Washington, 21 February 2010

Chinese farm exports are set to become a greater source of trade tension as China boosts its production and becomes a bigger player in world markets for labor-intensive crops, a U.S. agricultural economist said on Friday. Importers around the globe have already launched more than 30 farm trade cases against China in recent years, including U.S. cases aimed at stemming rising imports of orange juice, garlic and mushrooms.

"Personally, I think there will be more trade disputes," said Colin Carter of University of California-Davis, noting that problems with food safety issues have pared Chinese food exports in recent years.

"China will get through this food quality problem, trade barriers are coming down, and (disputes) will show up as anti-dumping cases," Carter said in an interview on the sidelines of the U.S. Agriculture Department's outlook forum. U.S. companies, steel producers and unions have filed dozens of domestic trade complaints against Chinese imports as exports of manufactured goods surged at a time of rising U.S. jobless numbers.

China has reacted with trade cases of its own, including new anti-dumping duties on U.S. chicken exports, which U.S. poultry exporters have said will price them out of their No. 2 market, worth $620 million for the first 11 months of 2009.

The political and trade strains between the two nations are unlikely to spill over into soybean trade, Carter said. Soybeans are the top U.S. export to China, which the USDA forecast will become the top overall foreign market for U.S. farm goods in a few years.

China depends on soybean imports for vegetable oil and the high-protein meal used to feed its massive and expanding livestock sector.

If China had to produce its own soybeans, it would need 30 percent more farmland, Carter said. China has more than twice the number of poultry as the United States, and more than four times as many hogs, USDA economist Fred Gale told the conference.

Gale noted farmland is in short supply in China, which holds 9 percent of global agricultural land but 22 percent of world population.

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By Roberta Rampton, Reuters ... for Commodities Now