-in-kind and selling surplus grain. Specialized households devote most or all of their labor to producing commodities for sale at market. Anhui Province, more than 60,000 households now specialize in grain production, each selling 5-20 tons a year In

rural

to the state,

compared

with less than

1

an

effort to

drain on the national budget

it

of agricultural its

fixed, unified

These moves are designed to shift production out of grain and into other commodities and ease transportation and storage problems caused by recent large harvests. They will also move China toward a more market-oriented system.

Farmers Share Investment Burden General Secretary Hu Yaobang said 1982 that the state could no longer

procurement or make broader use negotiated prices

in

Members

State capital investments

used

to the fullest extent possible.

Moreover, procurement price changes help farmers decide what to plant.

The

and in

irrigation facilities

the late 1970s.

It

of

order to raise

farmers’ incomes.

family farms so that their abilities are

in

increase the prices of agricultural products, lower the level of legal or quota

ton for an average family. of specialized households are usually the best farmers in their villages and are allowed to manage much larger

production

quota price and above-quota bonus price has in effect been abolished. quotas, with

is

in

agricultural

began hoped

to diminish

that private

8

Foreign Agriculture/April 1985

Mechanization Conference in 1966, manufacturers of small- and mediumsized machinery were rapidly established

throughout the country.

The expansion was

particularly apparent

during the Cultural Revolution, when China created more than 1 ,900 farm

machinery plants and 2,400 county-level repair plants. In 1970, China had only 73,000 tractors, by 1982 they had more than 2 million. During the same period the number of draft animals also increased by almost 20 percent.

Can China Keep Up the Pace? The recent increases in agricultural production are due to a combination factors:

improved management

of

of

production resources, restructuring of

government economic emphasis away from heavy industry, increases in personal incentives for rural families,

more

efficient

specialization

use of manpower, and modernization.

In the 1980-83 period, agricultural production increased at an annual rate of about 8 percent, greatly outstripping the

state target of 5 percent. This target set to fulfill the long-term plan

was

emphasizing a more diversified savings, which have

more than

tripled in

the rural areas since 1979, may help take up the slack and be at least partly

invested

in

agriculture.

The government has shown concern

that

farmers may stop participating in capital investments in agricultural projects. As a result, the state is seeking to mobilize farmers to work on such projects for a fixed number of days every year.

To manufacture chemical

China uses large-scale modern plants and small local plants established during the Great Leap Forward. However, since the initiation of the farm policy defined by the Plenary in 1978, further investment in fertilizer plants has been sharply reduced.

The reduction may

system have specified the unpaid workdays to be

responsibility

number

of

contributed to the construction and

maintenance

of

roads and

irrigation

many

not be critical to

regions, which have

1965

come

face to face

From

1970, 1 kilogram of chemical fertilizer brought a yield increase of nearly 50 kilograms; from 1970 to 1975, it was 23 kilograms; and from 1975 to 1980, the increase was only 9 kilograms. to

Mechanization

Still

Has Far To Go

Keeping Farming Modern mechanization has been a China's modernization plans. After

Agricultural

farmers have been sinking some of their increased income back into their farms. The surge in agricultural Clearly,

is

at least partly

due

to the

modern application of chemical fertilizers, which the farmers have to pay for out of their

own

The continuing encouragement

pockets.

goal

in

of

and the shift to production of cash crops have raised fears that the gap between poor and wealthy farm regions will widen. It can be expected that the state will move to insure that poorer farmers have access to modern production facilities and are able to share in the new wealth flowing into the rural sector.

Barring any

facilities.

production

priority

efficiency

with the law of diminishing returns.

Recently, contracts signed under the

heavy on grain production. Since the Plenary in 1978, livestock and cash crop production have mushroomed in response to the new structure. agriculture that did not place a

fertilizers,

more

sudden

shifts back toward China should agricultural advance, but at a

direct control,

continue its diminishing

rate.

the First National Agricultural

The author is with the Foreign Production Estimates Division, FAS. Tel. (202) 382-8882.

Foreign Agriculture/ April

China

at a

Glance

Some

Economy

Government

Land 9.6 million square kilometers;

74.3 percent desert, waste or urban (32 percent of this area consists largely of denuded wasteland, plains, rolling hills and basins of which about 3 percent could be reclaimed); 11 percent cultivated

(sown area extended by

multicropping); 12.7 percent forest

and

woodland; 2-3 percent inland water.

Official

name:

People’s Republic of

China.

billion

(1983

est.),

$308 per

capita.

Type: Communist state;

real authority

Communist Party’s Political Bureau. The National People’s Congress,

lies

GNP: $313

with

in theory the highest organ of government, usually ratifies the party’s programs. The State Council actually directs the government.

People



Agriculture: Main crops rice, wheat, other grains, oilseeds, cotton, agriculture mainly subsistence; grain imports 10 million tons in 1984.

Major industries: Iron, steel, coal, machine building, armaments, textiles, petroleum.

Capital: Beijing (Peking). Political

Population: 1,034,907,000 (July 1984), average annual growth rate 1 .2 percent.

Ethnic divisions: 93.3 percent Han Chinese; 6.7 percent Zhuang, Uygur, Hui, Yi, Tibetan, Miao, Manchu, Mongol, Buyi, Korean and numerous lesser nationalities.

Language: Standard Chinese (Putonghua) or Mandarin (based on the Beijing dialect); also Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects and minority languages (see ethnic divisions). Literacy: Over 75 percent.

Labor force: est. 447.1 million (December 1983); 74.4 percent agriculture;

15 percent industry and

commerce, 10.6 percent

other.

subdivisions: 21 provinces, 3 centrally governed municipalities and 5

autonomous

regions.

National holiday: National Day, October 1.

Shortages: Complex machinery and equipment, highly skilled scientists and technicians, energy and transport.

Exports: $23.5 billion (f.o.b., 1982); manufactured goods, agricultural products,

Branches: Control is exercised by Chinese Communist Party, through State Council, which supervises ministries,

commissions, bureaus,

etc., all

oil,

minerals.

Imports: $16.6 billion (f.o.b., 1982); chemical fertilizer, steel, industrial raw materials, machinery, equipment.

grain,

technically under the Standing

Committee Congress.

Major trading partners: Japan, Hong Kong, United States, West Germany, Canada, Australia and Singapore

Government leaders: ZHAO

(1982).

of the National People’s

Ziyang, Premier of State Council; LI Xiannian, President; PENG Zhen, Chairman of NPC Standing Committee.

— 10

Foreign Agriculture/April 1985

China’s Agricultural Gains Unlikely

To Match Growth of Recent Years

o < LL

By

Terry Taylor

Since the late 1970s, Chinese farmers have impressed the world and even Chinese agricultural planners themselves with their robust gains in farm productivity. And although output for the remainder of the decade is expected to continue to increase, it will be at a slower rate than in recent years.

The reasons are many. The gains in yields as China's farmers began to use improved seed varieties, more fertilizer and better management techniques

will

increase only to a point. In some ways, China has been too successful burgeoning supplies in some provinces strain

inadequate storage

facilities

and

clog the nation’s underdeveloped infrastructure.

It

only took six years for China to the world's largest producer of wheat, rice, cotton and tobacco and the

Other factors, such as declining state

become

capital investment, difficulty in mobilizing

second largest

increases

United States) of coarse grains and oilseeds. But China may have difficulty maintaining the great leaps in production enjoyed in recent years.

(after the

labor

will

and diminishing returns from in

producers’ prices eventually

have an impact on production.

For the remainder of the decade, most crop production will diversify away from grain with greater emphasis on cash crops, animal protein output and the industries that support them.

Foreign Agriculture/April 1985

Here, then, is a brief look at projected production for major commodities through

1990.

Metric tons/hectare

Total Grain

Unlike the United States, the

Chinese

define grain (or liangshi) production to

soybeans and tubers (roughly 10

include

percent of output in the 1980s). Total grain production by 1990 will approach million metric tons (or 405 million according to the U.S. definition).

465

Grain production of this magnitude would Chinese a grain surplus of 205

give the

tons accumulated during 1985-90.

million

Some

would be used to most of it, be channeled toward meat

of this surplus

feed the growth

in

population;

however, will production, industrial products or exported.

A

Chinese

official has stated gradually from a country importing grains, cotton and cooking oil to an exporter of all these products.

high-level

that

China

will shift

Production plans for 500 million tons of 2000 are quite possible given currrent trends. Self-sufficiency in grain by the year

may be possible, but will not be realized in the near future and will depend, to a great extent, on the rate of infrastructure development. grain output

Wheat China’s wheat production is expected to increase 21 percent by 1990 to 98 million tons, with yields

up 27 percent on

slightly

reduced area.

Wheat imports have been

volatile since the early 1960s (2 million tons in 1976; 12 million in 1981), but have remained high despite record grain production.

U.S. and Argentine wheat exports to China have slowed since 1982 and have dropped sharply in value due to the decline in wheat prices. However, China has increased its wheat imports from Australia and Canada.

Rice Rice yields during 1983-90 are expected by 15 percent to 5.6 tons per hectare roughly equal to those of present day Japan. Despite reduced

to rise

China’s Crop Yields Approach U.S. Level 1



1^1

LI.S.



— China

12

Foreign Agriculture/April 1985

sown

area,

1990

will

Chinese rice production approach 132 million tons

in

Rate of China’s Grain Yield Will Slow

Somewhat

(milled basis).

Rising domestic rice consumption, the

disadvantage of rice to in imports by China’s principal trading partners have reduced rice exports. relative price

wheat and reductions

In terms of its foreign currency balance, China previously realized an advantage to importing relatively inexpensive wheat and exporting rice mainly to Japan, Indonesia and Sri Lanka. This pattern has changed, however, and as a result China is restraining rice exports while maintaining wheat import levels.



Coarse Grains Coarse grain production is projected 110 million tons in 1990, about 20 percent higher than remaining stable.

in

at

1984, with area

some corn still is used for human consumption in China, rising demand for animal protein products will translate into increased demand for feed Although

corn.

The United

States, Thailand and Argentina have been China’s sources imported corn. China’s bumper corn crops in 1983 and 1984 sharply

dampened demand

for

for foreign corn,

however, and the Chinese are facing the big question of how to best utilize these

huge harvests. Storage is an acute problem in the Northeast Plain provinces of Heilongjiang and Jilin. The fledgling feed corn processing industry cannot handle the

and China’s transportation network is not adequate to move crops efficiently and economically from surplus surplus,

to deficit areas.

To handle some of the surplus, China introduced a crash program to expand feed and processing plants, and

encouraged more “specialized households” to raise livestock, using corn as feed. In addition, corn exports to Asian neighbors have increased.

No discussion of China’s coarse grain output is complete without mentioning the country's ambitious plans for feed production to supply growing livestock

These plans

and poultry sectors.

feed processing plants.

Recent statements by the Feed Industry Department indicate that the State Economic Commission plans to spend

Oilseeds



demand

for beer.

million

in

a combination of

new new

feed manufacturing techniques and

equipment

to

revamp 3,000 domestic

Oilseed production in 1990 will be an estimated 35 million tons, up by about 6 million tons over 1984. Area will expand by a projected 1 million hectares, mainly at

China’s current problems

the expense of grains.

the feed

industry include poor quality, inadequate

equipment, low productivity, limited variety and low investment.

domestic demand for feed is now about 60 million tons annually. China produced 8 million tons of processed feed in 1984, 15 percent more than in 1983. Ambitious plans look forward to producing 50 million tons in 1990 and more than 100 million tons in the year

Most of this area increase will be in soybeans; a rise in yields to 1.4 tons per hectare will put soybean production at approximately 12.25 million tons in 1990.

Total

2000 Barley has been imported from Australia, and demand surged from 25,000 tons in 1981 to 150,000 in 1984 mainly for brewing purposes to meet the rising

$300

over the next six years to improve feed processing and the production of additives.

the equivalent of

call for

foreign technological assistance,

.

The United States and Argentina have exported soybeans to China, although China exports beans to Japan and other Asian countries. traditionally

Soybeans are an important component in expand Chinese livestock production, and the American Soybean

the program to

HI—

II

I

'I

Foreign Agriculture/Apri!

Cotton and Soybeans

Show Modest

Increase

in

China

Yields

now

is

i

985

able to supply the raw

its mills from domestic supplies. The world’s largest importer in 1979/80, China has emerged as a major cotton exporter this season. It

cotton requirements of

ranks

third, following

the United States in forecast 1984/85

and the Soviet Union, export volume.

Tobacco As

with cotton, the

Chinese government

attempt to curtail the expansion of tobacco area. China is the world’s largest tobacco producer, with production four times what it was a decade ago. Production increased so much in 1981 that the government now will procure only tobacco that farmers are authorized to will

As a result of this policy, leaf production dropped 35 percent in 1983 from the 1981 level.

grow.

Despite skyrocketing production, China continues to import small amounts of leaf from India, Zimbabwe and Zambia.

Tobacco production

is projected at 1 .5 1990. With huge stocks

million tons in

available,

China

still

has not

made any

significant export efforts, but this policy

Association and the U.S. Feed Grains Council are working with the Chinese to increase the utilization of soybean meal and the output of improved livestock

consumption during 1983/84. This year’s production of about 26.0 million bales greatly exceeds the estimated domestic consumption of 16 million bales.

feeds.

Modest increases in the production of sunflowerseed, peanuts and rapeseed are expected, offsetting a decline cottonseed output.

in

Cotton Cotton

Despite low domestic demand and fierce competition for world export markets, efforts by the Chinese government to restrict production have been largely unsuccessful

Government the main cash crop

terms of sown area, but production through 1990 is

in

to project despite the State Councils recent announcement limiting cotton procurement to 19.5 million bales. The Chinese have had four consecutive record crops as a result of their cotton incentive program. With abundant supplies, further area decreases are is difficult

anticipated.

over the past six years. Use of fertilizer has escalated; irrigated area has increased dramatically in some areas; and both grain and agricultural chemicals

have been awarded

for

growing quotas

cotton.

The

rise in the price of cotton since 1979 has been significant, reportedly as much as 50 percent. The economic return for growing cotton is is about four times that

As a result, output and area have both increased.

of grain.

Rising prices of raw cotton to mills

and

of

sown

emerging consumer preferences toward synthetics contributed to an estimated

Assuming greater success

13-percent decrease

the future, output could stabilize at about

in

raw cotton

22

million bales in

slightly

in

cutbacks

1990. Yields are

above the U.S.

level.

in

now

in

the future.

Sugar Sugar crops are projected at 60 million in 1990 almost 50 percent above 1982 levels. Sugar imports have been cyclical, with tonnage varying from 917,000 tons in 1980 to 2.480 million in 1982. Since 1982, imports have dropped markedly to an estimated 1 .36 million



tons

tons

has favored cotton

policy

could change

in

1984.

Increased area and higher yields in both sugarcane and sugarbeets have resulted in increased production which reached an

estimated 4.29 million tons in the 1984/85 refining season. Even so, domestic demand by consumers and the food processing industry has not been met.

The drop in the market price of sugar in 1982 was a big factor in the large import level. Cuba has been the traditional supplier. Other main suppliers include Australia, Thailand and the Philippines, but all have been losing ground to Cuba.

Foreign Agriculture/April 1985

14

Even with the estimated increase in domestic production, China is expected to remain a net sugar importer

Major Commodities Will Score Gains

Commodity

indefinitely.

1983

in

Production Percent Change

1990

Percent

Million Ions

Livestock, Dairy and Poultry

Coarse grains China’s population of hogs, cattle, sheep and goats combined is the largest in the world. It is also one of the least efficient sectors of Chinese agriculture. Efforts are being made to modernize production

27.1

118.0

Tobacco

Wheat

+ 20 + 6 + 17 + 11 + 7 + 21

110.0 23.0 35.0 131.0

92.0 21.3

1

Cotton Oilseeds Rice

Area

1.4

1.5

81.0

98.0

Same Down Up Down Down

Down

practices through the adoption of

compound feed and

protein feed

additives along with

advances

in

1

Million bales.

animal

response

breeding.

government’s policy

to the

of

raising pigs for the production of organic

targeted toward increasing the

All this is

economic return and efficiency of meat, dairy and egg production. These products are generally

because

in

short supply,

problems. As higher rural incomes generate increased consumption, availability of these items in urban areas declines. partly

of distribution

fertilizer

now discriminates against the use of feed for animal consumption.

rather than pork.

structure that

This policy changed in 1979 and the slaughter rate rose sharply due to an increase in the procurement price. Today the emphasis on

meat production

is

reflected by both the increased slaughter

and

rate

in

the

amount

of

production will require high rates of grain production and a change in the price

meat produced

Dairy Industry Targeted for Growth China’s milk supply result,

is

inadequate. As a

the government has instituted

policies to

develop the dairy industry.

per pig.

Hog Sector

Is

the Largest Still,

current small-scale private swine

Pork is the most common and least expensive form of meat in China, representing approximately 95 percent of total meat production (excluding poultry).

production cannot meet the rising demand; specialized operations and

Swine numbered 297

Changes

million in

January

1985, the worlds largest population. Production is mainly by individual

Per capita milk consumption is only about 1.5 kilograms a year. In cities, children and the elderly are given priority.

consequent increased feed demand are

The

inevitable.

410,000 adult cows in 1982 and produced 1 .6 million tons of milk. State farms raise 36 percent of the total Chinese herd of 700,000 animals.

in

the Beef Sector

dairy

cow population numbered

only

While swine are kept mainly by individuals, cattle essentially are kept by

Poultry Industry Adequate Despite

Large domestic animals have been owned by collectives and used as

Problems

The

draft animals. Recently,

4.6 kilograms

on page 4) has brought about a reversal and increased the percentage of privately

Although eggs and poultry also are in short supply in China, officials consider poultry numbers adequate. The poultry sector has many problems in common with animal husbandry: poor feeding methods, inferior breeds, small-scale household operations and lack of widespread marketing.

households which own one and make their own feed.

to five

hogs

collectives.

national annual per capita pork consumption was 12.3 kilograms in 1983,

more than

in

1978.

responsibility

however, the

system (see

article

Procurement prices have risen by almost 50 percent in recent years and farmers were given the option to buy 25

owned

kilograms of feed grains at ration prices each pig sold to the State.

Per capita beef consumption averages under 5 kilograms and is principally from

for

old

Pig raising

is

draft animals.

and disabled

draft animals.

profitable with production

costs only about half of sale price. The manure also is highly valued as fertilizer.

A change

in

taste toward leaner

meat

where future increases meat production will require more grain per unit of meat, and will be accompanied by an overall drop in the meat production growth rate. points to a trend in

China is a major exporter of live hogs and frozen pork, mainly to Hong Kong. Live animal exports totaled 3.3 million

head in

in

Per capita consumption of eggs and chicken is only about 2 kilograms annually, even though the number of chickens sent to market increased nearly fourfold since 1978. Chicken is twice as expensive as pork.

1983, compared with 2.31 million

The long-term plan

calls for an annual growth rate of 3.4 percent to the year 2000. Rates will likely be nearer 6 percent to 1990. Higher rates of

1976.

In spite of

numbers

the upward trend in pig the mid-to-late 1970s,

in

slaughter rates remained

unchanged

in

The author is with the Foreign Production Estimates Division, FAS. Tel. (202) 382-8882.

— Breeds and Feeds: The Future of U.S.-Chinese Trade

By Norman Kallemeyn and

Terry

Taylor

The rapid increases and significant changes taking place in Chinese agriculture also

will alter

the

makeup

of

U.S.-Chinese farm trade. As China’s

becomes more self-sufficient, be new import needs for U.S.

agriculture

there

will

and world exporters

to

meet.

Since the late 1970s, U.S. agricultural exports to China have consisted primarily of wheat and corn, reaching a peak of 6.4 million tons of wheat and 1.8 million tons of corn in 1980.

The commodity mix

of

U.S.-Chinese

agricultural trade generally reflects the

emphasis

plans in China. For example, the 1981-85 plan stresses increased agricultural production of basic

of existing five-year

commodities

cotton, tobacco, etc.

The goal has been

urban areas.

of

m

i

ii

In 1980, imports of grain represented about one-seventh of China’s grain supply. China has been a net importer of grain since 1961, and although recent

patterns.

surpluses of agricultural products,

restructuring of agriculture

The Future

of Grain Imports

with favorable

importer for

Large-scale grain imports have been particularly important in provisioning

China's large urban centers and in maintaining the grain reserve. These imports have decreased the burden on the internal transport system and eased the extraction pressure on farmers. It is

and cheaper to ship grain from the U.S. West Coast to Tianjin than to transport it overland from remote surplus-producing provinces.

and movement

toward direct planning have combined

weather

China

to

produce it

is

remain a net the foreseeable future.

highly likely that

will

Rising commodity production is linked to a poorly developed infrastructure that will cause grain imports to continue until 1990. Production in excess of capacity of the developing infrastructure, particularly in the coastal provinces, will alternately move onto the international market.

often simpler

grains, oilseeds,

improve the quality

ip

Grain imports and sharp increases in domestic production have eliminated the grain shortages of the past, enabling China to begin agricultural diversification and move away from food rationing to a stage where income will be the primary determinant in food consumption



Chinese diets, particularly in rural areas, where even grain consumption has been less than in to

iiiHiiiim

Foreign Agriculture/April 1985

move grain internally manner is hampered by

China’s ability to

an

efficient

networks and lack of marketing experience.

Shift to

More Animal Protein

China's Seventh Five-Year Plan (1986-90)

emphasize livestock and poultry production. Consequently, the shift in

will

in

bureaucratic procedures, price inflexibility, primitive transportation facilities, lack of distribution

A

U.S.-Chinese trade

emphasis protein.

will reflect this

of turning grain into

animal

Foreign Agriculture/April 1985

16

The

force behind China’s expanding

and poultry industries has been increased consumer demand for meat, milk and eggs, as well as crop surpluses that are straining rural storage and livestock

transport

to

double the annual

eggs and fish from 16 kilograms per year to what is viewed as a satisfactory level of 30 kilograms. intake of meat,

an increase in animal numbers would also increase organic In

addition,

fertilizer

supplies for crop production.

poultry.

emphasis have been

will focus on increasing the percentage of lean meat. Overseas purchases of hogs will probably total several hundred head a year over the near future. Some imported hogs would be crossbred with local varieties, while others would be kept purely for building up numbers of a certain type.

sector

A Growing

Breeds and Feeds Long-range targets

Opportunities for Feed Suppliers

An official of China’s livestock importing agency has stated that efforts in the hog

facilties.

The Chinese want

In addition, appeals have been made to expand production of high-protein lean meat such as cows, sheep, rabbits and

Good

and

call for tenfold

twentyfold production increases for

some

livestock products by the year 2000.

Two

In

the feed sector, three areas of identified:

—There

is a keen interest in raising the on feed by increasing the use of additives and pre-mixes. Emphasis will probably be continued on increasing the supply of raw feed

return



ingredients, although localized grain

surpluses have outstripped demand for feed ingredients in some area. Calls have been made to increase the variety of feeds by relating feed composition to availability and price.



Dairy Industry

potential also exists for dairy

breeding stock and dairy technology, given the initiative underway in the dairy

For U.S. livestock and related suppliers, China's emphasis on animal and feed production are translating into market opportunities for animal genetics and

strategies for pursuing these goals are:

sector.

feed milling equipment and technology.

— Improve both the quantity and quality

An

Addressing Agricultural Inbalances

official of the China National Animal Breeding Stock Import and Export Corporation (CABS) has said that imports of high-yielding dairy cattle,

herds and flocks, with particular emphasis on introducing improved of

genetics.

primarily Holstein-Friesian,

— Develop the feed industry by

1,000-2,000 head range

CABS

will

be

in

the

at least for the

expanding milling capacity and overall feed availability and by using more additives and pre-mixes.

dairy cattle

and had a buying team United States in December.

in

As plans

Other countries also are interested

in

short term.

is

interested

in

U.S. the

China is attempting to address the unbalanced structure of its agriculture as well. While grains, cotton, edible oilseeds and other crops have developed swiftly, animal husbandry, fishery and forestry sectors are still comparatively weak.

same time, officials have expressed interest in rapidly developing processing industries for such commodities as grain, fiber, meat, edible oil, vegetables and fruit. Previously, these industries were mainly located in cities; in the future, they will be moved to rural At the

for livestock

and poultry

production are realized, there

will



be a



producers needs. Per capita grain consumption

in

China

in the Chinese dairy Japan and China have signed an agreement under which Japan will supply 100-200 head of dairy cattle per year in exchange for 1 ,000 head of Chinese beef cattle for slaughter.

getting involved

huge demand for feed grains both imported and domestic to meet animal

is

industry.

areas, close to production sites.

only one-fourth that of the United States,

although U.S. consumption

used

in

is

mainly

meat production.

Last year, the Netherlands shipped

head

of Holstein-Friesian cattle to

while

West Germany

260

China, sold 400 head.

Other Opportunities Although China will most likely continue to import live animals, several officials have indicated that China would prefer to

There are several ways in which U.S. exporters and dairy breed associations can improve their marketing prospects in

New Zealand

China: meet personally with leaders in China’s livestock industry; offer assistance through feeding, breeding and animal health seminars; conduct detailed discussions on breeds and their

semen

capability;

import semen, technology.

embryos and the

relevant

recently signed a bovine trade agreement with China. In November, the United Kingdom signed a veterinary protocol with China covering U.K. exports of bovine semen; an

agreement on embryo trade is expected to be signed in early spring. West Germany has donated animal embryos to China.

and

invite

Plans are underway to move more than population away from cultivation into animal raising, fish farming, processing, transport, commerce and service trades. This would not only increase the rural products sold in the market and bring better living standards half the rural

to the countryside, but will also gradually

reduce the differences between urban

and

rural areas.

Chinese dairy

production specialists to visit U.S. breeding stations, dairy farms and other

Kallemeyn

facilities.

Production Estimates Division, FAS.

Beijing,

is

and

agricultural counselor,

Taylor is with the Foreign

202) 382 8882 -

(

.

Tel.

Foreign Agriculture/April

Scoring High

U.S. Oilseeds

1

985

With Asian Customers

kernel output has

G. Goldich

By Judith

grown sharply during the protein

this period. Like copra,

Asian countries are becoming increasingly important to U.S. oilseed producers and exporters. Indonesia, Malaysia, the Philippines, Korea, Japan and Taiwan now account for nearly onefourth of U.S. exports of oilseeds and Six

products.

Prospects for expanding export sales to these Far Eastern markets are reflected in

the region’s growing

demand

content of palm meal

is

relatively low.

in

Output of locally produced soybeans has remained fairly steady over the past decade. These beans are used mainly for food rather than for feed. A similar situation exists for peanuts. Domestic demand for roasted peanuts and peanut sauce very popular in Indonesian





example

cuisine, for

is

high

restrict their availability for

for

livestock products and increasing use of soybeans, peanuts and coconuts for

Export sales of other U.S. vegetable especially sunflowerseed and safflowerseed oils expanded, probably

oils

enough

to

crush.

King-Sized Role for Soybeans





response

Japan

to the rising

demand

in

for “health food” oils.

Greater use of identified oils in Japan represents a significant marketing step in that country because Japan traditionally has consumed blended, unidentified vegetable oils. However, consumer preference for Canadian sunflowerseed oil, because of its higher linoleic acid content, poses stiff competition for U.S. producers and exporters.

food.

U.S.

Although soybeans alone accounted for about 90 percent of the value of U.S. oilseed and product exports to the region, nearly half a million tons of U.S. soybean meal were shipped to these markets in fiscal 1984.

sales

The Philippines and Indonesia are the region’s major importers of meal and oil.

With

However, both countries either have processing plants in place or are planning to build new ones. Increased crushing capacity will eventually lessen the need for imported soybean meal, but will

demand

create additional

for

soybeans.

and products rose 1984 to almost $2.2

U.S. exports of oilseed

14 percent billion.

to

in fiscal

Soybean sales gained 12 percent

$2.0

soybeans rank list

at

the top of the in the group,

every country

in

except for the Philippines. There, soybean meal was No. 1 with sales of $60.1 million in fiscal 1984. That represented more than half of U.S. meal sales to all six countries. rising

demand

for protein

meals,

can expect imports of and possibly peanuts.

supplies, U.S. exporters

continuing increases

soybeans



in

Indonesia is planning to build a processing plant, which is not likely to be completed before 1986. Once operations begin, the expected drop in soybean meal imports should be offset by increased purchases of soybeans.

The

Despite

protein meals, the the world's largest exporter of vegetable oils. This limits prospects for

region

its deficit in

is

high-volume sales

of

vegetable

oils

Phil-Asia plant in the Philippines is already operational, but awaits a government decision allowing soybean imports. Should this be forthcoming, a large portion of the country’s

imports

may be

meal

replaced by soybeans.

from

the United States.

Trends for Other Vegetable Oils

Oversupplies of locally produced vegetable oils also could depress soybean demand, and the entrance of China and Brazil in the region’s soybean meal market works to the detriment of

The

U.S. exporters.

Oilseed Output Fluctuates

six Asian markets bought about 14 percent of the value of U.S. cottonseed oil exports in fiscal 1984, a decline of 30 percent from the preceding year. The drop stemmed mainly from short U.S. supplies and subsequent high prices compared with the previous year.

Cottonseed

oil is

food products.

Over the past decade, oilseed output the six Asian countries has fluctuated widely, with most of the variations occurring

in

copra production. Palm

in

and peanut

oil

used primarily

to

pack

to

in fiscal

1984, with most of the shipments going Japan. A substantial unmet demand for edible peanuts exists in the region, particularly in the Indonesian market. This year, competitive exports from China are likely to reduce the growth of U.S. sales in the region. to

increasing food use of oilseeds and apparently long-term deficits in local

billion.

Major Producer of Vegetable Oils

U.S. exports of peanuts

the region reached $16.6 million

The author is with the Oilseeds and Products Division, FAS. Tel. (202) 3820092.

18

Foreign Agriculture/April 1985

Investing in Developing Countries Can Pay Off

photos

Bank

World

sv

—securing long-term sources

By Dale Good

of

—enjoying the advantages

raw

Continuing debt servicing problems may lead an increasing number of developing countries to encourage

more

foreign,

—establishing marketing organizations.

private direct investment in their



economies.

service) country.

For those businesses

who do

invest

and

cover a wide range. Foreign investment creates jobs, attracts domestic investment, pays taxes, generates foreign exchange earnings and

their hosts, the benefits

brings

facilitating

exports from the

—manufacturing

home

(or

skills.

Additional benefits for U.S. private

companies from investment

may

international direct

include:

products

in

foreign

countries for local or regional markets.

— avoiding trade barriers

of the host

country.

—lowering the cost

of the final

product

through lower costs abroad for inputs, production or transportation.

— improving the

ability to serve foreign markets through products designed, manufactured, distributed and serviced

from local

may have

with

its

— accomplishing

neighbors. international

diversification of holdings

and production

capacity.

needed technology, know-how and

management

of favorable

trade agreements that the host country

materials.

facilities.

Experts say that unmet food and foreign exchange needs of developing countries should be viewed as business opportunities. Countries, in an effort to increase foreign exchange earnings, are interested in developing export industries, which generate a demand for foreign technology and capital.

Foreign Agriculture/April 1985

Entrepreneurs and venture capitalists and knowledge to spot opportunities in these areas who can pull together the combination of capital, know-how and experience to meet them, with the foresight

could find large

and

profitable

markets

in

which to operate.

Both Sides Must Play Active Roles To attract investors, developing countries realize they need to provide assurances

and equitable treatment, reasonable and continuous access to supplies and freedom from unreasonable interference with company decision making. Also, they must offer a stable and predictable structure of laws and

of fair

policies.

U.S. investors, on the other hand, must be willing to consider creative forms of investment that will meet self-needs and satisfy the political and economic requirements of host countries.

still

Production sharing agreements, licensing and services contracts, franchising and other contractual types of investment can

reduce or eliminate negative attitudes that sometimes surround ownership and control, while

still

providing the incentives

and production sought by the

investor.

Overseas Private Investment Corporation: provides qualified investors with insurance against political risk; loan guarantees; direct loans to small businesses and cooperatives and a variety of pre-investment services. Tel. (800) 424-OPIC, (202) 653-2800.

Where To Get Help Department of Agriculture, Office Cooperation and Development: works with U.S. private U.S.

Large multinational corporations generally can initiate investment ventures on their own, but this is not often the case for the smaller entrepreneur.

of International

The

475-4191.

sector to promote overseas agricultural development through the use of public/ private sector joint activities. Tel. (202)

includes a number of agencies in this country that are available to help U.S. firms investigate, evaluate and implement overseas investments: following

list

U.S. Department of Commerce, International Economic Policy Group: offers

business counseling

overseas

for

U.S.

Department of State, Trade and Development Program: a variety of

investors. Tel. (202) 377-2527.

on a matching basis, of pre-investment studies undertaken by U.S. firms considering foreign investment. Tel. (202) 235-3660.

Export-Import Bank, Foreign Credit Insurance Association: insures U.S. exporters against commercial and political losses. Tel. (202) 566-8990.

Agency

for International

Small Business Administration, Office

Bureau

for Private Enterprise: offers

services, including financing,

financial assistance to

businesses.

Tel.

Development,

foreign-owned (202) 632-8298.

of International Trade: offers training

and counseling for small businesses that want to move into exportinq. Tel. (202) 653-7794.

The author

is

Division, FAS.

with the Export Tel.

Programs

(202) 447-3031.

20

Foreign Agriculture/April 1985

International Trade Network Links Buyers and Sellers

By James Sayre

Each announcement includes an

program was boosted December by a front-page article in Interest in the

indicator price for the featured product.

A new USDA

service, the Buyer Alert Program, places information about U.S. food and agricultural products in the hands of foreign buyers from Tokyo, to London, to Bahrain and back.

Using a high-speed telecommunications system, this service forwards sales announcements of featured products from Washington, D.C. to interested overseas buyers. For several years, the Foreign has provided product publicity to help U.S. suppliers introduce

Agricultural Service

food and agricultural products to foreign markets. The monthly newsletter, Contacts for U.S. Agricultural Products, had been the primary vehicle for this

This price information helps the foreign buyer to actively respond to sales

Nihon Keizai, the leading Japanese economic daily newspaper. The article called the program “a fairly bold

opportunities.

experiment This weekly service eliminates normal delivery delays between Washington, D.C. and foreign countries and is targeted to assist U.S. firms in the value-

added food and

agricultural sectors.

for the U.S. government.’’

When

the agricultural counselor in Tokyo conducted a three-day test of the Buyer Alert service last fall, almost 100 Japanese firms requested Buyer Alert notices. To receive this service, a firm

By October 1985, the Buyer Alert Program will reach importers in the more than 20 countries that represent 80 to 90 percent of the major value-added U.S. agricultural export markets. There will be extensive coverage of Western Europe, East Asia, the Middle East, Canada and Mexico.

service.

Pilot

Program Successful

in

Japan

Program Speeds Service; Targets Value-Added Markets

The service was introduced

in

Japan by

in Tokyo in has been well received by importers there as well as by

the U.S. agricultural counselor

November 1984 and Now, the Buyer Alert Program goes one step beyond product introduction. Every Wednesday, actual announcements of products available for export are transferred electronically to interested

in

it

must

an application, which includes how to transmit Buyer

file

information on Alert

announcements

electronically to

its

offices.

U.S. firms provide

announcement

information, which includes the product

type and

variety,

the quality, description,

packaging and labeling details, shipping specifications such as minimum shipment and quantity per container, and quantity available for export. Also included are indicator prices (valid through a specific date), bank reference data and information on the firm itself.

participating U.S. exporters. Currently, U.S. firms

may submit two

announcements per week. For submission forms and additional information on how to participate

importers in the leading value-added export markets for U.S. products.

Untied S<»'e*

For U.S.

Department

in

the

Buyer Alert Program, contact Agricultural Information and Marketing Services, Foreign Agricultural Service, Room 4645S, USDA, Washington, D.C. Tel. (202) 447-7103.

ot

Agriculture

Agricultural

Products

Foreign

The author

is

Information

and Marketing Services

Agricultural

Service

FAS.

in cases. Aval 1 ab 1 e of 800 ]\ Valid thoroy Minimum shipn'^. c0 i c F ^n San CaliforniaPort Ca BaPk Francisco street", San ...g\ 55E,-2.i I'U Main Street, phone, UR-

Tel.

with the Agricultural

(202) 447-7103.

For U.s. A9ri

Pr

culturai

°4uct s

j



^ rt
0^i

——

'

D

~~~

e a9ed in ?l ? an
* ld ,

(UUl)

Staff,

HBI Country Briefs

European Community

Wine Output Decline Helps Budget

Foreign Agricu!ture/Ar

Production declines for the European Community’s (EC) three major wine producing countries in 1984 (Italy, France and Germany are No. 1,2 and 3, respectively) have come at an opportune time for the EC budget. With EC wine stocks now amounting to slightly more than half of annual production, the EC has been spending about $1 .4 billion annually on support measures (intervention and distillation) for wine. Thus, it comes as a minor relief to the EC to have some decline in its “wine lake.”

The wine surplus

also has been a major impediment to the completion of negotiations for the Spain and Portugal to the EC, planned for Jan. 1, 1986. Spain in particular will add to the EC surplus. Spanish production in 1984 amounted to almost half of Italy’s production, and Spain’s wine surplus (the amount distilled) has more than doubled during the past decade. Since accession would generally increase EC budget expenditures for wine, the prospect has forced the issue of how to bring the surplus under control. The latter issue has the current wine-producing members at loggerheads because the various measures under consideration would affect each member differently. The smaller 1984 production might ease

access

of

differences.

EC wine has also figured in the EC-U.S. trade conflict. EC wine prices presently are below 70 percent of the guide price (a target price set each year, based on average prices of the previous two years and current price trends). Low EC prices, combined with the strong dollar, have made EC wines very competitive in the United States. The smaller EC harvest in 1984 will cause prices to rise, and since quality wines are especially affected, will result in higher prices for quality wines from stocks of earlier vintages. All in all, EC wine prices to U.S. importers are expected to increase during 1985, even if the dollar does not weaken. Miles Lambert, Economic Research Service. Tel. (202) 447-8289. it

Poland U.S.

Feed Sales

Limited

This year Poland will import about 1 .2 million metric tons of protein meals and over 500,000 tons of corn. But future import demand could be limited by partial substitution of corn and soybean meal in feed rations by industrially produced enzyme preparations. Polish feed

imports are grain

now

running to hundreds of millions of dollars. In 1983, for example, U.S. feed to Poland were valued at $109 million.

and soybean exports

show that a formulation of domestic feed ingredients and pulses) with an enzyme preparation added would perform almost as well as a corn and soybean meal formulation. Polish experiments with broiler feeds (Polish rye

Application of these experimental results depends very much upon the cost relationship of the enzyme and protein meal in production. However, with the policy pressure to achieve self-

some use in the commercial feed industry is anticipated. Another be that faced in neighboring countries, namely the need to increase production of industrially produced vegetable protein substitutes. Therefore, in the next several years, import patterns for feed components are not likely to change drastically. Frank A. Coolidge, Agricultural Attache, Warsaw. sufficiency, at least

constraint

India

will

wheat over the next year because recordwheat stocks well above target. With excellent harvests also forecast for 1984/85, food grain stocks will likely rise further and exceed covered storage capacity by a wide margin by July 1985, unless surplus wheat is exported. Likely destinations for exported wheat include the Soviet Union and neighboring Bangladesh, Nepal and Sri Lanka. India

is

expected

to export 1-2 million tons of

shattering 1983/84 food grain harvests have boosted

Exports Likely as

Wheat Stocks Swell

The

Soviet Union probably will be the major market, with wheat possibly bartered for Soviet petroleum under the Indo-Soviet rupee trade facility. The Soviet Union bought 1 .5 million tons of Indian wheat during 1977-80, with most of that wheat shipped to Vietnam, North Korea

and the Soviet Union. With only relatively small amounts of rice trade likely, India’s port facilities should be capable of handling 2 million tons of wheat over the next 8 to 10 months. Rip Landes, Economic Research Service. Tel. (202) 447-8229.

22

Foreign Agriculture/April

Sweden

1

985

A

decision to cut down on the amount of fishmeal allowed in Swedish hog feeds is expected an increase of 35,000 to 40,000 tons of soybean meal in those feeds and a corresponding reduction of 20,000 to 25,000 tons of fishmeal.

to result in

More Soy, Less Fishmeal Wanted in Hog Feeds

The lower fishmeal use recommended by

the Swedish Agricultural Market Board was based on research showing that pork from animals fed excessive amounts of fishmeal has a reduced storage life and an undesirable taste. Large amounts of pork are in frozen storage part of the year in Sweden, due to the seasonal demand for certain cuts such as hams and the fluctuation in hog slaughter.

The Swedish meatpacking industry had requested the feed industry fishmeal to no more than 0.2 percent of crude fish fat in feeds used

to

reduce

its

for fattening

use

of

hogs. The

Association of Swedish Farmers made a similar request and proposed a temporary differential fee to avoid feed price increases. The Board will be giving temporary rebates, probably through mid-1985, to reduce the prices of oilseed meals that replace fishmeal. The rebates will be adjusted monthly to reflect changes in soybean and fishmeal prices. Shackford Pitcher, Agricultural Attache, Stockholm.

Yugoslavia Poultry Production

Expanding

fastest growing sector of Yugoslavia’s agricultural economy in the past 20 years has been poultry farming. Total poultry meat production rose fourfold, from 67,000 tons in 1963 287.000 tons in 1983. Preliminary data for 1984 indicate that production rose another 4.5 percent to 300,000 tons, of which broiler meat comprised 80 percent. Egg production also recorded a dramatic rise, increasing from 1.6 billion in 1963 to 4.6 billion in 1983.

The

to

Favorable prices paid to producers have been a prime factor in the expansion, especially for meat. In order to compensate producers for rapidly increasing feed costs, large increases in producer prices 60 percent for broilers and 70 percent for eggs were authorized in 1984. Poultry production has remained somewhat more profitable than other sectors of the Yugoslav livestock industry because of greater efficiency in production, and the strong demand for poultry products, especially in the domestic market. broiler





The surge

in the poultry sector has given a considerable boost to U.S. sales of soybeans and soybean meal to Yugoslavia. Sales averaged about 220,000 tons of soybeans and over 100.000 tons of soybean meal during the 1980s, not counting meal made from U.S. soybeans purchased in Europe.

The American Soybean Association has been working

for several years with the Yugoslav feed industry, as well as with scientific research organizations, to improve production systems and the industrial character of the poultry industry. A 35-person Yugoslav feed manufacturing team visited the United States in 1984 to review the latest methods of feed compounding in the United States. Harlan J. Dirks, Agricultural Counselor, Belgrade.

Jordan

Growing Poultry Industry A Market for U.S. Feeds

While Jordanians have a distinct preference for red meats, shortages and rising prices for these favorites are encouraging greater consumption of poultry to the possible benefit of U.S. feed grain producers.



continue to depend almost totally on corn imports to meet the everpoultry industry. (The country itself produces only about 1 ,000 tons of corn annually, most of which is consumed as a snack food.) Its imports totaled 170,000 tons in 1983, with the United States the largest supplier, providing about two-fifths of the total. However, the United States faces strong competition from Yugoslavia, Brazil, Kenya, Argentina, Turkey and Thailand. U.S. corn will have to remain price competitive to continue to

Jordan depends and increasing

do

demands

will

of

its

well in the Jordanian market.

Clyde

E.

Gumbmann,

Agricultural Attache,

Damascus.

Foreign Agriculture April

The appearance September is an

China

Mink Industry Poised for Takeoff

of high-quality

Chinese

furs at a fur

China

indication of the attention

is

and garment fair in New York last development of its mink

giving to the

industry.

China currently produces 10 percent of the world’s mink. Although the raising of mink on a commercial basis reportedly began hundreds of years ago, it was not until the 1950s that China earnestly began developing its mink industry with the introduction of Russian varieties. Chinese officials have expressed confidence that, in the near future, they will be able to boost mink quality sufficiently to compete in high-quality markets such as the United States. Four developments support

changes

in diet,

in

this

confidence: improvements

in

breeding stock, improvements

the organization of production and processing advances.

China currently is importing breeding stock from the United States, Scandinavia and Japan in an effort to upgrade the genetic pool. It also has acquired greater expertise in mink feeding. For example, feed concentrates are being used in mink rations, thus eliminating some of the logistical and hygenic problems of transporting and handling fresh feed. Quality also has been improved by permitting private households to raise mink. Until the past two years, mink

was confined

raising

to special farms.

For the U.S. mink industry, China’s efforts to upgrade production through use of foreign expertise and products such as breeding stock will translate into at least a short term market opportunity. However, over the longer term, China may develop into a formidable competitor.

The Chinese

are anxious to export and earn foreign exchange. Chinese officials have stated share of the $100 million U.S. fur and leather import market from their current 1 to 2 percent. Norman R. Kallemeyn, Agricultural Counselor, and Joel their intention to increase their

Haggard, Agricultural Trade

Officer, Beijing.

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