Thursday, November 24, 2011

Happy Thanksgiving!

Happy Thanksgiving everyone! I hope that you are able to have a safe and happy thanksgiving with your family and friends. We have so much to be thankful for!

Noah Hultgren

Tuesday, November 8, 2011

Korea is a Growing Market

I came across this article by a colleague of mine with the Minnesota Corn Growers, talking about the opportunity we have in marketing our corn in Korea. It was written by Jonathan Eisenthal, and was published in a wide variety of agricultural publications. I caught this one in the Iowa Ag Connection:

"Korea Offers Strong, Growing Market for Minnesota Farmers
By Jonathan Eisenthal: Minnesota Corn Growers

Gov. Mark Dayton led a Minnesota trade mission to South Korea from Sept. 25 through Oct. 1. The delegation included Minnesota farmers who found that not only is Minnesota's agricultural connection with South Korea strong (it is America's fifth largest ag importer), but the prospects for growth are almost certain, thanks to the recently concluded Free Trade Agreement between the US and South Korea.

John Luepke, a farmer in Nicollet County, just north of Courtland, took part in the mission, representing Minnesota Corn Growers Association. He learned that South Korean changes in regulations affecting Korean pork producers, due to go into effect in 2012, will create an opportunity for expansion of American pork sales there--already a sizeable market.

Luepke lives with wife Lorna on the farm where his grandfather was born, which has been in the family since 1881. He raises sheep for breeding stock and produces a hundred acres of corn. He is a director of Minnesota Soybean Processors in Brewster and is a founding member of Heartland Corn Products in Winthrop. He became a director for MCGA in January this year. John had a 35-year career (1973-2008) at 3M in New Ulm, after which he joined the board of the Nicollet-Sibley Corn and Soybean Growers Association.

Here is his report on the trade mission.

I was honored to represent the Minnesota Corn Growers on the Minnesota Mission to Korea Sept. 25 --Oct. 1. Kevin Paap picked me up at 2:30 A.M to catch a flight to Detroit where I shook hands with Mitt Romney. The flight was 14 hours and flew across the north coast of Alaska thru Siberia to Korea. The plane burned 235,000 pounds of fuel. It's an hour drive from the Incheon airport to central Seoul. We drove over and along the Han River, which has 27 road bridges and 3 rail bridges. Seoul has about 10 million people but including the satellite cities the urban area totals 25 million. It is up to 60 miles across.

Tuesday: We went to the Korean War Memorial which was quite lavish and included the names of 33,000 US dead as well as soldiers from 14 other countries. We drove past a 600-acre US garrison that the city grew around. It is now relocating out of the city. We also went to the demilitarized zone. The fences with concertina wire start in Seoul. There are explosives and a tank wall to slow an invasion. We were able to enter the negotiation building so we were technically in North Korea...and their soldiers were staring at us with binoculars. On the way back we saw the Jet Bow fountain, which is a jet engine in the Han spraying 30,000 liters water per second into the air.

We received a briefing from the State Department. In 1960, the tallest building was eight stories. Now there are skyscrapers all over town, many still under construction. Economic growth was seven percent in 2010 and 3.5 percent this year. Unemployment is 3.3 percent. Medical care is similar to Canada. Most families have one or two children because of the expense of education. An estimated 80 percent of South Korea's gross domestic product is tied to world trade, partly because they only have 17 percent arable land and few other natural resources. Their main resource is the ambitious people. US products pay 14 percent tariff and Korea products pay only 2-3 percent. US products have a good image. 50 percent of their food is imported and 75 percent of their feed grains as well. Most farms are less than five acres and use hand labor and small equipment to raise rice, vegetables, fruit, ginseng, barley, soybeans, and livestock, including fish and shrimp.

Real estate in downtown Seoul sells for $15,000 per sq ft., residential space is $1000 per square foot and condos cost $1500 per square foot. Farmland is $130,000 per acre. Rice is subsidized, but consumption is down by half in the last 25 years because many Koreans are adopting a western diet. Beef and pork exports are up. Australia, the European Union, Chile and Canada are competing for market share. Their pork industry might decline because in 2012 they must stop discharging manure into the ocean.

We had a briefing at the Korea World Center and individual meetings. I met with a buyer from the largest corn refinery there. He is very concerned about trying to source non-GMO corn. The larger users of HFCS will not use sugar from GMO corn. IP follows the corn all the way to the pop can. He buys some non-GMO thru New Orleans but most is from Hungary and Serbia. I explained he would have to pay premium to buy non-GMO but he stated he has price controls on his products and couldn't pay more. In the evening we were hosted by Hanwha, one of Korea's largest conglomerates, who are interested in buying into a hog processing facility in southern Minnesota or northern Iowa.

Thursday: We met at the National Agriculture Cooperative Federation. They handle over 1,000 coops. Half of their business is financial. They charge 5.6% on urban loans and 3 percent for farmers. 50 percent of the funds are from the federal government, 30 percent is from the province and 20 percent is required from the borrower. The coops have helped increase the standard of living and have 2.4 million members. They are involved in farm machinery rentals, fertilizer, pesticide, and the distribution and retail of farm produce. Their members are not in favor of the FTA as they are afraid of being undercut by cheaper imports.

We then met with the Ministry of Food, Agriculture, Forestry, and Fisheries. They are conscious of the benefits of Ag cooperation with the US. We buy 10 percent of their exports and supply 9 percent of their imports. We export $40 billion dollars in goods, but import $49 billion dollars worth of goods from them. They stressed food and feed safety and price.

We visited Good Morning Foods (store and meat processing). They have numerous stores and have a relationship with Hormel. The USMEF rep that Gerald and I met in Washington, D.C. was there as well as a Hormel rep that lived in Austin.

Koreans will pay a premium for high fat meat.

In the evening we were invited to the U.S. ambassador's residence. I probably was introduced to 50 or more people including many Ag interests. The 3M president recognized and remembered me and introduced me to several of his executives. I also met my guests. I invited the parents of my daughter's friend and classmate from MVL High School. Her home is Seoul. I had a nice visit with Richard Ulrich (Ag consulate from the Canadian Embassy). He said pork exports from Chile to Korea are increasing because of a free trade agreement and Canada is working on a free trade agreement with Korea. Canada is the number two supplier of pork to Korea. Richard said he is friends with Kevin Paap and Gerald Tumbleson.

Friday: We traveled south to tour Taeyoung (a new grain terminal where they unload corn, beans and wheat). Cargill-Purina are major stockholders and are planning to build a soybean crushing facility next door. They can unload two ships at a time and can unload the largest ships in 4 days. They plan to handle over 100 million bushels annually and currently load 200 trucks per day. There are 15 feed mills in the area.

We visited a 60-cow dairy, where the buildings had no walls. The producer buys a complete ration at .25 lb. and receives .44 lb. for milk. He averages 26,000 lb per year, uses AI and has been to the World Dairy Expo in Madison. He uses sawdust bedding and gives the manure away.

We toured a crushing plant that was similar to one here but smaller. They also have a feed mill that produces feed for dogs, cats, pork, chicken, shrimp, and two kinds of fish.

Governor Dayton did a wonderful job representing our state. It was a good group of people in the delegation and I hope it increased good will. Other ag members of the delegation were Kevin Paap of Minnesota Farm Bureau, Doug Peterson from Minnesota Farmers Union, Kathy Skiba from Midwest Dairy Association, Mark Querna of F.I.R.S.T. (First Independent Research of Seed Technologies -- Dennis Timmerman from AURI, Mark Brown of St. James representing Minnesota Soybean Growers and Brian Erickson of Minnesota Department of Agriculture."

The opportunities are great! If you'd like to discuss opportunities for your farmland, please contact me.

Noah Hultgren