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August 4, 2006
China:
An opportunity for
Texas agriculture
By Tom Nicolette
TFB Media Services Director
China is people...in fact, 1.3 billion people, making it the most populated country in the world. This Asian nation's economy is very closely linked to the United States in terms of agricultural export-import trade. For this reason, the Texas Farm Bureau traveled to China as part of a Global Agricultural Education Tour.
"Our goal was an educational and informational tour for Texas Farm Bureau. There are opportunities for trade. We met with government officials to explore those opportunities," said TFB President Kenneth Dierschke, a cotton producer from San Angelo, who led the eight-member Texas delegation on several stops to both rural and urban regions of China in mid-June.
More specifically, the Texas producers focused on China to better understand the potential for global agricultural trade between both countries; to study the possibilities for China to become a major exporter of ag commodities as well as a major consumer of U.S. farm and ranch products; and to better understand the culture and economic background of the Chinese people.
"I think China has the possibility not only for themselves but for the U.S. (for increased trade). They have the labor which makes their products cheaper. They can export (agricultural products) to the U.S. and other countries," said Albert Thompson, TFB secretary-treasurer and District 9 state director.
The large number of Chinese people is good for the U.S. because China can import American agricultural products such as meat, cotton and soybeans that are used in large amounts across the country, Thompson added.
In addition to President Dierschke and Secretary-Treasurer Thompson, the TFB group included four more state directors: Joe Kapavik, District 4; Dan Dierschke, District 8; Tommy Boehme, District 10; and Bobby Nedbalek, District 13. Also on the trip were John Gaulding, TFB Rice Advisory Committee chairman and Carl Homeyer, TFB Poultry Advisory Committee chairman.
China's labor force stands at 583 million people. Cities are densely populated and urban sprawl is taking over farmland much like it is in the United States. The Chinese population continues to grow at 10 to12 million people per year. Just lower and upper socio-economic classes exist—there is no middle class. More than half the current population—600 to 700 million—are agricultural producers living on farms. The average farm size is only one to three acres in the eastern portion of the country.
The entire country is owned by the government. There are minimal social services in rural areas and Chinese farmers' income is about one-fourth of what is earned by urban residents. In some instances, this income as little as $450 per year.
However, two years ago the Chinese government began a farm assistance program that helps agricultural producers purchase farm equipment and seed.
"Two years ago, (Chinese) farmers protested against their treatment. To give them the opportunity to stay on the farms, the government allowed them to continue to farm but they had a choice now of what they planted. They were also released from paying any taxes to compensate between the cultures in the rural area and the city dwellers," Gaulding said.
China has a long and rich history. A succession of dynasties has ruled this country for more than 3,000 years. The People's Republic of China was formed in 1949.
Thus, began a Communist regime under Chairman Mao Zedong. After years of human rights violations, the U.S. renewed China's most-favored-nation trade status in 1990.
Today, China is still a one-party state—the Communist Party. In terms of the economic system, however, western capitalism is guiding the exchange of Chinese yuans, the country's currency (8 yuans = 1 U.S. dollar).
"In terms of economics, this is at first glance as capitalistic as any other society that I've seen. It's very much a profit-oriented, investor-rewarded kind of economy—not what we would equate with Communism of 30 or 40 years ago," said Dan Dierschke.
Capitalism was quite evident to the Texas group during stops in China's major cities—Beijing, Shanghai and Hong Kong. Many U.S. and international companies are doing business here. Commerce is flourishing in these metropolitan regions and building continues at a rapid pace as hundreds of construction cranes can be seen along skylines that are already impressive to most observers. Shanghai, for instance, is the country's largest city at 18 million people, and also is home to 3,000 skyscrapers that stand more than 19 stories and 800 structures that rise more than 40 stories. Beijing is preparing to host the 2008 Summer Olympics. From an energy standpoint, fuel consumption is huge with the number of Chinese vehicles only outnumbered by the U.S. Sixteen of the 20 most polluted cities in the world are in China.
Agriculturally, China is very diverse. Most farmland is located in the eastern part of the country. Livestock production can be found in the north and west. The Farm Bureau entourage traveled exclusively to farms in East China. Climate in this region is moderate to subtropical with average rainfall ranging from 60 to 95 inches per year.
Cotton and rice are major crops. Corn, wheat and garlic were also among the commodities seen firsthand by the Texas producers. They learned that average Chinese crop yields are very comparable to U.S. production. For example, corn yields can range from 160 to 180 bushels per acre. Wheat stacks up at 80 to 100 bushels.
"We're here after wheat harvest and a little after corn planting. They'll plant in the wheat stubble with a one-row planter or by hand. It's really labor intensive," Boehme said. "You go down the highway and look out at a hundred acres and there might be 200 people working. They all have their two acres or 12 mu (6 mu=1 acre) and they're trying to get the crop planted, and pulling weeds," the Castroville corn, cotton and hay farmer added.
Very little nitrogen fertilizer is used by Chinese farmers. Human waste and compost are more common.
"What I have really noticed as the biggest difference in agriculture (between China and the U.S.) is that all this in China is minimum till to no-till. They have virtually no tractors to plow these fields," Kapavik said. "They use various planting methods depending on what area you are in and what is grown as second crops in wheat fields. Some fields they plant corn seed directly into the wheat stubble or the wheat stubble is burned, and they transplant cotton from nurseries after harvesting a garlic crop," added Kapavik, who raises corn, wheat, cotton, hay and cattle in Lancaster.
The Farm Bureau group was given some staggering numbers regarding China's cotton industry. More than 18 million households are involved in cotton production while there are more than 10,000 cotton gins scattered across the country. About 90 percent of the cotton is irrigated, hand-picked at harvest, yielding about two bales per acre. All of the crop is BT cotton.
"One of the exciting stops we made was visiting the largest textile mill in the world. It actually consumes 40 percent of all United States cotton exports (equivalent to the 2005 Texas production). I found that so amazing. They have 160,000 employees. They're very diversified. They have their own energy supply and produce glucose that's exported throughout the world," said Nedbalek, a cotton, grain sorghum and cattle producer from Sinton.
Henan Province in Central Eastern China is the largest farming region in this country, the fourth largest nation behind Russia, Canada and the United States.
Numerous crops are grown in this province from grains and garlic to watermelons, peanuts and rice. The Texas group saw some very lush rice fields—a small operation of just three-quarters of an acre of rice and a larger farm of 1 3/4 acres. On average, yields range from 6,700 to 7,000 pounds per acre.
"He (the larger farmer) planted the rice and then rotated it into wheat and then back into rice again. I was quite surprised with his cultivation practices. He planted his wheat in December and then harvested it in May. At the same time, he planted his rice in a small nursery pond and within 35 days he would have that re-planted in a field of wheat after harvesting the wheat," said Gaulding, who's from Winnie. "In our area, we wouldn't see any wheat being grown. You'd have to go hundreds of miles to even find a field of wheat."
Due to the Avian influenza that has struck the Chinese poultry industry, the Texas farmers and ranchers did not visit any poultry farms. But TFB's poultry chairman had these observations.
"On the farms and ranches at the local level, we've noticed that technology has not advanced quite as far in those areas yet (as compared to urban areas)," said Caldwell broiler and cattle producer Carl Homeyer. "As we drove down the road going from city to city, they are westernized with a lot of commerce. But as soon as you break into the countryside, it's farm upon farm upon farm. They're very small. Yet when you drive down the road and look out into that field there may be 50 people in a 15 to 20 acre area, all working the same field. There are people pulling plows just like an ox or a mule that we used 70 or 80 years ago."
Another segment of China agriculture that lacks 21st Century technology is the cattle industry. The Farm Bureau leaders did not see many cattle because most ranches are in the northern and western regions. But what they saw did not meet standards or practices common in the U.S. Such was the case in a tour of a Chinese feedlot of Charolais, Limousin and Simmental cattle.
"Well, compared to our feedlots in the Panhandle, Oklahoma, Kansas and Nebraska, this was totally different," said Thompson, a cow/calf and timber producer from Martinsville. "Each animal is brought in and tied individually. This is one of the larger feedlots. It feeds about 200. They're watered one time a day. When we were in there, there seemed to be a huge fly problem. They do not castrate, they do not use any hormones. Most of the feed they finish out on is brewery mash. They buy them as yearlings, bring them in and carry them out at 1,100 to 1,200 pounds where they are slaughtered."
The Texas farmers moved from a feedlot to a slaughter facility as part of their livestock experience.
"We had an opportunity to visit a slaughter facility. They harvested 60 to 80 head each day. We were told this was an average size facility. It was interesting that this facility was gearing up to attempt to be certified for Middle Eastern trade. They were harvesting the animals according to the Islam tenet so their target population could be served," said Dan Dierschke, a beef cattle producer in Austin. "I would say from my visiting of the facility that it did not meet the basic sanitary and photosanitary standards that would ordinarily be seen in any American plant, especially an American plant that was attempting to go into the international market."
The U.S. ag producers met with a number of Chinese government and U.S. Embassy officials. They received encouraging news from a meatpacking and distribution company which stressed that Chinese companies and consumers do want U.S. beef back in their market. The Chinese government banned the import of American beef due to three previous BSE cases in the U.S. Another meeting with the Asia representative for the U.S. Meat Export Federation updated the group on the progress being made to re-open other markets, including Japan, to U.S. beef products.
Other stops while in China included a wet market, supermarket and commodity market in Shanghai. They found a variety of produce at the commodity market including watermelon selling for just 12.5 cents.
TFB leaders learned at the Zhengzhou Commodity Exchange that only wheat, cotton and sugar are traded. It is one of three commodity exchanges in China. All trade grains, but no livestock.
The Texas farmers and ranchers traveled west to Yichang and the hydropower capital of China. Here, the new Three Gorges Dam, one of the largest dams in the world, will control flooding from the Yangtze River and produce hydro-electric power. The dam is projected to save 50 million tons of coal annually. Construction began in 1992 and will be fully operational by 2008. Three Gorges Dam is so large that its construction affected U.S. steel and concrete prices.
In Hong Kong, the Texans saw Modern Terminals—the world's largest container port. Forty international shipping companies go through the port. Frozen chicken and pork are transported from this facility. Most agricultural commodities, however, go through Shanghai, but the group had no access to that port.
In this current fiscal year, China will displace the European Union as the number 4 market for U.S. farm exports. China has one of the fastest growing capitalistic economies anywhere. The country has a strong infrastructure with a good highway system, railroads that ship cotton and grains from West to East, and huge ports that ship goods worldwide.
So, how do the Texas Farm Bureau leaders view China on the world market?
"We're all in the agriculture pipeline together," said Nedbalek. "I don't really look at China as being competition. We're really partners. We work together, especially regarding exports. We produce more cotton than we can use and obviously China does not produce as much as they need to keep their big textile industry going. The future looks bright in China."
"I guess one of first and main strengths I see is a tremendous drive to succeed financially. I also see a very large labor pool that is very economically priced," Dan Dierschke said. "At the same time, that labor pool constitutes a tremendous population. It's difficult to conceive of a country that has four times the population of the United States. I would hope that somehow, government to government, we can break through some of the barriers that we have been experiencing, that we can resume the trade of beef products into the country as it existed before BSE."
"I think after being here and seeing (China), we can be a real good partner. They'll be a good customer for our products," TFB President Dierschke said. "I think they'll have a need for food products in the future. Fiber production—they'll be a good customer of ours if we maintain quality that they like. As long as we can do that—get them a quality product when they want it—I think they'll be a good friend of ours in agriculture."
Those making the trip to China included (left to right): District 13 State Director Bobby Nedbalek; Tom Nicolette, TFB staff; District 10 State Director Tommy Boehme; Bryce Myrick, TFB staff; District 8 State Director Dan Dierschke; District 4 State Director Joe Kapavik; TFB President Kenneth Dierschke; George Caldwell, TFB staff; Xiaoke Chen, translator; Secretary-Treasurer and District 9 State Director Albert Thompson; Poultry Advisory Committee Chairman Carl Homeyer; and Rice Advisory Committee Chairman John Gaulding.
Albert Thompson gets a bird's eye view of The Pudong in Shanghai. This area was farmland as recent as 16 years ago. Today, it is part of the largest urban center in China with a population of 18 million people.
In Central Eastern China, Bobby Nedbalek visits with a farmer's wife on her family's cotton, corn and wheat farm near Zouping. Farms in East China are very small, averaging just two acres per farm.
The TFB group toured Modern Terminals, the world's largest container port, located in Hong Kong. Frozen chicken and frozen pork are shipped through this facility. Forty international shipping companies conduct business here.
President Dierschke and Secretary-Treasurer Thompson pause at Three Gorges Dam. The dam, one of the largest in the world, was built to control flooding from the Yangtze River and to produce hydroelectric power.
Bobby Nedbalek and Joe Kapavik observe a farm worker behind cows pulling a plow. Many farms in China are far behind in technology and utilize primitive means to produce crops.
President Dierschke tries out this 3-wheeled truck at a dealership in Central China. The vehicles cost from $500-$700.
John Gaulding visits with a Chinese farmer who raises rice side-by-side with a corn crop.
