The Columbia Basin Century
The Columbia Basin Food & Beverage Processing Survey 2014 highlighted seven recommendations necessary to position the Columbia Basin as a globally recognized food and beverage processing region: 1) Develop a Hospitality Program – accomplished in 2015 by Washington State University Tri-Cities 2) Develop a Culinary School 3) Develop a Food Processing Training Program 4) Develop a Technical Skills Training Program 5) Produce an event to showcase locally processed foods to buyers – accomplished with the recently completed and highly successful FABREO Expo 2015 6) Develop a public relations program – currently being implemented with local, regional and national media and 7) Develop the Strategic Gateway Concept.
The final recommendation, number seven, is the most exciting, while also the most challenging. The Strategic Gateway Concept is designed to position the Columbia Basin as the strategic gateway for the food and beverage industry, and all support industries, between America and Asia. It’s vision is ambitious: 1) Trade and investment opportunities between Columbia Basin and Asian food and beverage companies 2) Cooperative networks between Columbia Basin and Asian educational, packaging, research & development, storage, and logistics companies and organizations and 3) Cross promotion and participation between the FABREO Expo and Asian food and beverage trade shows. Why Asia?
Asia is the world’s economic growth engine. Many refer to the 21st Century as the “Asian Century” preceded by the 20th “American Century” and the 19th “British Century,” each claiming their century title through manufacturing and trade dominance. Asia is the driving force in worldwide economic growth, projected at 6.4% in 2015, home to over half of the world’s mega cities and 53% of the world’s urban population. Over the next decade Asia is projected to overtake Europe in number of billionaires.
Asia and the Columbia Basin are a natural fit. Because of the Columbia Basin’s strategic location in the Pacific Northwest, access to world-class ocean and air transportation featuring transit times shorter than any other U.S. location, abundant international trade resource providers, local storage, rail and highway transportation and abundant crops and processors to meet the needs of the Asian consumer, the Columbia Basin is the natural Strategic Gateway between America and Asia for agricultural products. But, where does one start? Asia is a large and complicated target, 49 countries comprising over four billion inhabitants, multiple languages, cultures, histories, politics and economies. Many are probably wonderful opportunities for the Columbia Basin, many are probably not. Why not start at the top, with a country whose growth and needs present one of the greatest business opportunities in American agricultural history!
China is the “El Dorado” of Asia. In 2014, China became the world’s largest economy by producing $17.6 trillion in economic output, followed by the United States at $17.4. We have come to expect a “Made in China” sticker or stamp on most everything we purchase, creating continual trade deficits. The exception is agriculture, where the United States has a trade surplus. The U.S. accounted for over 24 percent of the value of China’s agricultural imports during 2012 – 13, a larger share than any other country. Sales doubled from 2008 – 2012, reaching nearly $26 billion in annual sales.
While bulk commodities such as soybeans, wheat, barley, rice and corn dominate China’s imports, a rising middle class (larger than the population of the United States), reflecting rising incomes, education, a desire for the Western lifestyle, and the proliferation of fast food outlets have fueled an increased demand for higher valued, specialty food and beverage products such as wine, beer, bread, cookies, pastries, cheese, butter, yogurt and ice cream. The value of these imports grew more than threefold during 2009 – 2013, reaching $764 million.
Although China boasts of a large land mass stretching over 3,000 miles, similar in size to the United States, its agricultural production capacity falls short in feeding its 1.4 billion plus population. Imports have become a necessity. Investments in foreign food processing facilities, such as the recent acquisition of Smithfield Foods, the largest ever Chinese acquisition of an American company, have become a reality. Consequently, a wonderful opportunity exists, not only for the fertile plains and valleys dotting the American landscape, but especially for the Columbia Basin.
America’s share of China’s top agricultural imports (2012 – 13) fit comfortably into the Columbia Basin basket: Meat (25% share of China’s imports, #1 world ranking), Cereal Grains (42% share of China’s imports, #1 world ranking), Dairy (10% share, #2 ranking), Fruits and nuts (13% share, #4 ranking), Wine and Beverages (3% share, #7 ranking) and Vegetables (2% share, #5 ranking). The United States Department of Agriculture (USDA) predicts this import surge will continue to grow through 2023.
But, all of this is merely wide-eyed enthusiasm without the right partner, an organization that not only understands China, but also the West. We reached out and fortunately the Hong Kong Trade Development Council (HKTDC) reached back. Hong Kong reflects its Chinese heritage while embracing its British history. Since the late 1970s, Hong Kong has positioned itself as a major trading and financial center, especially as it relates to China. Even with its sovereignty transferred from the United Kingdom to China in 1997, Hong Kong has remained the “Pearl of the Orient,” with one of the freest and most robust economies in Asia.
Recently, the HKTDC launched the Pacific Bridge Initiative, promoting Hong Kong as a portal for U.S. companies eager to access China. Their Pacific Bridge Initiative and FABREO’s Strategic Gateway Concept are complementary, providing the infrastructure for a mutually beneficial economic development future between the two regions. We have agreed to move forward on a journey of unlimited potential, new relationships and unseen opportunities. With a fair wind and a strong current, the Asian Century may well become the Columbia Basin Century.
Trends That Will Shape Asia’s Economic Future, Part 1, February 4, 2015; Part 2, February 11, 2015, The Asia Foundation: In Asia
China’s Growing Demand for Agricultural Exports, USDA, February, 2015
U.S. Agricultural Trading Relationships With China Grows, USDA, May, 2015