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Sep 15, 2023

Opinion: Curb China's domination of amino acids market

Chinese amino acids importer Fufeng Group made headlines this winter when the

Chinese amino acids importer Fufeng Group made headlines this winter when the Grand Forks, North Dakota, city council voted unanimously to prohibit the company from building a corn mill on 300 acres of land it bought in 2021. Why? Because Fufeng Group has deep ties to the Chinese Communist party and its land is only 12 miles from Grand Forks Air Base, a vital U.S. defense installation. The vote came only days after a Chinese spy balloon traversed the U.S., but it would have proved a sensible decision at any time.

The episode is a vivid example of the grave national security implications of allowing a Chinese presence so close to a vital U.S. defense installation. But that's not the only threat to U.S. security that Fufeng and other similar Chinese companies pose. Chinese amino acids exporters threaten U.S. food and economic security, as well.

Amino acids are the building blocks of protein molecules and are vital to our health and nutrition. They are found in most of the food that we eat and provide energy, build muscle and boost the immune system.

But our bodies do not produce amino acids, so we need to get them through the protein in our food, or supplements. The best sources of amino acids are animal proteins, such as fish, beef, poultry, eggs and dairy, as well as soy, quinoa and buckwheat.

Amino acids form a key component of animal feed, as well. Farmers all over the U.S. balance the diet of their livestock with amino acids. This decreases excess dietary protein in the animals’ diet, and also has environmental benefits, including the reduction of nitrogen excretion into our air and water.

The U.S. has a robust and competitive amino acids industry, centered in the American heartland – Iowa. Corn is used to produce most supplemental amino acids, and Iowa corn powers that state's lead in domestic production. The U.S. amino acids industry produced more than $3 billion in GDP in 2022.

However, in recent years, the U.S. amino acids industry has been unfairly undercut by Chinese competitors whose products are subsidized by Beijing and sold well under U.S. market prices. The African Swine Fever outbreak in China in 2019 and 2020 caused the collapse of almost half of the country's pork industry, halving China's need for amino acids.

Chinese amino acids producers turned to the U.S. to offload their excess inventory. American farmers, quite understandably, responded favorably to the lower prices offered by Chinese amino acids producers. Those Chinese producers receive electricity, water, loans, and natural gas subsidies that their American competitors do not. Additionally, some major Chinese producers of amino acids have significant production facilities in China's Xinjiang Province, a location where U.S. regulatory agencies are investigating the possible use of Uyghur forced labor.

Thanks to these unfair economic advantages, use of Chinese amino acids exploded across American farms. The U.S. market share for China-produced amino acid Lysine-HCL, for example, more than doubled from less than 10% in 2017, to 18% by 2021, and 37% by 2022.

Imports of Chinese amino acids into the U.S. economy continue to increase even as China's hog population recovers. Unfair market domination is their goal. Chinese manufacturers now represent more than 85% of the global capacity for producing threonine, an amino acid typically used for pigs and poultry.

China has already cornered the world market on vitamin and pharmaceutical ingredients. We can't let the same thing happen in the key amino acids sector. If we did nothing, what would this Chinese monopoly on amino acids look mean for the U.S. economy? Bad news.

A 2021 University Wisconsin-Whitewater study found that, if left unchecked, China's domination of key sectors of the U.S. amino acids industry would destroy 30,000 American jobs and reduce economic activity by $15 billion per year and federal, state and local tax revenue by $9 billion by 2031.

It's for this reason that the U.S. Trade Representative imposed Section 301 tariffs on imports of some Chinese amino acids. This tariff is currently under four-year review, and deserves to be extended. Additionally, argue Iowa Sens. Chuck Grassley and Joni Ernst and Rep. Randy Feenstra, the USTR should extend Section 301 tariffs to amino acids threonine and lysine, which is found in red meat, pork, poultry, cheese and some fish.

It is easy to see why stopping Chinese dumping of amino acids in the U.S. is critical to maintaining American food and economic security. Food supply chains could be severely impacted if Beijing decides to cut off or reduce exports of amino acids, or if Chinese amino acids are found to be corrupted or substandard. Just as America has increased its energy security by reducing its reliance on foreign oil and gas, we can increase our food security by smart tariffs on Chinese amino acids producers.

But Chinese agricultural ambitions pose more than an economic and food threat to the U.S. They are a real and present threat to U.S. national security.

For all of these security reasons – food, economic and national – Chinese domination of the amino acids market must be curbed.

Andrew Asher is the executive director of the American Amino Acids Federation, which represents stakeholders in the U.S. amino acids industry.