December 15, 2010

Perspectives of U.S. corn market in Columbia, Panama

NOTE: This blog was written by Don Hutchens, executive director for the Nebraska Corn Board. He traveled to Columbia and Panama with the U.S. Grains Council, and shared some of this thoughts and perceptions about the situations and market share of U.S. corn in these countries.

Don HutchensThe decrease in market share of U.S. corn exported to Columbia has dropped from 96% to less than 38% in just the last three years. How did that happen? Not getting the Colombian Free Trade Agreement passed is one major hold up, especially when you realize there is a 15% import duty on U.S. corn and only 6.9% preferential tariff provided to Argentina and Brazil. The second major snag is the 2009 U.S. corn crop. While it was huge in volume, it was not the highest quality crop with record levels of BCFM, high moisture, higher levels of mycotoxin, all of which opened the door for Argentina and Brazil to step up and steal some market share. With my recent opportunity to travel to Colombia, our mission was to try and convince them the 2010 crop is excellent quality, and will continue to push for our Administration and Congress to get this Free Trade Agreement passed.

Dried distillers grains (DDGS) has great opportunities in Panama – a country that is steadily increasing their per capita consumption of chicken and eggs – and a country with a growing population that is improving their standard of living. We have a freight rate advantage from the Gulf and knowledge of how best to balance a feed ration, which is helping educate end users of the advantages.

Domestic crop production in Columbia and Panama is experiencing some of the worst flooding in over 40 years. Up to 50% of the rural roads are damaged. While in Panama City, we promoted the feeding of DDGS to assure our customers that the 2010 corn crop will be some of the highest quality corn in the world. Unfortunately, we also witnessed the closing of the Panama Canal – which marked only the second time in history that the canal has been closed since 1914. Once with the invasion to stop Noriega, and second this last week when I arrived in Panama City. It opened the next day, but it was obvious the severity of the rainy season taking its toll.

We have to work harder to convince Congress and the President to get the free trade agreements passed or else we stand to lose good customers in Colombia and Panama to countries like Canada, Argentina and Brazil. When you add it all up, we have lost nearly 2 million tons of corn exports alone in just the last three years that equates to over $400 million dollars.

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