Brief Summary of Minutes of Annual Meeting

Minutes of the WCC-101 Business Meeting April 17, 2003

Cathy Durham, as Committee Chair, called the meeting to order. Minutes of the 2002 meeting were approved. Brenda Sternquist was elected as the Vice Chair & Secretary for the coming term.

Bryan Lohmar assumes the role of Chair for the coming term.

Cathy Durham assumes the role of Past Chair for the coming term.

Tom Wahl continues in his role as co-Chair and permanent head of the committee‘s secretariat, located at the IMPACT Center, Washington State University.

Brad Gilmour retires from his position (as Past Chair) on the executive, but agreed to continue participating as a conference organization team member.

4. The location and focus of the 2004 meeting was discussed. It is typical to have the meeting at a location convenient for a member of the executive as the executive also serves (with others) as conference organizers. Vice Chair Brenda Sternquist agreed to investigate holding the meeting at Michigan State University.

There was some discussion about the timing of the meeting. Some members would like to have the meeting earlier in the year, perhaps March. Others indicated that later in the year perhaps the end of May would work better for professional schedules.

Topics for the meeting ranged from rural education, rural development to specialization zones in areas. The topic of Market, Myths and Mavens was generally supported as being broad enough to draw a variety of interests.

Cathy Durham and Brad Gilmour noted that the first meeting announcement needs to be out in October to provide sufficient lead time for prospective presenters and attendees. If the announcement is to get into professional association newsletters and other media on a timely basis, it should be finalized and submitted to such associations by the 2nd or 3rd week of September. It was also noted that vigilance is warranted: the executive needs to remind professional associations to keep the notice in subsequent newsletters and media until the meeting and workshop have been convened.

As Chair, Bryan Lohmar will take the lead in notifying interested professional associations, industry, academics, and government officials about the workshop. He hopes to draw on the resources and support of his executive and conference team, USDA-ERS and the Impact Center in drawing up and disseminating the notice.

5. It was moved and seconded that the meeting be adjourned.

Submitted by Brenda Sternquist

An industry panel on Marketing Food and Agricultural Products in China was held as part of the WCC-101 Symposium. The speakers‘ presentations and discussions covered topics in exporting, distribution, business development, retailing, financial arrangements, phytosanitary rules, and government assistance for exporters. Panelists include a number of Pacific Northwest businessmen and China experts. These included Marc Cool of Barenbrug USA (a seed company); Bill Gilmour-Bank of America, Rob Russell-Strategic Ventures (a project management and marketing consulting firm), Buzz Chandler-Asean Corporation (exporter of North American processed foods to Asian markets) and John Szczepanski-Oregon Department of Agriculture. A presentation on retailing in China was made by panelist Brenda Sternquist from Michigan State University.

A proceedings from the meeting is available in PDF format on the WCC-101 web site - http://www.china.wsu.edu.

Multilateral Agricultural Negotiations: The Interests and Positions of China, the United States and Other Major Players. Brad Gilmour and Michael Swidinsky
The authors review the main features and achievements of the Uruguay Round (UR) as well the challenges remaining. Using UNCTAD‘s Agricultural Trade Policy Simulation Model, the authors then assess the impacts of various provisions and proposals, focussing on the Harbinson Text and "Special and Differential"(S&D) provisions in particular. While the analysis suggests that developing country producers in aggregate do benefit from the S&D provisions analysed, it seems that some of the provisions better meet development objectives than others and that some even have deleterious effects. Speaking generally, consumers in developing countries are adversely affected by S&D provisions. As a rule, overall well-being in developing countries improves with S&D provisions that open up markets elsewhere but is adversely affected by S&D provisions that are "protective" in nature and result in fewer contested markets at home and abroad.

WTO Market Opening in Agriculture: The Chinese Domestic Context. Terry Weidner - This paper examined the Chinese economic and political forces influencing China‘s market opening as a member of the WTO. China pledged not only to cut tariffs on virtually all agricultural products from the US, but to end a number of non-tariff practices such as import bans, illegitimate licensing demands and the manipulation of phytosanitary standards. However, enforcing these standards will result in grim consequences for thousands of Chinese rural localities in the northeast and interior which produce grain and other crops that cannot compete with developed countries. Market opening may be complicated by China‘s fears of social unrest and sensitivity to foreign pressure.

An Analysis of the Lumber Products Trade Patterns between Shanghai and Washington State. Sheng Wang and Riley Moore - China had just 0.78 percent of the total world market share of U.S. exports of hardwood lumber in 1996, but by 2000, China had increased the amount to 4.41 percent, an increase of 6.5 times. With Hong Kong now part of China, China has become the second largest importer of U.S. hardwood lumber, after Canada. Opportunities for exports of U.S. forest products in the housing sector to China lie in the following areas: (1) Packaged housing projects and in-country 2x4 style housing continues to penetrate the market. (2) Chinese groups partnering with U.S. suppliers and technical support to build multi-story timber-frame housing and commercial structures. (3) Promotion of U.S. wood products to Chinese door and window manufacturers.

Trends in China‘s Horticultural Trade - Persistent or Dynamic? Colin A. Carter and Xianghong Li - An abundant low cost rural labor force together with varied climate and topography gives China a strong comparative advantage in horticultural products. Vegetables, fruits and their processed products are the most important trade category. Eliminating the effects of some important macroeconomic factors, our analysis suggests that China‘s horticultural trade patterns have not changed much since 1988. After WTO accession, China‘s horticultural farmers will presumably have better prospects to expand output. With greater integration into world markets, China will be able to improve its financing and marketing skills. China‘s ability to provide high quality horticultural products will increase as a result and China could become a very competitive exporter in the world horticultural market.

Segmenting Consumer Preferences toward GM Foods: Implications for China‘s Food Culture. Quan Li, Thomas I. Wahl and Jill J. McCluskey - China has only 7 percent of the world‘s cultivated land to feed 22 percent of the world‘s population. On a national basis, food expenses take 40 percent of Chinese family spending. The marketing outlook for GM foods, especially the products with health benefits, is positive. Keys to marketing GM foods in China can be summarized as follows: (1) The core market for GM foods is the knowledgeable consumers, who are better-educated younger people. (2) Product information about GM foods, either product-enhancing attributes or process enhancing ones, should be presented to consumers, who still do not have much knowledge. (3) Misunderstanding and ignorance of GM foods exists. The solution is education. Biotechnology learners know little about GM foods. But when they are presented with benefit information about GM foods, they are likely to change their attitudes.

China Buyer-Supplier Relationships: The Influence of Ownership Type. Brenda Sternquist, Zhengyi Chen and Ying Huang - China is undergoing a transformation from a system of product allocation to a market based system, requiring that retailers assemble a line of goods likely to meet their customer‘s expectations. To understand how the buying system works in China‘s new marketplace, we analyzed data for three types of retail ownership: state-owned enterprises, privatized former state-owned enterprises and foreign joint ventures and organic enterprises. We conclude from preliminary data that the major differences in buyer-supplier relationships are not based on the three types of ownership, but other considerations. If our results are representative of the industry as a whole, the retail state-owned enterprises have been quick in adapting a market based organizational structure.

Following China‘s Onions from Farm Gate to Retail. Fred W. Crook - After studying onion marketing efforts in the provinces of Gansu, Shandong and Henan provinces, we reached the conclusion that at present China‘s capacity to move farm products from farm gate to consumers is limited. (1) Current macro-economic policies are not conducive for firms providing the links. (2) Firms have a difficult time getting access to capital. (3) Weakness in the banking system. (4) Capital allocation system. (5) Weakness in the legal system-contracts, intellectual property rights. (6) Weak auditing and accounting systems.

Westernization in China: A Case Study in Processed Potatoes. Kynda Curtis, Jill McCluskey and Thomas Wahl - The demand for western-style convenience foods is growing around the world, especially in China. To measure this westernization trend, data from a survey of Chinese consumers in Beijing is evaluated using a multinomial ordered logit model to determine which consumer attributes influence the probability of consuming western foods such as French fries, mashed potatoes and potato chips. Results show that higher income levels and positive opinions concerning the taste characteristics of western foods have a significant influence on increased consumption of all three processed potato products. Additionally, younger ages and female gender were highly significant indicators of increased French fry and potato chip consumption.

Water Management Reform, Water Use and Income in the Yellow River Basin. Jinxia Wan, Zhigang Xu and Scott Rozelle - The overall goal of the paper is to better understand water management reform in China‘s communities. Based on a random sample of 51 villages, 189 farmers and 378 plots in four large irrigation districts in Ningxia and Henan provinces, results show that two of the main forms of water managements reform, Water User Associations and contracting, have begun to systematically replace traditional forms of collective management. When managers in reformed organizations are provided with incentives, they save water. Given China‘s concerns about national food production and poverty alleviation, the reductions in water do not lead to reductions in either production, income or higher incidences of poverty.

Water Management Reform and the Choice of the Contractual Form in Rural China. Quiqong Huang, Scott Rozelle, Jinxia Wang and Siwa Msangi - In rural China, only 40% of the water allocated to irrigation is effectively used. Since the 1980s China policy makers have promoted water management reform. The current management forms found in China are: leader-run management system, share contracting system, and individual contracting system. Our analysis shows that in villages with canals that require a lot of maintenance, village leaders manage canals themselves. However, in villages in which the land is fragmented, leaders contract out irrigation services to individuals. Finally, when the leader is busy managing other activities in the village, leaders delegate responsibility for canal management to individuals.

Long-term Projections of Bovine Meat in China: Focus on Production Potential. James R. Simpson - Projections to 2030 for China using the computer program ANFEEDPROJ include beef consumption supply per capita growing from 3.9 kg in the base period 1999-2001, to 5.5 kg in 2010, 6.5 kg in 2020 and 7.5 kg in 2030. Cattle inventory (including dairy cattle) will increase from 104 million head in the base period, to 123 million in 2010 and 2020, and to 128 million in 2030 under the scenario called "robust" in which it is assumed that the economy grows at 7.0 percent annually from the base to 2010, 5.5 percent annually from 2010 to 2020, and then 4.5 percent annually to 2030. It is concluded that China can basically meet its cattle feed requirements without additional feedstuffs imports, primarily due to the large proportion of crop residues fed to them. However, while imports of energy feeds for the entire livestock and fish sectors will not be required, potential protein shortfalls point to the need for significant imports if appropriate agricultural sector policy decisions are not taken.

An Analysis of the Chinese Banking Industry and the Challenges Facing it after China‘s Accession to the WTO. Haitao Zhu and Riley Moore - The banking industry is a vital sector in China. During the 15 year negotiations on China‘s entry into the WTO, three years were devoted to the negotiations relating to the banking industry. Under WTO agreements, China will allow foreign banks to conduct foreign currency business involving Chinese clients beginning one year after accession, and to allow them to conduct wholesale Chinese currency business two years after that. Five years later, foreign banks will be able to offer individual services to Chinese citizens, and all geographic restrictions will be eliminated.

Additional Accomplishments Attached to Minutes

Agribusiness and Food Marketing in China. Proceedings of WCC-101 Annual Meeting, April 17-18, 1003. Thomas I. Wahl and Cathy Durham eds. IMPACT Center Publications, Pullman, WA 99164