Workshop Presenters:

Colin Carter, Professor, Agricultural & Resource Economics, University of California, Davis
Fred Gale, Economist, Economic Research Service, USDA
Shermain Hardesty, Extension Economist & Director, Rural Cooperatives Center, University of California, Davis
Richard Howitt, Professor & Chair, Agricultural & Resource Economics, University of California, Davis
Scott Rozelle, Professor, Agricultural & Resource Economics, University of California, Davis
Michael Wootton, Vice President for Corporate Relations, Sunkist Growers

 

China’s Rising Bamboo Curtain (Shermain Hardesty)

• Major reforms began about 25 years ago
• China foreign trade was merely $20.6 billion then; in 2003, totaled $851.2 billion.
• 25 years ago, more than 250 million people were living below the poverty line. By 2003, the figure was reduced to less than 30 million
• Chinese government has made development its top priority

China’s Economy (Shermain Hardesty, Fred Gale)

• Between 1980 and 2004, China’s GDP increased 10-fold, while the US GDP increased 4-fold
• In 2004, China’s GDP totaled $1.93 Trillion
• China’s GDP ranks 5th in the world, behind the US, Japan, Germany and France, and ahead of Italy
• However, on a per capita basis, China’s GDP ranks #100
• China has adopted policy to protect farmers, as well as develop economy
• China is welcoming Foreign Direct Investment
• China’s economy is driven by investment, not consumers
• Ag production is very fragmented, which compromises food safety and quality control
  
  
• Powerpoint presentation (as a pdf file)
  See also:
• USDA - China's Rising fruit and Vegetable Exports Challenge U.S. Industries
• USDA - China's Agricultural Imports Boomed During 2003-04

China’s Trade Issues (Fred Gale, Colin Carter)

• China is #4 market for US ag exports
• Soybeans & cotton comprise 2/3 of US exports to China
• China’s rising fruit & vegetable exports challenge California’s cooperatives and producers
• Private companies from Japan, US and other countries have made significant investments in specific agricultural sectors in China
• Importing nations use nontariff trade barriers to restrict imports from emerging exporters like China
• US’ Antidumping orders disrupt imports from China for only 3 to 4 years

• Powerpoint presentation (as a pdf file)
  See also:
• China's Food Exports face Dumping Laws

China’s Efforts with Genetically Modified Crops (Scott Rozelle)

• Chinese government. has invested considerably in biotech
• If China commercializes GM rice, GM rice will be planted on 50% of rice acreage within 5 years
• Even if faced with trade barriers on GM rice, expect $5 billion in economic benefits to producers & consumers from GM rice
• Currently, there is much counterfeit GM seed due to poor intellectual property rights system
• GM crops, such as rice and Bt cotton, increase China’s production efficiency and improve farmer health through reduced pesticide usage
• South Korea and Japan are likely to prohibit imports of Chinese rice if China commercializes GM rice
  
  See also:
• Insect-Resistant GM Rice in Farmers Fields: Assessing Productivity and Health Effects in China
• Plant Biotechnology in China

Water Availability in China (Richard Howitt)

• Water shortages will push China’s farmers to grow a higher proportion of high value crops—competing with some of California’s specialty crops
• China will need to import staple crops

• Powerpoint presentation (as a pdf file)
  See also:
• China's Agricultural Water Policy Reforms: Increasing Investment, Resolving Conflicts, and Revising Incentives

China’s Demand for Processed Foods (Fred Gale)

• China’s consumers are demanding greater food choices
• China is expanding its array of food choices
• Retail outlets
• Restaurant chains
• Branded foods
• Best US/California export opportunities to China appear to be:
  - Food with health benefits
  - Banquet or gift foods
  - Exotic or new foods
  - Trendy foods
• “Safe” foods (no pesticide residues/meeting high food safety standards)

• Powerpoint presentation (as a pdf file)
  See also:
• ERS, USDA -China's Growing Affluence. How Food Markets are Responding

Sunkist’s Experiences In China (Michael Wootton)

• Sunkist is targeting consumers in upper 5% income bracket in Eastern China
• Sunkist has 90% brand awareness and is subject to counterfeiting
• Retailers don’t buy direct from Sunkist
• Importers often have cash flow constraints
• China is expanding its citrus plantings, facing strong domestic & export markets

Conclusions

• Comparative advantages will determine how China impacts producers of certain crops in California
• China has much cheaper labor
• China has lower tariffs & lower transportation costs than US in Asian markets
• California has more efficient land holding structure
• California has more stringent environmental controls impacting food safety and regulations governing food quality
• California’s food technology and distribution systems are considerably more highly developed
• Does it make sense for California’s ag cooperatives to collaborate with firms/producers in some of China’s agricultural sectors?