WASHINGTON, D.C., U.S. — Over the past decade, the U.S. agricultural exports to China have risen sharply, propelling China into its position as the fastest-growing and highest-value export destination for U.S. farm and food products, the U.S. Department of Agriculture’s (USDA) Office of Communications reported on Nov. 20. In 2011, China surpassed Canada to become the top U.S. market and it has since retained that position. In fiscal year 2015, U.S. agriculture and related exports to China totaled $25.9 billion, comprising approximately 16% of all U.S. agricultural exports, the USDA said.
While the rapid growth in U.S. farm exports to China has plateaued in recent years, many macroeconomic conditions signal the potential for continued long-term growth and trade expansion in China, the USDA said An increasingly urban population, a growing middle class, and higher disposable incomes have increased Chinese consumers' ability to diversify their diets and purchase high-value, protein-rich foods.
USDA forecasts a considerable increase in China's imports of coarse grains, soybeans, cotton, beef, and pork by 2024. Furthermore, growth in U.S. exports of horticultural goods, dairy, and alcoholic beverages to China bode well for future opportunities within the consumer-oriented products sector. Provided the U.S.-China trade partnership remains strong, U.S. agricultural producers are well positioned to capitalize on China's economic development and consumer demand into the foreseeable future.
The value of U.S. agricultural and related exports to China has more than tripled over the last 10 years, reaching a record $29.6 billion in fiscal year 2014 before declining slightly in fiscal year 2015.
Due to China's severe cropland shortage and inexpensive labor force, U.S. exports to the country have traditionally been dominated by land-intensive bulk commodities that China then processes for domestic consumption or export, USDA said. More recently, China’s booming demand for luxury items and ready-to-eat foods has created new opportunities for the U.S., particularly for exporters of intermediate products such as oils, fats, flour, meal, and sweeteners, and consumer-oriented products such as processed foods, meats, dairy, eggs, tree nuts, and wine and beer. U.S. exports of bulk, intermediate, and agricultural-related products, such as forest and fish products, have each increased approximately 250% since 2006, the USDA said. Exports of consumer-oriented products grew 150% over the same period.
A variety of agricultural goods have made significant contributions to U.S. export totals, many gaining first-time market access to China in the last couple of years. For example, U.S. sorghum and distiller's dried grains used for animal feed have become billion-dollar exports to China despite being almost non-existent prior to 2008. Sales of these lower-cost feed substitutes have helped offset recent declines in U.S. corn exports caused by China's restrictive trade policies. Soybeans continue to dominate U.S. agricultural exports to China, historically accounting for approximately half the total value of U.S. exports. In fiscal 2015, U.S. soybean exports to China were valued at $12.7 billion, the second-highest level on record.
USDA said the tremendous expansion of U.S. agricultural trade with China has not come without challenges. Chinese consumers recognize the U.S. as a supplier of high-quality agricultural and food products that are both trusted and desired. However, U.S. exports are limited by Chinese policies that promote agricultural self-sufficiency and protect domestic industries. China's lack of regulatory transparency, inconsistent product review and approval processes, and erratic distribution of import quotas all distort trade and create uncertainty for U.S. exporters. This environment has prevented the U.S. from achieving its full potential in exports to China, the USDA said.
The size of the agricultural trade relationship for both the U.S. and China, as well as U.S. agricultural exports' support for China's food security through trade, provides incentives for both sides to address these issues. Recent engagements have shown that negotiations between the two countries can achieve positive results.
The USDA said ample opportunities for expansion continue to exist within China’s food and agricultural markets. Growth in China's food consumption is forecast to outpace its domestic output by more than two percent per year between 2015 and 2020, resulting in increased demand for imports (IHS Global Insight). In order to address the growing demand for food, China is pursuing a number of economic and regulatory reforms to bolster its domestic agricultural production and efficiency.