TRADE MISSION REPORT China August 22 September 3 rd, 2015

Transcription

1 TRADE MISSION REPORT China August 22 September 3 rd, 2015 Participants: Randall Fairman Jack Zhao Submitted to USDA FAS

2 CONTENTS Click on subject to go to that topic. Executive Summary... 3 Recommendations China Production Summary... 5 Trip Itinerary Overview... 6 Datong regional visit... 7 Northeast Heilongjiang Regional Visit... 9 Sunwu County (25 August, 2015)... 9 Nenjiang Visit Dayangshu Visit North Heilongjiang Conclusions Jiamusi regional visit China pulse import/export meeting Meeting Overview Presenter Brian Clancey - Statpub Presenter US Dry Bean Council Presenter Government policy Presenter LiuLi Shanxi DRK Presenter LuoChengrong Yunnan Presenter Quyanwen Dayangshu Presenter Chenye Xinjiang Zhang xiaoming Heilongjiang of 20 P a g e Return to table of contents

3 EXECUTIVE SUMMARY Finding markets for US Dry Beans Objective Conduct research in China to examine market conditions and identify opportunities to fill worldwide orders with US Dry Beans based on 2015 production and demand in China. Results Light speckled kidney beans will not be adequate to meet the demand this year. It is very likely that India, Yemen and South Africa will all be forced to substitute pinto beans for light speckled kidney beans in places where they are not accustomed to doing so. This could be a great opportunity for a marketing campaign. Identifying Market Trends Objective Identify trends in short term and long term planting and production in China with a goal of assessing specific varieties which are likely to have greatest unmet worldwide demand next year and in the next five years. Results In the short term, light speckled kidney beans and lima beans have a significant unmet need. In the long term, corn in China is double the price of corn in the USA which makes it very difficult for Chinese farmers to grow beans instead of corn. Production overall in 2015 is less than half the production of 2014 but this could all change with government policy modification. Objective China currently represents 1/5 th of the world population and they have just now started to gain an appetite for beans. If Chinese people simply ate beans at 10% the rate of Americans they would be a net importer of dry beans. Objective Develop relationships with key members of the dry bean industry to allow for ongoing dialogue and mutually beneficial initiatives. Promoting Bean Consumption in China Building relationships Results Our trade mission visited dozens of growers, processors and traders in China building good will and creating opportunities to encourage increased domestic bean consumption. Our trade mission found that there is an increasing appetite for white bean flour and other bean varieties in China. It seems that this might be a good time for the US Dry bean council to consider commissioning a study on how best to promote dry bean consumption in China. Results Our trade mission built new relationships and grew other relationships in the China Dry Bean industry. As always Chinese hospitality was a blessing to the traveling delegates. The foundation for future partnerships seems to be healthy. 3 of 20 P a g e Return to table of contents

4 RECOMMENDATIONS It is very clear that the worldwide supply of light speckled kidney beans will not be adequate to fill the worldwide demand this year. As you look at the price trends over the last few years it is abundantly clear that many of the worldwide players have become increasingly unwilling to pay a premium for light speckled kidney beans compared to pinto beans. This trip identified the fact that bean production and processing people tend to be operating in their own region and the only organized group of folks in the bean industry is the import/export consortium. Earlier this year, the Chinese government declared the potato to be a fourth main staple in addition to rice, wheat and corn. The result has been a very highly organized campaign to increase domestic consumption of potatoes. With market conditions changing quickly and government policy potentially causing significant market changes we recommend a monitoring program. Pinto Bean Marketing Domestic consumption Continued monitoring The Chinese traders told us that quality and price sensitivity are highest in Europe and India and much lower in South Africa and Yemen. We recommend a marketing campaign to the traditional buyers of light speckled kidney beans in India, South Africa and Yemen. It occurs to us that it would clearly be in the Chinese Government s best interest for their people to consume increased amounts of protein from beans in place of meat. We recommend commissioning a study to find out how the patriotic potato movement got started in China. The International Year of the Pulse might be a natural time for the government to start a patriotic pulse movement that would change the world. We cannot recommend ourselves so we simply say that it is a pleasure to serve the US Dry Bean Council and we hope that the relationship will continue into of 20 P a g e Return to table of contents

5 2015 CHINA PRODUCTION SUMMARY As you read the entirety of the report you will begin to realize that we are reporting things as they are told to us and as a result there are many sets of conflicting information. In general we have handled the conflicting information as follows: 1.) When what we see with our eyes and hear from the farmers matches what we are told at the import and export symposium then we just trust that information. 2.) When we get conflicting information we try to think about whether the person speaking with us might have a motivation for a particularly high or low estimate. a. Sometimes we conclude that the farmers who are simply farming a small patch of land do not have the larger view. b. Sometimes we conclude that the large scale import/export folks are trying to create an impression of plenty or an impression of scarcity. Dark Red Kidney In 2014 the total production of DRK in China was at a historic high of around 70,000 tons. The following changes have occurred bringing the 2015 total production to about 62,000 tons. With carryover stocks at around 8,000 tons the total starting stock in 2015 is approximately the same as Shanxi reduced ~ 10,000 tons South Heilongjiang reduced ~ 10,000 tons Xinjiang increased ~ 8,000 tons North Heilongjiang increased ~ 4,000 tons Light Speckled Kidney In 2014 the total production of light speckled kidney was around 220,000 tons. Low planting has reduced total planting this year to 45,000 tons. Carryover stock is around 65,000 tons but with light speckled kidney beans the older beans are not easily sold because of loss of color. Black Beans Total production in 2014 was over 200,000 tons and less than 100,000 tons has been sold. Production in 2015 is around 50,000 tons which means that the starting stocks in 2015 are around 150,000 tons. White Beans With the current low value for white beans there is a growing demand in the Chinese marketplace for using white bean flower in bakeries. Production last year was very high but the carryover is not as strong because of this domestic consumption. Production this year is approximately 45,000 tons which is down from about 120,000 tons last year. Total production is as follows: Baishake 24,000 tons Spanish 9,000 tons Navy 8,000 tons Japan 4,000 tons Lima Beans Domestic consumption of lima beans has grown significantly to about 14,000 tons per year. This year the total harvest is 21,000 tons so there will only be about 7,000 tons available for export. About half of the exportable quantity will be large size and about half will be small size. Purple Speckled Beans There was a slight decrease in purple speckled beans compared to last year. Total production is about 17,000 tons. 5 of 20 P a g e Return to table of contents

6 TRIP ITINERARY OVERVIEW Datong Region Phase 1 - Datong Region Aug 2015 We spent 3 days in the Datong region talking with farmers and processors about their crop. We found that overall weather conditions were slightly dry and planting was slightly less than last year. This region is primarily about dark red kidney (DRK) and we will give more detailed observations in its own section. Phase 2 North Heilongjiang Aug 2015 In North Heilongjiang the farmers tend to be organized into cooperatives and so the bulk of our time was spent visiting fields with cooperative leaders and talking about their experience. Overall we found DRK planting higher than last year and all other bean varieties lower than last year. Phase 3 Jiamusi Region Aug 2015 We spent a total of 3 days in this region doing field visits and spending time with a cooperative manager. Last year this region harvested more than 18,000 tons of DRK. At planting, kidney bean prices were low so in general this region planted adzuki beans extensively. Phase 4 China Dry Bean Expo 31 Aug to 2 Sep 2015 We presented the status of the North American crop on behalf of the US Dry Bean Council. We also gained perspective from Chinese traders about the current status of the 2015 crop. We also learned about some important new government policies and considerations. 6 of 20 P a g e Return to table of contents

7 DATONG REGIONAL VISIT Farmers indicated that this region has been experiencing drier than normal weather toward the end of the season and as a result much of the harvest is happening a little bit earlier than they feel is optimal. Liang Cheng Harvest Estimates Liang Cheng is primarily a DRK region with several thousand tons of annual production. The farmers stated that they planted about the same amount as last year and production is about 80% of what it was last year when their weather was better. Tian Zhen Regional Visit The region around Tian Zhen appeared to have quite ideal weather for beans this year. The beans were fully developed and the farmers confirmed that this year has had excellent bean weather. Farmers stated that in a well planted field they can get a maximum of 26 CWT per acre. Liang Cheng Regional Visit To the South and West of Hohhot is thoroughly mung bean territory. As you drive toward the point above labeled Liang Cheng you slowly approach a high concentration of DRK. Crop Rotations Tian Zhen is typical of many areas in China where beans are grown. The combination of altitude and northern latitude make the growing season too short for any variety of corn to come to maturity. In this region they said that the typical crop rotation is for potatoes one year and DRK the next year. Cash considerations they have were like this last year: Income DRK gives same income at this indicated price. Potato $562 USD per acre $21 per CWT DRK $1,680 USD per acre $64 per CWT Sunflower $1,200 USD per acre $46 per CWT 7 of 20 P a g e Return to table of contents Based on these calculations it is not surprising that a lot of people in this area often stretch their crop rotations and push hard to plant as much DRK as they are able.

8 The farmer says they can go to the city and get some special sprays that help them plant DRK for 3 years in a row but the yield is not as good. Partner visit Nearby there is an advanced factory with electronic eye sorting as well as machinery to remove the shell from any type of bean and turn it into a flour. It is fascinating to see a multimillion dollar operation operating just a few miles from the ancient way of doing things. An important fraction of kidney beans in China are grown in marginal regions like this one where it is not possible to produce corn, wheat and soy. These specialized regions will likely continue to produce kidney beans unless there is a very fundamental change to the economics. Equipment This region is among the least mechanized regions in China that we have observed. Typically each family will have a donkey cart and regard their donkey as a member of the family. The harvest processing equipment is the same as that which has been used for centuries around the world. Datong Area Conclusions 50% of this region was hit by a drought that will result in a slight decrease in production. 50% of this region experienced good weather. Planting was consistent with 2014 planting levels. Ultimately we estimate that DRK production in this region will be 85% of the 2014 production levels providing a total of 11,000 tons of DRK. 8 of 20 P a g e Return to table of contents

9 NORTHEAST HEILONGJIANG REGIONAL VISIT Black beans everywhere What we found in every processor warehouse was large stacks of unsold black beans with some white beans. As we interviewed the local processors we found that many of them have literally not sold one batch of black beans this year. Sunwu County (25 August, 2015) Sunwu county of Heilongjiang Province is very near the Russian border. This region has a very active farmers association that helps to provide seed and coordinate the planting of farmers in the region. We had the opportunity to visit a few regional bean processors followed by good opportunity to visit fields and interview the head of the local farmers association. Sunwu processor visits One of the processors told us that the farmers are no longer holding the beans in their homes but have sent them to the processors but there is nobody to buy the beans. All varieties except DRK low harvest # s The processor guessed that this year in Sunwu county farmers would harvest (relative to last year) 2% black beans, 10% white beans, 40% light speckled beans and 250% dark red kidney beans. He told us it is simple economics for the farmers based on current prices. Although the DRK numbers are up significantly by percentage, this region is not typically a strong DRK region. The total tonnage of DRK is still less than 2,500 tons. Selling all forms of kidney beans DRK, Light speckled, Black beans, Adzuki beans, White beans, Cranberry beans, Purple Speckled beans Call of 20 P a g e Return to table of contents

10 Sunwu Economics The leader of the farmer s cooperative we visited offered us some insight into the economics of decision making for the farmers in 2015 for those in his region. The following table summarizes the situation as he saw it on that day for Sunwu County. Yield (ton/hectare) Price ($/ton) Revenue (USD) dark red kidney 1.8 $938 $1,641 light speckled kidney 2.1 $625 $1,313 black bean 2.5 $495 $1,213 white bean 2.6 $570 $1,482 cranberry bean 2.0 $670 $1,307 adzuki bean 1.4 $1,520 $2,052 soy bean 2.3 $920 $2,070 corn 9.0 $303 $2,728 Sunwu DRK Looking at the economics of the decision making in Sunwu county it was easy to understand why more of the farmers chose DRK than the other kidney bean varieties this year. The village leader said that DRK planting more than doubled this year for a total of 2,500 tons. The village leader indicated that crop development was good and the fields will be ready to harvest in a few weeks. Sunwu light speckled kidney and black beans Chinese farmers are by and large very patient people and if they have to wait a few years to get their money they are okay with that. In the case of black beans, farmers have been known to put their beans in their root cellar for two years where it is nice and cool and dark for up to 2 years waiting for the price to come around. Currently there are over 100,000 tons of black beans around China waiting for the price to come up. This year the price was so low for light speckled kidney beans that farmers wanted to do that but they were nervous that the beans would lose their color and so they went ahead and sold their light speckled kidney beans at a very low price. Now at harvest time the farmers have sold their light speckled kidney beans from 2014 and they have a meager 25% of last year s harvest available this year. Traders are very aggressively trying to buy up the light speckled kidney beans but the farmers are holding out to see what happens with the price. Farmers fear this might be their only cash crop this year. 10 of 20 P a g e Return to table of contents

11 people on the bus with us and so we all traveled together from Sunwu to Nenjiang. Nenjiang Visit Continuing along our path above we drove to Nenjiang. The field conditions throughout this region give evidence of good to excellent weather this year. Fields are evidently planted with less bean crop in 2015 compared to previous years. This trader and local processing plant owner talked with us about the changing face of bean planting in this region. China Speckled Bean Markets One interesting point that was found was the overall flow of speckled kidney beans from China. Overall traders have found the tolerance for quality problems to go down as you proceed down this list. Nenjiang is a region with large fields that are highly organized and mechanized. This region follows roughly the same economics as nearby Sunwu county described above but the land is a bit more fertile and a bit more expensive in terms of rent. Nenjiang DRK DRK planted area increased in Nenjiang because it was the most economically viable of the bean varieties suitable for this area. Total DRK production in this region went from about 800 tons to about 1,800 tons. Trade partner visit In a fortuitous turn of events our bus broke down between Sunwu county and Nenjiang and we were able to call our driver from a nearby city to pick us up. It turned out that there were two other bean industry 1. Best light speckled beans go to Europe 2. Next best light speckled go to India 3. Next best light speckled go to South Africa 4. Next best light speckled go to Yemen 5. Cranberry beans go to Pakistan Nenjiang market situation Last year the region around Nenjiang produced well over 250,000 tons of beans in total. The three major contributors to that total were black, white and speckled beans. This year the black beans were not grown and the white beans only had about 10% of the previous year s crop. Speckled beans went down by about 50% with a total crop by his estimate of 40,000 tons. This year total production in this region is less than 80,000 tons because international market prices for beans simply cannot compete with the price of corn in China. (Corn in China currently is priced at about double the internationally available corn price.) 11 of 20 P a g e Return to table of contents

12 Dayangshu harvest assessment The farmers and leaders in this region indicate that total planting in 2015 is about 40% of the total planting in In this region the percentages of various beans were held mostly steady from the previous year. The harvest estimates for this region are: Dayangshu Visit Continuing along our path above we drove to Dayangshu where we met with another local business leader from the bean industry. Late developing fields 20,000 tons black beans 25,000 tons white beans 25,000 tons light speckled kidney beans 10,000 tons purple speckled No DRK planted Nehe and Yian Traditionally the area around Qiqihar has had extensive plantings of various bean varieties with particular emphasis on white, black and speckled beans. In the past, this region has been flooded with highly mechanized harvesting equipment at this time of year and no such equipment existed this year. In the past we have seen extensive bean processing preparations at this facility and this year there is no activity at all. The fields in this region seemed to be quite a long ways from maturity. (Later on we found out that an early season hail required extensive replanting. The millet was destroyed and it was too late to plant anything else so they planted kidney beans in late June.) Interviews with farmers and processors indicate that this region produced 215,000 tons last year in black, white and speckled beans and this year the total is less than 10,000 tons. 12 of 20 P a g e Return to table of contents

13 North Heilongjiang Conclusions 3 roads North Heilongjiang produced around 510,000 tons of dry beans in 2014 and the conclusions we were finding were so different than last year that we found ourselves struggling with a way to make sense of the information. We decided to quantify our findings by breaking the road into what we thought were 3 pieces that somehow each represent one third of the Northern Heilongjiang crop. The data in the following chart does not exactly line up with previous observations because there is a subjective gut feel added based on the sum total of observations. Numerical estimates Variety Road 1 (tons) Road 2 (tons) Road 3 (tons) Level of confidence Subjectively, we feel rather confident that harvest will be a lot less because of less planting of all varieties. Subjectively, we feel confident that overall the crop looks good and yield will be good. North Heilongjiang black bean 8,000 19,000 1,000 28,000 white bean 15,000 28,000 2,000 45,000 light speckled kidney bean 25,000 15,000 3,000 43,000 cranberry bean 5,000 8, ,500 dark red kidney bean 1,500 5, ,500 purple speckled bean 3,000 16, ,000 Percent last year's crop 38% 61% 4% 34% Numerically, it is very difficult to quantify this amount of change based on our work. These numbers are what we will use to sort of cross check what we hear at the dry bean import and export exposition but it is difficult to put a confidence interval on this data. 13 of 20 P a g e Return to table of contents

14 JIAMUSI REGIONAL VISIT 2015 Crop Condition Thus far the crop appears to be progressing well. This region of China typically will harvest later than other regions so they are still a month away from their normal early harvest. Rains appear to be adequate and the crop is developing well. Baoqing Farming Economics The farmers in Baoqing typically plant 3 hectare of crops for each member of their family. This is the allotment that they will not have to pay rent for. If they want to plant more than this then they must rent the land from somebody else who is not using their allotment. Baoqing County The most important bean production region of Jiamusi is the area around Baoqing. This region has extremely fertile soil and excellent growing conditions with plenty of rain. This region typically grows wheat, corn and soy with other crops mixed in. Some of the land in this region is more hilly and not very conducive to large scale mechanized farming. Each year the farmers take these highly fertile lands that are not conducive to mechanized farming and plant whatever crop seems to be most profitable in that year. In 2013, the farmers in this region produced less than 11,000 tons of dark red kidney beans with excellent profit because of the 2013 price hikes. In response to this the farmers produced over 20,000 tons of DRK in We saw during our planting intentions and crop progress research that planting was less this year but we came to the region to make our best guess about crop progress and total production. Yield (ton/hectare) Price ($/ton) The farmers in this region anticipate revenue from their land as indicated in this table this year. They feel confident that if they hold their produce they can eventually get the prices indicated above and are likely to hold out for those prices unless something changes Jiamusi Production Revenue (USD) dark red kidney 1.9 $1,141 $1,641 adzuki bean 2.5 $1,141 $2,052 corn 10.0 $344 $2,728 Based on interviews with farmers and producers in this region as well as the processor that we visit each time we come it appears that DRK production in this region has gone down from about 20,000 tons in 2014 to about 11,000 tons in The only other meaningful bean production in this region in 2015 was adzuki beans. 14 of 20 P a g e Return to table of contents

15 CHINA PULSE IMPORT/EXPORT MEETING Meeting Overview Presenter US Dry Bean Council This year our company had the privilege of presenting on behalf of the US Dry Bean Council. In general the presentation given showed an increase in production over the last 5 years. This included an increase in production in 2015 compared with There were a number of presentations from international leaders in the pulse industry as well as leaders from the China pulse industry. Here I will give some highlights from a few specific presentations. Presenter Brian Clancey - Statpub The main focus of Brian s presentation was related to the fact that major worldwide commodity prices are very low and bean prices have not yet dropped as far as the other commodities. This fact means that bean acreage is higher. One point of interest to many was this plot which shows how the price of corn has decreased in the west but not in China. This helped these bean industry folks understand why it is harder for them to compete with corn for acreage. One interesting slide that Brian posted showed Brazilian production plus carry-in more than 300,000 tons below the 5 year average. This could be a market opportunity. This actually fit in nicely with much of what Brian Clancey had presented with respect to high pulse returns compared to other commodities and helped the Chinese businessmen to understand the differences. 15 of 20 P a g e Return to table of contents

16 Presenter Government policy On the second day there was an unplanned presentation from a university professor. We had the impression that his presentation was likely a response to concerns being expressed by the import/export community. The first half of his presentation focused on the recent decreasing trends in bean exports from China. He noted that from 2004 to 2012 there was a gradual increase but things have radically decreased over the following two years. He presented the following graphs depicting these trends. More farmlands for beans in 2016 from corn reduction in China Resource: 01/ html Source: nbd.com.cn Date: Sept 1, 2015 A recent article posted online talks about that China will plant less corn next year and more farmlands maybe available for beans. Elements of interest from this article include: China Agro Department sets up the goal that the corn planting acreage will reduce over 666,667 ha in The targeted provinces are mainly the 4 provinces in the northeast of China, including Heilongjiang, Jilin, Liaoning, and Inner Mongolia. More farmlands from corn reduction will be planted with grains and pulses. About 1/3 of corns in China will be adjusted and grouped to corns for feed. He explained that this is despite increasing prices for beans over those years and he stated that he recognizes that this is in part a result of government grain policy. He referenced new policy that is being put into place by the Chinese Government that will favor growing more beans in China starting in For an automated online translation of this Chinese Article click the following link: %2Fwww.nbd.com.cn%2Farticles%2F %2F html%20&from=zh&to=en&source=url&r ender=1 16 of 20 P a g e Return to table of contents

17 Presenter LiuLi Shanxi DRK Liuli informed us that there was a significant drought in Shanxi this year and this drought was most extreme in the South of the province and less extreme in the North. He indicated that many of the fields will produce very little beans this year. Presenter LuoChengrong Yunnan Yunnan Province is mainly a region focused on Lima beans. Tobacco and medicine crowding out Lima Luochengrong pointed out that there have been some advances in tobacco growing technology that now allows it to be grown in much higher land where lima beans have historically done well. As a result planting is down. Poland now important in Lima beans Poland is now taking much market share in Russia and South Africa. Poland produces Domestic consumption significant Last year when production was at 28,000 tons there was 50% domestic consumption. Now it seems that with reduced total production that the domestic demand is likely to consume 60% or more. Dry fields in Shanxi Province Liuli informed us that there was a lot less planting of DRK this year due to crop rotations and that the end result was that farmers planted other things. Liuli s estimate is that Shanxi DRK production is likely to be about 25,000 tons this year down from 35,000 tons last year. At the end of his speech he gave the gathered crowd some food for thought. He pointed out that in winter of 2013 the price of DRK went so high that it caused all kinds of losses for European companies. He made the point that this was a temporary win for China but in the long run now China has lost a market share in Europe that they may never get back. On some level the trust is broken in the relationship and the European markets simply will not allow themselves to rely on China for their beans. The European market is willing to purchase China beans if they are cheaper and they have need but they will not rely on China DRK. Prices for small size beans likely soft Poland has a lot of alternatives when it comes to the smaller beans and as a result the supply is large. The prices are likely to come down to 1,200 Euros per ton. Prices for large size beans likely strong Poland cannot compete on the large size beans so the price is likely to stay strong at 3,000 Euros per ton. Total Lima Bean Production Small size = 17,000 tons Large size = 4,000 tons LRK disappearing It is very difficult for the LRK to compete with medicinal herbs and tobacco for land space and as a result production is extremely low. This year the light speckled kidney beans appear to be short. If China runs up the price this year as they did in 2013 then China might just find out that people could lose the will to rely on China for their light speckled kidney beans. 17 of 20 P a g e Return to table of contents

18 Presenter Quyanwen Dayangshu Quyanwen did an excellent job of giving us a brief history of the weather conditions in Dayangshu in In the middle of June there was a weather disaster that resulted in a loss of significant millet crop. Based on the short growing time remaining kidney beans were the only alternative so there was a significant increase in the overall bean planting following the hail disaster. The following diagram represents the information presented about 3 year production trends in dayangshu in graphical format. It is good to remember that 2013 was a flood ravaged year and 2014 was a typical planting and harvest year. The decreases in production from 2014 to 2015 represents a fundamental shift in the confidence of the farmers in their ability to sell dry beans. 50,000 MT 45,000 MT 40,000 MT 35,000 MT 30,000 MT 25,000 MT 20,000 MT 15,000 MT 10,000 MT 5,000 MT 0 MT Dayangashu 3 year production totals Dayangshu totals In general, the numbers presented for Dayangshu seem to represent the most organized and well thought out numbers presented at this meeting. The totals for all beans harvested in Dayangshu for the last 3 years are as follows: ,000 tons ,000 tons ,000 tons China dry bean broader implications The trends in this region are a very important part of the total China market. Looking over the last few years this region accounts for around 1/3 of the total 18 of 20 P a g e Return to table of contents exports of all white and colored beans with the exception of DRK. Domestic consumption One of the points that was brought out was that the black beans continue to sit in storage because there is no domestic consumption. The white beans are actually selling domestically for extensive use in flour for Chinese bakeries. This was one of several presentations where the increasing role of China domestic consumption was expressed in terms of being a threat to the dry bean import/export business sector.

19 Presenter Chenye Xinjiang Xinjiang Cranberry Beans Historically the most important beans from Xinjiang have been the high quality cranberry beans shipped to Turkey. Prices have declined this year due to the international bean situation but prices did not change in time to change farmer planting behavior. Overall, 2015 planting and production is consistent with 2014 planting and production. Organized communities Mr Chenye informed the gathered community that in 2015 there was increasing experimentation with some organized communities (called bingtuan ) who have begun to grow Dark Red Kidney beans. These organized communities have the capacity to quickly ramp up production of agricultural products because they make decisions as a group. Zhang xiaoming Heilongjiang Overview Zhang xiaoming started off by telling us that his conclusions were developed by driving around talking to people and looking at fields for the last week. light speck black beans DRK Cran White 2014 carryover 65, ,000 20, harvest 45,000 40,000 15,000 27,000 48, starting stock 110, ,000 27,000 Light speckled kidney beans Zhang mentioned that the light speckled kidney beans are very controversial right now because there are so many people speculating that there will not be enough to supply the world demand. He said these are his estimates and it is important to remember that the carryover stock for light speckled beans do not have good quality because the pattern becomes dull. Black beans Zhang said for black beans that China is in a good position this year when you consider the combination of their carryover stock and their new harvest. Dark red kidney beans He expressed low confidence in his Dark Red Kidney Estimate for Heilongjiang. Dark Red kidney This slide indicates that the organized communities will produce a total of 10,000 to 15,000 tons of DRK in We interviewed Liuli and others after the presentation and everyone agrees that the increase in production of DRK in 2015 over 2014 is at least 8,000 tons. In the context of worldwide production numbers, this amount of production is very significant. 8,000 tons would represent more than 5% of the worldwide total of DRL available for cost based on trade or export.the bingtuan organized communities in 2015 have increased production from less than 2,000 tons in 2014 to more than 10,000 tons of DRK in White beans Zhang specified the following information about this years white bean crop: Baishake ~30,000 tons Japanese white ~5,000 tons Navy beans ~13,000 tons Zhang also indicated that white beans are being increasingly consumed in the Chinese baking industry. He is not sure of the carryover of white beans but does believe that there are 12,000 tons of navy beans being carried over. 19 of 20 P a g e Return to table of contents

20 TRADE MISSION REPORT China August 22 September 3 rd, 2015 Participants: Randall Fairman Jack Zhao Submitted to USDA FAS 20 of 20 P a g e Return to table of contents