US farmers eye China's growing market
(AP)
Updated: 2005-11-07 07:09

China's huge population and rising standard of living have U.S. farmers hoping the Chinese will cross culinary lines and sample fare that's a little more foreign to them.

Many of China's 1.3 billion people, with ever more disposable income, are becoming more receptive to different food choices, said New York State Agricultural Commissioner Nathan Rudgers. He traveled to China last month to help market U.S. agricultural goods, including dairy products from his home state.

While it may seem obvious that farmers would look to China as a place to expand there are numerous hurdles to clear to make it profitable.

In 2004, the United States exported $5.5 billion of agricultural products to China while importing $1.6 billion worth of that country's farm goods. The largest U.S. agricultural exports to China were soybeans, cotton and other raw products. Factories paying low wages turn the raw materials into goods, such as clothing, that are often then sold back to the United States at prices lower than are sustainable by U.S. manufacturers.

Agriculture officials in the United States hope to change that. They foresee a time when the average Chinese, like the Japanese, will partake of everything from California wines to New York bagels and bialys.

"There are people that are leaving their rural livelihoods and are coming to the cities and (China) has a demonstrated record of raising the wealth of a huge population in a very short period of time," Rudgers said. "And all those people with newfound wealth are looking for improved diets and looking to try new and different things."

Still, officials concede it could be a stretch to get the Chinese — without Japan's freer market economy and embrace of American pop culture — to buy and enjoy foods such as cheddar cheese or breakfast cereal that are common to Americans.

"They are not used to eating something in a bowl that is not warm," Rudgers said. "It's rare they would eat something without chopsticks. Being (that) fresh milk has been hard to come by, the concept of taking cold cereal, putting it in a bowl and pouring fresh milk on it is totally foreign to them."

The U.S. market share of agricultural products in China is about 8 percent. Officials hope that number will grow to around 20 percent by 2010. That may be a tall order considering it took two decades to get to the current market share.

"China is a huge market opportunity, but there are differences in what we can produce and what they can pay," said Duncan Hilchey, an agricultural development specialist at Cornell University. "If in time their economy grows and we can produce products at a price they can afford we may be able to find things we can sell them. Currently it's the reverse."

China has multiple markets that vary by region. And wealth levels differ greatly from the major cities like Shanghai and Beijing to the rural, less developed areas of the interior.

"You can't just say `I'm going to go sell in China,'" said DeWitt Ashby of the National Association of State Departments of Agriculture. "It's way too big and complex a place."

For example, a U.S Department of Agriculture report highlighted Chongqing, a city on the Yangtze River with a population of 6 million, as a potential market for U.S. goods that has largely been untouched. There were 76 supermarkets in Chongqing, covering more than 1 million square meters and numerous five-star hotels catering to business executives, according to the report. But the report also noted there are problems with distribution to the city.

China likely will have little choice but to become a larger importer of food as its economy develops fast and living standards rise steadily.

China has "a quarter of the world's population and 6 percent of the world's arable land," Rudgers said. "There's an equation there that suggests they are going to be consumers of food and agriculture products in a developed economy."

U.S. businesses, however, may have to take losses at first to get established across the Pacific.

"It is about having patience," he said. "It is starting not with containers but individual cases of product and being willing to serve that market probably at a loss for a time until folks develop a taste for what we're providing."