Last year, China purchased an estimated $20 billion worth of U.S. agricultural products, as the booming Chinese market became the top foreign destination for U.S. farm goods.
The development was not exactly a surprise. With 1.3 billion residents, China accounts for 21 percent of the world's population, yet the developing nation is blessed with only 9 percent of the planet's arable land.
According to the Agriculture Department, U.S. farm exports to China supported more than 160,000 American jobs in 2011.
At an Agricultural Symposium held at the headquarters of the World Food Prize in Des Moines, Iowa this week, U.S. and Chinese leaders signed a Plan of Strategic Cooperation to guide the two countries' agricultural relationship over the next five years. The guest of honor was Chinese Vice President Xi Jinping, who is widely believed to become the next President of China.
The stop was one of several in Iowa, and as Andrew Batt discovered, Xi's whirlwind tour fostered positive relations between the two nations, expanded trading opportunities and reunited old friends.
Visits between foreign dignitaries are often meticulously planned for weeks and months ahead of schedule but this trip from Asia to The Heartland of America was more than 25 years in the making.
Nestled between Presidential meetings in Washington and a jaunt through America’s most populous state of California, the presumed heir-apparent of China’s presidency visited the Corn Belt this week. Chinese Vice President Xi Jinping swept through the agricultural powerhouse of Iowa…visiting a local farm and joining the state’s Governor for a lavish dinner.
Xi Jinping, VP China: "I hope Iowa will take an active part in economic, trade and investment cooperation between China and the United States."
Gov. Terry Branstad, R – Iowa: “We are proud of our mutually beneficial trading partnerships with China and Iowa farmers are proud to harvest safe and reliable agricultural products for use by the people of China. We hope to build-upon these partnerships in related areas where Iowa leads the world, such as biotechnology, advanced manufacturing, food processing, and financial services.”
Dining on pork and bacon-wrapped beef, the dinner was part business, part reunion for the next leader of the Asian superpower.
In 1985, Xi – then a provincial Chinese official – joined a small group of dignitaries for an agricultural tour through Iowa. His rural hosts treated Xi to warm meals and lodging. His visit long sat as a foreign footnote to history.
Fast-forward 25 years and that little-known provincial official now seems destined for the presidency of the world’s most populous nation. And, in a camera-friendly tour through America, Xi returned to Muscatine, Iowa and friends not long forgotten.
But the Chinese leader didn’t stop in Iowa solely for a friendly reunion. Iowa leads the nation in corn, soybeans, and other commodities and is a beneficiary of China’s booming country.
Gov. Terry Branstad, a five-term veteran who weathered a disastrous farm crisis in the 1980’s, envisions Iowa farmers can ride the wave of Chinese demand.
And for Midwestern growers, the rising tide shows few signs of cresting anytime soon.
Over the past decade, Chinese purchases of Iowa commodities have skyrocketed…from less than $25 million in 2000 to nearly $600 million dollars in 2010.
Xi Jinping: “How do you read market signs and signals?”
Rick Kimberley, Maxwell, Iowa: “That is probably the toughest part of farming — to market our crops.”
Iowa corn and soybean farmer Rick Kimberley hosted the Chinese leader at his 4,000 acre operation and he too believes the Asian power is a premiere buyer of U.S.grain today and will be well into the future.
Rick Kimberley, Maxwell, Iowa: “To give you a little background, exports -- we export 55% of the soybeans that are grown in the nation, not only in Iowa, but in the nation and 60% of that number is exported to China. So that is a huge number.”
The numbers are staggering – according to the Iowa Soybean Association, one out of every four rows of U.S. grown soybeans is bound for Chinese markets. And that’s a major reason why Kimberely and many farmers rolled out the carpet, toy tractor gifts, and a welcoming hand to Xi Jinping.
But China’s global status as a major creditor of U.S. debt and growing influence in international relations has soured some impressions in America. Xi’s visit immediately drew comparisons to an historic meeting in 1959. That’s when hybrid seed pioneer Roswell Garst invited Nikita Krushchev to Iowa amidst rising tensions of the Cold War. Garst believed agriculture was a gateway to prosperity between nations and a doctrine dubbed “Peace through Corn” was born. Echoing sentiment from 1959, Xi’s visit in 2012 version drew hundreds of protestors -- albeit for different issues -- regarding China’s contentious policies towards Tibet. But the men involved in the modern-day edition are nowhere near as bombastic as Kruschev and Garst and tensions were virtually nonexistent.
Kimberley: “… back at that time we were in the Cold War with Russia and it was a serious time and, you know, it was a very good visit. This visit I feel is a lot warmer relationship and warm visit back to us. They are a great partner and we need to build on these relationships. We need them, they need us. And this world is changing so we can't go back to the old days, we can't go back. And it is a free trade world. We're going to have to learn to deal with it and do what we can to be the person that they need.”
In 2011, the multi-billion dollar Chinese market surpassed Canada to become the top destination for U.S. farm exports. But American officials caution the agricultural sector against relying solely on unilateral trade with a growing partner.
Sec. Tom Vilsack, USDA: “…the importance of China and the import/export opportunities to China grow tremendously and they are now our number one customer. But you still have to have a diverse portfolio. You don’t want to be over reliant on one customer because that customer could pull the rug out from under you.”
Instead, agricultural representatives rolled out the welcome mat in Des Moinesas. Chinese executives and government officials agreed to buy $4.31 billion worth of U.S. soybeans. Additional contracts signed in California combine for the largest soybean commitment ever made in a single foreign visit and offered another sign of China’s tremendous appetite for U.S. grain.
International experts predict Xi Jinping could assume the role of China’s presidency in 2013. His country will undoubtedly continue to rely on American grain exports. And the future president will undoubtedly never forget about Iowa and the farmers that help feed his growing nation.
For Market to Market, I’m Andrew Batt.