As a result of high-level trade talks a week ago, China has agreed to purchase 600,000 tons of soybeans grown in the USA. As a result of the purchase, the price of soybean futures in the US climbed by more than 1 percentage point on the Chicago Board of Trade.
The deal will result in the shipment of about 10 boatloads of soybeans, which will be spaced over the time period between October and December, all heading off to Chinese shores.
The announcement about the soybean purchase came on the heels of the bad news that Chinese trade officials had cancelled a scheduled visit to US farm states. Except for this one decision, trade talks had proceeded positively. More negotiations between the US and China are scheduled for October has the trade war between the two powerful global economies continues.
In early September this year a Chinese state news agency reported that some farm products, pork and soybeans, were no longer subject to additional tariff increases. The announcement helped to reduce tensions between the trading partners and make way for the recent soybean deal.
After trying for 15 years to break into the Chinese rice market, a 100-year old family business based in Sacramento has cut a deal to sell its rice in China. In July, Sun Valley Rice became the first US company to sell its rice in China.
“China has been tough to get into because for many years it was illegal to sell our rice there,” said Betsy Ward, president of USA Rice, a national trade association.
Until a 2018 agreement was forged between the US and China, it was illegal for the US to sell rice to China. When that law was lifted over 25 US companies were approved to sell their rice to China. Sun Valley became the first to make a deal.
“We would travel regularly to China to research [the market], attend trade shows and meet the industry players,” said Ken LaGrande, who founded Sun Valley Rice with his father Michael in 2000. “It was a commitment we made as a family to persist. So when the opportunity opened up, we were ready.”
The LeGrande Family has been producing rice in the Sacramento Valley since the 1920s LaGrande’s great-grandfather saw that the area’s climate, water supply, and soil was correctly proportioned to perfectly grow rice. Over the years the family incorporated other parts of rice production into their business, including drying and milling. This business became the LaGrande Family Foods Group. Now the Group is composed of many different operations, including farming, sprouting rice and milling sake.
Almost 20 years ago, in 2000, LaGrand and his father Michael saw an increased market demand for high quality, specialized rice. That is when Sun Valley Rice was born.
“Sun Valley Rice now is a fully integrated arm of the family business, ‘from farm to fork’ if you will,” said LaGrande. “We source rice from 200 farms, or about 10% of the rice crop gown in California. And we handle drying, milling, packaging and marketing of the rice.”
It is likely other rice growers will also land deals to sell their rice in China.
“We have the first sale. But we really hope there will be strong continuing demand for American rice in China, and that allows, in turn, more opportunity for farmers back in California,” LeGrande said.
According to the most recent Vinexpo/IWSR wine and spirits report, the world is expected to consume US $207 billion by the year 2022, drinking approximately 2.7 billion 9-liter cases. That represents growth in the industry of 2.15% between the years 2017 and 2022. Due to the recent practice to “drink less but better,” value has out-paced volume in growth all over the world. This is especially true in North, South and Central America as well as in the Asia-Pacific region.
The United States is still the world’s most valuable market for wine with a value of US$34.8 billion in 2017. After the US France is rated the second most lucrative market worth about US$16 billion. China comes in at a close third with US$ 16.5 billion in sales.
Vinepress forecasts the China will overtake France as the second largest consumer of wine by the year 2020, with a value of over US$19 billion.
The top five markets for volume of sales did not seem to change in the last year with • USA sold 318 million cases • Italy sold 266 million • France sold 250 million • Germany 224 million • China 156 million
North American businessmen have long been aware that traveling to China had its risks: executives with cellphones and laptops feared the theft of intellectual property and cyber attacks when in the biggest of all Asian nations.
But now the level of fear has been notched up to the next level.
Ever since the arrest of Meng Wanzhou on December 1st, traveling to China for business people hailing from the West, and especially North America, has been a nail-biting experience. Wanzhou, the head of giant cellphone maker Huawei, was arrested in Canada and her extradition was requested by the USA. She is charged with fraud because her company has allegedly had business dealings with Iran, a violation of US sanctions against the middle eastern country. Then the atmosphere intensified when Chinese officials stopped two Canadians, saying the pair was suspected of national security violations.
It is supposed by observers that the self-destructive mutual suspicions will not spiral out of control since neither side has any interest in provoking the people they want to do business with, and therefore will not publicly change their travel policies.
Unfortunately, sometimes mistakes are made. Last week the US tech company Cisco sent an email to their employees telling them that all non-essential trips to China would be suspended. The company caught the mistake and issued an apology stating that their travel policy to China had not changed.
American diplomats and businessmen will say in private that the two Canadians being held in China now is in retaliation for Meng’s detention, according to Craig Allen, the president of the US-China Business Council.
“If we don’t recognize that as a possible signal to American interests and to American businesses, then we would be willfully blind,” he says.
In an unusual and controversial move, the Canadian government detained Meng Wanzhou, chief financial officer to electronics giant Huawei. The arrest took place as Meng was changing planes on December 1st, in Vancouver, at the request of the United States.
Washington is requesting the extradition of Meng so she can face charges of Huawei using a shell company to sell electronic equipment to Iran, against the terms set forth by the US sanctions against Iran. The US also alleges that Huawei, under Meng’s leadership, misled American banks about the business it conducts with Iran.
The Chinese government called the US ambassador to Beijing to register its anger over the detention, insisting that Canada release Weng and the US cancel the order for her arrest. The official Chinese news agency Xinhua News Agency said that Vice Foreign Minister Le Yucheng “lodged solemn representations and strong protests” with Ambassador Terry Branstad. The Chinese government also summoned the Canadian Ambassador John McCallum, telling him that there would be “grave consequences” if Meng is not released. One of Canada’s provinces, British Columbia, said it was cancelling a trade mission
scheduled to visit China due to the detention of Meng. There is a fear that the Chinese will retaliate against Canada and arrest Canadians in kind.