Thursday February 27, 2020

June 18th, 2014

On April 14, 1971 China’s twenty-year-old trade embargo was discontinued. Deng Xiaoping’s Opening Up and Reform opened the country to foreign investment and trade. These liberalized restrictions led to growing commercial ties with outside countries, specifically the United States. According to Zhong Shan, China’s Vice Minister of Commerce, “the China-U.S. economic and trade relationship is more important than ever.”

Over the past three decades, the economic relationship between the United States and China has expanded substantially. The Office of the United States Trade Representative reported that in 2012, U.S. goods and private trade with China totaled $579 billion. In 2013, the top exports were grains, seeds, fruit, aircraft, machinery, electrical machinery and vehicles.

The reported added that in 2013, United States exports of agricultural products to China totaled $25.9 billion. These exports included products such as soybeans, cotton, hides, skins and distillers grains. U.S. imports of agricultural products from China (e.g. processed fruits and vegetables, fruit and vegetable juices, fresh vegetables and snack foods) totaled $4.4 billion in 2013. Today, the most important agricultural product traded between the United States and China is alfalfa hay.

The alfalfa plant is produced as a forage for cattle and is often harvested as hay. When used as hay, the plant is cut and baled for transportation, storage and feed. The alfalfa plant is grown in warmer temperature climates, cut three to four times a year and can be harvested up to 12 times per year. Alfalfa hay is the most widely used fiber source for cows that are used to produce dairy products including milk, cheese, ice cream and yogurt.

Currently, the United States is the largest exporter of alfalfa hay to China. Because of China’s lack of access to water and land, China relies heavily on the United States to supply feed for China’s dairy cows. U.S. hay exporters, specifically those based in California, are improving and increasing their exports to China. The Los Angeles Times reported that last year, ACX Pacific Northwest, a California-based hay exporter, produced over 6 million tons of alfalfa hay.

The U.S. Department of Agriculture estimates the United States produced and sold over $586 million dollars of hay to countries outside the United States. Japan was one of the first countries to demand the United States export. Shortly thereafter, Japan was followed by South Korea, Taiwan and the Middle East. Now, China’s demand for alfalfa hay has far surpassed that of Japan.

In 2003, agricultural exports to China were around $5 billion. According to the Los Angeles Times, that number rose to $25.8 billion dollars last year. Since 2009, U.S. alfalfa exports to China have grown nearly eightfold, sending over 575,000 tons of hay to China. From 2011 to 2013, China went from representing 2% of ACX Pacific Northwest’s revenue to about 21% of the company’s revenue. The increased demand for U.S. alfalfa has resulted in prices twice as high as last year.

The manager of marketing and communications for ACX, Greg DeWitt, commented on the recent growth of alfalfa exports to China in a recent China Daily article. He said, he thought “the growth in China has been anticipated” because “Alfalfa is the very beginning of so many products, not just milk but cheese, ice cream, yogurt.” Ronnie Leimgruber, an alfalfa farmer in the Imperial Valley, said “Even if just 2% of the middle class there decided they wanted milk, that’s a huge market swing for alfalfa.” The U.S. alfalfa hay exports to China has the United States rolling around in the hay and money.

For further coverage of news on this topic, see the following news sources and commentary:

The Los Angeles Times“U.S. farmers making hay with alfalfa exports to China”

China Daily“US hay helping China’s dairy needs”

Office of the United States Trade Representative“The People’s Republic of China”

Embassy of the People’s Republic of China in the United States of America“U.S.-China Trade is Win-Win Game”

For Chinese language news on this topic, see the source below:

China Morning Post (北京晨报) – “美媒:中国乳业发展迅猛 美为华奶牛种苜蓿”

Compiled and edited by Arlie Slonim