"With potential major markets like China purchasing, not animals for slaughter, but animals with all of the best genetics the US has developed, the future potential of that market begins to look somewhat limited as the Chinese begin to gear up to move hog production out of the backyards of millions of farmers and into modern high-production facilities like those used across much of the U.S.," says Daryll Ray, ag policy specialist and director of the University of Tennessee's Agricultural Policy Analysis Center.
But, that's not all bad for U.S. ag exporters. All those hogs in China will be hungry, and feeding them will be a huge task. So, though pork exports from the U.S. to China may slide as the latter nation builds its herd, the recent surge in its buying of U.S. corn will only continue to pick up speed, Ray says. But, Chinese leaders are likely to in the near future begin looking to build that nation's own corn genetics rather than rely solely on export stocks.
"The usual assumption on the part of U.S. grain producers is that they will be the major beneficiary of such developments. While there may be some benefit to U.S. grain farmers in the increase in Chinese demand and production of meat, there is more to the story," he says. Between 2001 and 2011, the increase in the U.S. corn yield was a paltry 6.6% due to weather-related yield loss over the last 2 years. China on the other hand has seen yields increase by 22% over the same period. In addition while total US corn production has increased by 30% over that same period, Chinese production has increased by 68%. Clearly the Chinese are going to be grudging importers of corn but, as applicable, eager importers of US corn genetics."
The signal from this scenario is clear: U.S. farmers' competition around the world is taking steps to catch up, both on technology and productivity fronts. How U.S. producers respond will be critically important to global marketability in the future, Ray says.
"The agricultural technology that gave U.S. farmers a competitive advantage for many years is now spreading worldwide," he says. "And while the sale of that technology may continue to benefit a small numbers of farmers and agribusinesses, it also means that most US producers of meat and grain face an increasingly competitive worldwide agricultural marketplace."
