A few years ago, an entrepreneurial Ottawa funeral director was part of a business group travelling in China.
He returned to Canada enthusiastic about the business opportunity.
There are more than a billion people there, he told a Canadian interviewer. Many of them are old and they all have to die. Just a fraction of that business would be a godsend for aspiring undertakers.
It was a bit like that last week as American farmers, business leaders, bankers, academics and bureaucrats gathered in Washington to try to gauge the prospects for U.S. agriculture.
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China, while not represented at the two-day forum in one of Washington’s power hotels, was everywhere. It has more than a billion people. They are getting richer and they have to eat.
Speakers speculated. Economists cautioned. Hallway conversations often revolved around China’s potential.
Brad Anderson, a grains analyst from Memphis, summed it up as “the China factor.” China has become the great puzzle in world food trade. With its enormous potential appetite but unpredictable moods, China has replaced the Soviet Union as the country that can make or break the market in any given year.
And American grain exporters and policy planners haven’t got a clue about Chinese intentions or prospects.
Will it respond to growing prosperity among at least some of its 1.2 billion citizens by importing more food?
Will it stick to its on-again-off-again policy of food self-sufficiency?
Might economic reforms turn it into a permanent food exporter and a major competitor for North American sellers?
“Obviously, there is a great deal of uncertainty about China’s role next year,” U.S. department of agriculture economist Peter Riley said.
“While its farm sector has displayed an increasing market orientation, the presence of the central government is still large.”
And that is the greatest problem for Americans trying to figure out the China puzzle.They are accustomed to basing their judgments on market conditions, supply and demand.
China remains the last major world economic player where solid market intelligence is hard to come by and where commercial policy reflects government political needs as much as market conditions.
It appears to be driving American policy and export forecasters to distraction, joining weather as one of the two greatest uncertainties.
It is a issue for Canada as well, of course, but less so.
The Canadian Wheat Board has a longstanding relationship with China and something of a “preferred supplier” status. Canadian traders are confident that even if China does pursue self-sufficiency, it will be cheaper to import grain into the Chinese east coast from Canada’s west coast than to move it by train across China’s vast interior from producing to consuming areas.
The Americans, with larger volumes at stake and lacking the depth of Canada’s political and commercial ties and history with China, appear uneasy and confused at the unpredictability.
