November 25, 2013

Corn Exports Critical to Nebraska

In the not-so-distant past, the prospects for Nebraska’s corn farmers hung on the political whims of nations using trade as a power play. A grain embargo implemented by Russia, for example, could throw grain markets into a tailspin. While trade is still used as a bargaining chip among nations, its impact on grain
markets has been lessened somewhat through U.S. corn farmers’ focus on adding value domestically through livestock production, biofuels and industrial uses for corn—creating greater demand across a variety of sectors. Still, exports remain an important component of the U.S. corn market portfolio. “The equivalent of one in six rows of corn in Nebraska is exported,” said Alan Tiemann of Seward, a member of the Nebraska Corn Board and secretary-treasurer of the U.S. Grains Council (USGC). “There is no question that corn prices are enhanced by the demand in the international marketplace.”

Through their checkoff, Nebraska corn farmers support the efforts of the U.S. Grains Council in building demand for corn around the world.

Global competition in corn exports has grown significantly over the past four years, driving the U.S. share of the market down to about 50 percent. Since 1990, the amount of corn grown outside the U.S. has increased from 11 billion bushels to nearly 22 billion bushels in 2012.

“Brazil and Argentina are formidable competitors, but other areas such as the Black Sea region, Paraguay, South Africa, Thailand and China are emerging as well,” Tiemann added. “We’re using more and more corn domestically, which is creating opportunity for other nations to fill the void. That’s why it’s even more important that we redouble our efforts to maintain and build international markets for our product.”

As emerging nations become more prosperous, their appetite for protein—poultry, pork and beef—grows as well. USGC is working around the world to help farmers grow their flocks and herds, which in turn increases demand for feed grains such as corn. From water buffalo in Morocco to turkeys in Canada to pigs in South Korea, USGC has been extremely successful in demonstrating the outstanding feed value of American feedgrains.

As the ethanol industry has grown in Nebraska and the U.S., so has the supply of distillers grains, a high protein value animal feed that is a co-product of ethanol production. As a result, USGC has also begun building international markets for dried distillers grains (DDG). A shining example is China, which four years ago imported no DDG—and today is the number one customer in the world for DDG from the U.S. Mexico ranks second.

“Instead of simply shipping raw corn overseas, DDG is a product that adds value here at home,” Tiemann said. “DDG exports help build markets for Nebraska ethanol producers as well, and that helps create profit opportunities to keep these plants running and energizing our rural economy.”

Tiemann said it’s critical that Nebraska corn farmers continue to invest in international market development. “We’re going to have more than nine billion people to feed by 2050, and Nebraska can and should play a big part in meeting that demand,” he said. “By encouraging fair trade and staying in front of international customers, we can make sure we feed the world—and create economic vitality right here in Nebraska.”

Country           Metric Tons      % of U.S. Exports
Japan                11,748.6                31.0% 
Mexico                9,537.5                25.2%
China                  5,174.1                13.6%
Korea                  3,635.3                  9.6%
Venezuela            1,280.1                 3.4%
Taiwan                 1,265.4                 3.3%
Costa Rica             575.7                  1.5%
Guatemala             549.1                  1.4%
Egypt                     544.9                  1.4%
Canada                  487.2                  1.3%
Others                 3,117.1                  8.2%
TOTAL               37,915.0
2011/12 Marketing Year Ending August 31, 2012

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