Meeting Chinese Demand Face to Face: Please Sir Call Again

China-Economic-Growth     I had one of those magic moments this afternoon.  This past week has been a busy one for me.  Last week I was speaking on the grain markets near Chatham Ontario, then in subsequent days turning the page and speaking about farmland values.  Little did I know in the audience this past Thursday in Alma Ontario, was a man from China.  He had come to hear what I had to say about farmland values in Ontario.

It was just the day before that I had to answer a question from another farmer 200 km to the southwest about the Chinese buying farmland in Ontario.  My reaction at the time was it didn’t matter to me.  This is a free country and all of us got here by immigrating from somewhere.  If that means people buy Canadian farmland overseas, so be it.  Canadian farm country is full of people who crossed the oceans looking for a better life.  Needless to say, having a man approach me from China at a presentation on farmland values brought many things home.

I greeted the man warmly, told him of my own experience in Asia after asking him where he was from.  He told me he was particularly interested in farmland and my presentation.  I engaged him warmly and quickly pulled out my business card and in truly Asian style; I gave it to him, carefully holding it out with two hands.  He laughed at that, obviously somewhat surprised that this Canadian farmer might know that.  I digress. I just try hard.

I should have got a clue from an earlier part of the presentations in Alma that day.  I was presenting about farmland values for Farm Credit Canada along with Laval University agricultural economist Maurice Doyon.  Maurice and I had presented last year together.  It just so happened this year that part of Maurice’s discussion was about China and how that country is changing.  Those changes hold out the real possibility for Canadian agriculture.  As Maurice was presenting on China, our Chinese attendant put his hand up and helped Maurice with some of his points.  Nobody knew this man, but voluntary input toward Maurice was certainly appreciated.

Dr. Maurice Doyon laid out this Chinese perspective from a very Canadian, Quebec perspective.  He talked about how Chinese authorities want to reduce their reliance on western markets.  He mentioned their latest 5-year 12th plan, which was adopted in March 2011, which aims to reposition their economic perspective to more consumers spending and less emphasis on exports and investment to create a greater middle class.

Of course this is a long and winding road, as Chinese society gets richer it is changing, which means many things.  Of course one of those is the change in diet, which we’ve heard about for many years.  In 1980, the Chinese ate 13 kg/person of meat, but by 2012, that number had risen to 53 kg/person.  Pork is the meat of choice for many Chinese, and of course feed grains are needed to feed these animals.  China now produces more corn than rice, and as we all know they import lot of corn and soybeans.  It keeps those markets boiling daily.

With 1.4 million people, as of 2014, China is now the world driver of almost all agricultural commodities.  Dr. Doyon documented that now the Chinese need to import, pork, beef, coarse grains, milk products and rice.  Dairy consumption is increasing.  According to Dr. Doyon, if all of China’s large cities reach the level consumption of Beijing only (50kg), 16 MMT of additional milk would be needed.  This figure approaches New Zealand’s annual production of 20 MMTs.

It is all so hard to imagine.  However, it’s called “potential”.  Dr. Doyon laid out many strategies for Canadian agriculture to capture many of those opportunities that might exist.  Of course the question is how do we realize that potential and capture those future opportunities?  With 255 million Chinese moving from rural to urban areas over the next 16 years, that’s the equivalent of creating a new city like Windsor Ontario every 8 days.

With that as a backdrop, one lone Chinese man shows up at our presentation last Thursday in Alma Ontario.  Of course I should have asked him, what Canadian agriculture could do for his country.  How can we capture some of these agricultural opportunities?  Needless to say, I was so taken a back; I just tried to put my best foot forward.

So you never know, maybe he was a Chinese investor with a billion dollars looking to buy land, I don’t know.  However, what I do know is it was a magic moment in time, when Chinese demand for whatever reason showed up right in front of me.  Please sir, come back and visit, it was such a pleasure to meet you.