January 27, 2005
Sino-US soybean trade goes well - Interveiw
The interview below was adapted from China Business Weekly. Neal Bredehoeft, president of the American Soybean Association (ASA), Stephen Censky, ASA's chief executive, and Phillip W. Laney, country director of ASA China, were asked about soybean trade between China and the US. Bredehoeft and Censky recently attended a business conference in Beijing.
China is the world's largest soybean importer, and most of its soybean is purchased from the United States.
China Business Weekly (CBW): What do you predict for the Sino-US soybean trade this year? What measures are being adopted by ASA to promote business with China?
Bredehoeft: Everything is going well. China's booming soybean oil industry has kept its robust growth, and the feed industry has been recovering from the impacts of last year's avian flu. We think the soybean trade between the two countries will keep growing.
Censky: Predictions are not what we are good at. While the US Department of Agriculture (USDA) predicted China, in 2004-05, will import 22 million tons of soybean, the US soybean will account for half of that.
Since September 1, the starting point of our farming year, China has purchased 8.4 million tons of US soybean, from 8.1 million tons in the same period of the previous year.
Laney: We came to China when China was still a soybean exporter. In the past 20 years, we worked with Chinese oil processors, the animal husbandry industry and the sea products industry to try new and efficient uses of soybean. China's oil processing and animal husbandry industries have grown steadily, and there have been strong demand for soybean. We will continue working with our Chinese partners.
CBW: Do you think the safety certificates given to Monsanto's genetically modified (GM) roundup soybean (a popular soybean strain in the United States) last February has eliminated the major barrier for US soybean to enter the Chinese market?
Censky: Yes. More than 90 per cent of US soybean is GM to resist pests and herbicides. Since the early 1990s, when our GM soybean was planted, numerous scientists have proved GM soybean is safe and, in the United States, consumers have never resisted GM soybean.
Similar tests and field trials have been done in China to prove the safety of GM soybean. China has shown strong demand for our soybean. After the certificates were issued, a major trade barrier was removed.
CBW: US President George W. Bush, on both of his visits to China in 2002, pressed the Chinese Government to approve more US soybean imports. Do you think the United States applied too much political pressure on China?
Censky: US soybean farmers and the ASA have long been supporters of free trade. They supported China's entry to the World Trade Organization, and China's permanent normal trade relations status with the United States. The US leaders only mentioned the importance of soybean trade when it was blocked (as a result of the Chinese GMO rules, or rules on genetically modified organisms).
Before safety certificates were issued, China's GMO rules seriously influenced China's imports of soybean, and its soybean oil processing industry. Now, the question has been resolved with the issue of safety certificates.
CBW: Some Chinese soybean importers and analysts suggest USDA's forecasts on soybean demand and output have been misleading. Sometimes, the forecast is for demand is raised so high to stimulate Chinese buyers to purchase soybean. Then, after Chinese make their purchases, the forecast for output has been lowered to jack up the price. Some commentators have suggested the USDA and US speculative funds have colluded to deceive Chinese soybean importers. What is your response to such accusations?
Censky: I used to work for the USDA. The department's forecasts on soybean output and demand are objective, unbiased and transparent. The forecasts have long been accepted by the market as authoritative. Employees who help draft the report have traditionally been banned from participating in business activities that could benefit from the report. The report must reach all market players at the same time.
Bredehoeft: The interests of US soybean farmers are linked to those of Chinese buyers. We represent the interests of US soybean farmers, but not the shippers. We hope Chinese soybean users can be successful, and rational. We don't want Chinese soybean buyers to suffer the aggrandizement of soybean demand.
Laney: Chinese buyers are rational. If they think the USDA has aggrandized the demand, they can choose not to buy soybean. In the market, there are different sources of information. The USDA's forecast is just one source. If Chinese buyers open offices in Chicago, they can hear various opinions They will gradually learn to avoid risks.
