Asian markets important for agricultural trade

By Matt Reese

In terms of agricultural bounty, the United States has been clearly blessed since its earliest days of domestic agricultural production.

“The U.S. is a country that has been remarkable in that we had a relatively sparse population, we had an abundance of natural resources, we were surrounded by two terrific oceans, and we were never relegated by having to deal with marauding armies coming through the countryside every three or four generations,” said Tom Dorr, U.S. Grains Council president and CEO. “In comparison, Asian countries have very dense populations without the natural resources to support them. Even though China has nearly the same number of corn acres that we do, they have four times the population. Even if they gain in productivity, they ultimately exceed their ability to produce and that provides opportunities for us.”

For this reason, when Dorr starts talking about the vast market potential in Asian countries, he just can’t help but get excited.

“All of the countries in southeast Asia and throughout northern Asia are major markets for U.S. food and commodities,” he said. “It started with Japan, Taiwan and Korea 20 or 30 years ago. China is emerging very aggressively on the scene today. Vietnam, the Philippines, Malaysia, Indonesia — there are a lot of countries in that region that are growing their economies very rapidly. They’ve opened their industrial and information technology systems to a global market. They are competing and building middle class societies. As a result, there is an increasing demand for the high quality protein of meat, poultry and dairy products.”

Moving forward, there will be challenges for Asian countries in meeting their growing food demand with domestic production.

“One of the big challenges that we always have in the food business is that countries look at trade and industrial goods as one thing but they look at food security as something that has to be predicated on self sufficiency,” Dorr said. “I think one of the things we’re going to see in the next 10 to 20 years is a recognition that you can become food secure even if you’re not food self sufficient. In the long term, trading what you can produce the most efficiently is a way to become far more cost effective, far more politically secure and ultimately more socially stable.”

In the short-term, Dorr thinks it is vital to build strong trade relationships with these Asian countries.

“We’re going to see between 2.5 and 3.5 billion people morph into this middle class arena over the next 30 years. When they do that, it will be a significant economic driver,” he said. “If you add $500 per capita per year to 2.5 billion people, that is a huge year after year growth in the domestic product of the world. This is something the U.S. needs to participate in because we have the expertise to do so.”

With excitement of the future possibilities, Dorr points to the Trans-Pacific Partnership Free Trade Agreement that would include a number of Asian countries, Australia, New Zealand, Argentina and the U.S. Japan has expressed interest in the trade agreement as well. Other recent important steps in forming relationships with Asian customers were USDA’s largest-ever agricultural trade mission to China the and the implementation of the U.S.-Korea trade agreement last month.

As a result of previous trade efforts throughout the world, U.S. farm exports in fiscal year 2011 reached a record high of $137.4 billion — exceeding past highs by $22.5 billion — and supported 1.15 million jobs here at home. The agricultural trade surplus stands at a record $42.7 billion.

 

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