Growth Amid Challenge: Q & A With USGC China Director Lohmar

USGC China Director Bryan Lohmar
USGC China Director Bryan Lohmar
A Chinese sorghum trade team visited the United States in June 2016. China remains the top export destination for U.S. sorghum this marketing year.
A Chinese sorghum trade team visited the United States in June 2016. China remains the top export destination for U.S. sorghum this marketing year.

China is a complex but influential market for U.S. grains and the products made with them. Below is a Q & A with U.S. Grains Council (USGC) China Director Bryan Lohmar on his offices' work, what is happening on current issues and the long-term future for the partnership between U.S. farmers and Chinese importers. 

Tell me about the China office's priorities. What are you most focused on today? 

We are focused generally on being seen as a positive force here in China, a positive partner that wants to work with China to help it develop and modernize its agricultural sector while assisting its integration into global markets. 

And how do you do that? 

There is not a simple explanation. We have several large events every year. We bring in consultants on technical issues and trade issues and policy issues. We have teams going to the United States, trade teams, technical and policy teams. We do a lot of on-the-ground work. 

To give you an example, just yesterday, we had a guy come in to the office who is a representative of a global ethanol technology company. He heard about our ethanol promotion programs, and he wanted to talk with us about how he could participate in those and whether there are opportunities to work together. He is on the ground here working with the companies that are seeking to expand ethanol, so we talked with him. 

We also met with two importers yesterday, both of them chomping at the bit to bring in U.S. corn. So we talked a bit about the current pricing, difficulties bringing in [distiller's dried grains with solubles] and corn and how we can work together to keep this market open. We told them some of the work we are doing, which they can bring back home and share, which maintains a unified set of arguments that are presented to policy makers at all levels. 

We interact a lot with the U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS), too, on policy issues. 

How would you sum up the Council's strategy in China? 

All of this work is around a strategy to work with China on the issues that are confronting it, and what is coming to the top of that is advocating for better environmental outcomes. This issue is a big for China, probably the number one issue China wants to address. 

It is the biggest constraint holding back the livestock industry, so it is a platform we can use to continue to develop the livestock industry as well as government stakeholders to improve policies. It is a big issue for the Ministry of Agriculture. Then you look at issues like ethanol; that is really an environmental argument, and that is what we are making. 

Biotechnology is a big issue here. U.S. farmers understand that genetic engineering has helped them improve their soils and their environmental footprint, so it is a natural platform for us to advocate for its benefits here, too. 

The people in China who advocate for greater openness to global markets for feed grains, their number one argument is that it will reduce the environmental cost of extensive production in China. The environmental issue is an opportunity to talk about trade and how trade can help reduce the strain on scarce resources dedicated to uses other than agriculture that have much higher value. 

That is good for China, and certainly something we can add value to and bring something to the discussion; it touches on all various planks of the Council program, advocating for policy, advocating for demand building activities, biotechnology, ethanol. 

Why is China such a critical market for U.S. producers? 

China's been a significant market - in the past few years, it was the #1 DDGS market, it is still the #1 sorghum market. There is enormous potential here. China's growth and development is still ongoing. You come to cities like Beijing and Shanghai, and you are like, wow, they are wealthy. But when you go to the countryside, they are still very limited in what they can consume and what their income allows them to do. So there is enormous potential for increased demand for animal proteins and subsequently feed grains. 

China has been an important market for us already; it is presenting many challenges for us right now, but these are things we can work through, and there is a lot of potential to develop a more stable, reliable, longer-term trading relationship with China that will be good for U.S. producers and good for China. 

The 100 days strategy between the U.S. and China is meant to be addressing challenges and opening opportunities between the countries. What's the status of that? 

While it is important to achieve positive outcome with the 100 day process, we need to be mindful the changes are structural in nature, addressing critical policy constraints and not just short-term concessions. Our role is to play a supportive role, continue our message that greater openness is good for both sides, and we are doing that with a big symposium in mid-June and through continued conversations with traders, end-users and policy makers. 

The symposium will be a good opportunity to discuss the role that trade plays in meeting environmental outcomes and the changing global markets. China has multiple means to engage in global markets and not feel they are relying on just one region. That creates stability, and U.S. producers definitely can compete it the global market. We are advocating that it is in China's interest in terms of resource savings, improved feed efficiency with lower feed prices to engage more in the global market. 

What's the impact of ChemChina/Syngenta merger likely to be on your work? 

I think it is a positive. This merger will help our program of advocating for genetic engineering by providing us with a major, influential partner here in China that is a stakeholder in the environment for global plant innovation. They will want to see global policies improved, and China is an important component. They will be an important partner; our interests are aligned. There are other things going on, greater promotion and development of biotechnology here in China, that will also provide opportunities to further this discussion and advocacy. 

What do you want a U.S. farmer to know that you think they may not know about China as a market? 

There is a lot of frustration - farmers are saying, yeah, we have been told China is going to be a big market for 30 years now, and it has not been. But some things have happened. China has imported $15 billion worth of product in the last six, seven years. In the 1990s, it was an import monopoly; today there are multiple trading companies. You look back in the '90s, the policy was for provinces to be grain self-sufficient; now, that is not even a national policy. It is opening up. 

If you go back 20 years, there is a policy that's much stricter than now. You go back 20 years before that, there was no commercial activity whatsoever - almost zero commercial activity. There is a slow, halting movement toward greater openness in China. It is a much more commercial environment than it was even 20 years ago and with a much more modern feed and livestock industry, partly due to Council efforts. I know it is frustrating and exasperating - but I believe China offers a very significant opportunity for future feed grain and co-product demand growth, and I believe the Council's patience will pay off.

Read more about the Council's work in China here.