Chinese crusher positions itself on the new Silk Road

The Chinese government would like the historic Silk Road to be prominent once again, and U.S. soybeans could play an important role.

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Shaanxi Shiyang Group established its soybean crushing business in Xi'an, a city far from the Chinese coasts and other competitors. Preferring to rely on a strong transportation network that includes roads, river and rail the company believes it will be best for their business to be near their customers.

Sound familiar? It did to Governor Kim Reynolds and other members of an Iowa Soybean Association (ISA) trade mission last week as they visited the company.

"We have a lot in common," Reynolds told the CEO while pointing to the state of Iowa on a map on the back of an ISA business card. "We are in the center of the country far from the coasts too."

Chang Qingshan, CEO of the Shaanxi Shiyang Group, hopes the strategic position will capitalize on the reemergence of the Silk Road.

The Silk Road was an ancient trade route between China and the West during the Roman Empire. It’s how silk from the orients make it to Europe and how China received western goods in return.

China President Xi Jinping announced in 2013 a new $900 billion trade corridor would reopen channels between China and Central Asia, the Middle East and Europe. The new Silk Road will be on land and sea with experts saying it will be a way for China to continue to boost global trade.

"They don’t have as much competition in the central part of China. If you look at the re-establishment of the silk road going north and west out of China there’s a lot of advantages logistically," Kirk Leeds, ISA CEO, said after touring Shaanxi Shiyang Group's facility.

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Shiyang Group was first established in 1992 and transformed into a joint stock limited company in 1999. The Group focuses mainly on farming, breeding and processing but it also has integrated into other areas like the sale of soybean cooking oil. The CEO told the ISA delegation and Governor Reynolds that 35 percent of the beans they crush is from the United States.

"They told us that 35 percent of their soybeans come from the U.S., but that leaves 65 percent that didn’t," Leeds said. "You have to listen to customers, but at the end of the day when you look at the total value of soybeans, consistency, on-time delivery and financing, they know there is an advantage in buying from the U.S."

Qingshan told the Iowa delegation he continues to be concerned with foreign material in shipments coming from the U.S., but as the Iowa group drilled into the numbers, they found the percentage was below the allowable rate for the beans they had purchased.

Currently, one out of every four rows of soybeans are exported to China. The country is by far the largest soybean importer projected at 83 million metric tons, or a little more than 3 billion bushels.

Jeff Jorgenson, an ISA director from Sidney, and other U.S. farmers would like that number to increase as large surpluses drag commodity prices down.

“There’s no better opportunity to sell soybeans than right now," Jorgenson said. "There is affordability, and we have plenty of supply, so obviously we see that in the markets. There is no better opportunity than having the folks we have in China with  Ambassador Branstad, with the United States Soybean Export Council and our Governor that we shouldn’t be able to make strides in moving more soybeans to China.”

Originally published for the Iowa Soybean Association. Read more articles at www.iasoybeans.com.

 

Missouri River flood recovery

By Joseph L. Murphy

Today driving through the I-29 corridor near Iowa towns like Hamburg and Percival you would never know the area had experienced a widespread flood. Crops are green, businesses are open, and people are getting back to their normal lives. That was not the case one year ago when the over swollen Missouri River breached levees in Fremont County sending water on a destructive course killing crops, destroying roads and ruining homes from Sioux City to Hamburg.

Leo Ettleman and Jeff Jorgenson stand on a recently rebuilt levee near the Missouri River. The U.S. Army Corps of Engineers repaired the levees back to the original flood protection giving residents the security to rebuild their farms and homes. (Photo: Joseph L. Murphy)

Leo Ettleman and Jeff Jorgenson stand on a recently rebuilt levee near the Missouri River. The U.S. Army Corps of Engineers repaired the levees back to the original flood protection giving residents the security to rebuild their farms and homes. (Photo: Joseph L. Murphy)

People in Iowa, Nebraska and Missouri, had to deal with the prolonged flooding and damage. Farmers like Jeff Jorgenson, an Iowa Soybean Association Director, and Leo Ettleman, an Iowa Soybean Association member, witnessed significant losses and damage to their cropland, homes and roads. Some areas dealt with floodwaters from June to November of last year.

“Overall we are very pleased with the progress.” Ettleman said looking at one of his soybean fields. “The goal was to get our security back, through flood risk reduction, to where we could get on with our lives, get our homes back, get the roads back and get commerce back.”

To accomplish that, they needed help from the federal government to rebuild levees that were breached during the flood. Ettleman along with other farmers in the area formed the group Responsible River Management (RRM) That group has been credited with creating a unified voice for agricultural interests in the area while making flood control needs known to the Army Corps of Engineers.

“Some of the projects in the past have been detrimental to agriculture and to flood risk,” Ettleman said. “Now they are (U.S. Army Corps of Engineers) starting to see, by us being at the table, that those things need to change.”

The main focus of the group following the flood last year was to regain flood control at the original 100-year protection levels. Due to a lack of funding the U.S. Army Corps of Engineers originally planned to repair the levees at 25-year flood levels. By doing that crop insurance would be jeopardized for many farms in the area. After a flood of calls from farmers and others involved with RRM, the federal government recognized the importance of rebuilding the levees to the original strength.

“Now, I think they see that when flood control fails everything fails,” Ettleman said about the U.S. Army Corps of Engineers. “Fish and wildlife projects were shot, recreation was shot, and everything fails when flood control fails.”

In late December, the U.S. Army Corps of Engineers received the funding that they needed to restore the levees to the original strength. That, combined with a mild winter, allowed the construction projects to go full speed ahead. By the beginning of March, the levees repairs were completed.

“The protection that they are helping to provide (RRM) for Fremont County is tremendous,” Jorgenson said. “Otherwise you feel like you are getting stepped on. The RRM understands policy better than most of the people at the state house when it comes to the U.S. Army Corps of Engineers and the Department of the Interior.”

Once the protection of their farms and fields were secure both Jorgenson and Ettleman said they were able to focus on recovering from the floodwaters and preparing their fields for spring planting. “The outlook in October was very meager because we didn’t know if we could get back in and start farming again,” Jorgenson said. “For the most part we were able to plant like normal this spring. The weather bailed us out. Otherwise, it would have been a whole different situation.”

The mild winter weather allowed farmers in the area to fill holes and move sand off of many fields in the area. Jorgensen said that he moved 4,000 yards of sand a day for twelve days to get just one 80 acre section cleaned up. Today the crop stands look healthy in the impacted fields, and both Ettleman and Jorgenson are optimistic for average yielding beans. Although they are concerned that continued dry weather could impact the crops quickly because of the sandy soil. “We’ve got good stands, and we’ve had some timely rains,” Ettleman said. “ We’re very pleased with the progress.”

Neither farmer would have expected to be in this good of a situation after the destruction they experienced last year. Now they have optimism that newly constructed levees can offer the protection needed for them to concentrate on their farms. Ettleman hopes that, in the next five years, his farm and life will be back to normal.

“There’s about two years of progress done now, and it happened in the last six months,” Jorgensen said. “But now it will slow down because we will be fine tuning the soil to get the production back to where we want it. That will take time.” For more information on Responsible River Management you can follow this link: http://responsiblerivermanagement.com/