Even if the U.S. can continue to increase its meat exports to China in the near future, this all-out emphasis on domestic production by the Chinese has to put a damper on the potential for U.S. meat exports. And there is no guarantee that with this genetic jump-start from the U.S., the Chinese will not develop their own genetic research teams, reducing the need for imports of this valuable material. 

The Reuters article points out that all of the chickens and hogs in China will need corn, providing a potential boon for corn and soybean farmers. As Mike Phillips, president of U.S. Livestock Genetics Export in Salem, Ill., is quoted in the first Reuters article: “Genetics and nutrition go hand-in-hand…. The more they use our genetics, the more they’re going to need to import corn from the U.S. and elsewhere.” 

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. 

Between 2001 and 2011, the increase in the U.S. corn yield was a paltry 6.6 percent due to weather-related yield loss over the last two years. China, on the other hand, has seen yields increase by 22 percent over the same period. In addition, while total U.S. corn production has increased by 30 percent over that same period, Chinese production has increased by 68 percent. Clearly the Chinese are going to be grudging importers of corn but, as applicable, eager importers of U.S. corn genetics.

But competition for supplying Chinese corn demands is not limited to just Chinese farmers. Farmers outside the U.S. and China have increased their production of corn by 46 percent from 2001 to 2011. At the same time the farmers outside the U.S. and China have seen their corn exports triple. Where their corn exports were once (in 2001) just a third the size of U.S. exports, in 2011 they were 23 percent higher than U.S. corn exports. 

As U.S. corn farmers have hustled to meet the demands of a growing domestic corn ethanol market, farmers outside the U.S. and China have gained a dominant position in the export marketplace. 

The agricultural technology that gave US farmers a competitive advantage for many years is now spreading worldwide. And while the sale of that technology may continue to benefit a small numbers of farmers and agribusinesses, it also means that most U.S. producers of meat and grain face an increasingly competitive worldwide agricultural marketplace.



Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298;dray@utk.edu  and  hdschaffer@utk.edu;  http://www.agpolicy.org.