U.S. Grains meets in Nebraska this week; still covering issues with China, DDGS

This week, the U.S. Grains Council members are meeting for the 54th Annual Board of Delegates meeting in Omaha. The Council is a cooperative partner of the Nebraska Corn Board.

In Omaha, attendees will focus on emerging opportunities, competitive challenges, and the Council's work to increase U.S. market share. The Advisory Teams will review new developments that affect the Council's strategies and priorities around the world. Top speakers and insight from the Council's global program staff will keep you ahead of the curve on factors affecting export growth. Last but not least, the Council is a member-led organization, and this is the Council's annual business meeting, at which delegates will elect officers and board members, and adopt the budget for FY 2015.

But just because Council staff and Board are in Omaha for meetings, they are still working around the globe on opening up market barriers. One of those issues is China’s approval of new biotech certification requirements for distiller’s grains with solubles (DDGS) by the Chinese import inspection authority.

The new requirements effectively call for a certificate from the point of origin - in the case of U.S. shipments, from the U.S. Department of Agriculture (USDA) - guaranteeing that the shipment is free of the biotech trait.

The mandate was made effective immediately, causing serious disruptions with existing DDGS trade and making future DDGS trade hard to achieve.

“China is asking for something that cannot be done. This certificate they’re asking for does not exist,” said Tom Sleight, USGC’s president and CEO.

“It’s time for China to look at and approve this trait,” Sleight said. “It’s been approved for commercialization in the United States since 2010, and it’s been approved by all importing countries, including the European Union, for quite some time. We think that the lack of approval of MIR 162 is becoming an undue impediment on trade.”

Yesterday, Chairman Schaaf sent a letter to Secretary of Agriculture Vilsack, urging efforts of the U.S. government to intervene with China to halt this current regulatory sabotage of the DDGS trade with China. Approval has been pending in China for more than four years.

This matter is urgent for U.S. corn producers, DDGS exporters, and the ethanol industry as a whole, which is threatened with severe harm due to China’s action. Until this action, China was importing DDGS at a rate of 20,000 MT per day, which is the equivalent of 750 standard containers. The value of DDGS exports to China exceeded $1.6 billion in 2013 and this year was running well ahead of that pace prior to the current interruption.

The Council is doing all they can to work through this issue with China, and others around the world, to provide more markets for Nebraska and U.S. corn producers.

Podcast: U.S. grain exports

In this podcast, Alan Tiemann, past chairman of the Nebraska Corn Board and secretary/treasurer of the U.S. Grains Council Board of Directors, shares about the International Marketing Conference held recently to update U.S. industry on markets and updates around the world. China was a big topic this year.

Click here to listen to the podcast.

This podcast is part of Nebraska Corn Board's series called Kernels of Truth, featuring Nebraska Corn Board members, Nebraska corn farmers and cooperators of the checkoff programs.

Kernels of Truth podcasts are also available on iTunes! Click here to subscribe.

China: missing a beefy opportunity

This week, I read that China has approved four additional Canadian beef facilities that will now be able to export beef to China. These newly approved establishments will increase the Canadian export capacity for beef in a market estimated by the industry to be worth approximately $20 million annually.

Timeout! Nothing against Canada, but why is China investing in Canada and not looking towards the U.S. beef supply?

What is China’s beef with U.S. beef? As of December 24, 2003, China has banned U.S. beef from being imported due to the BSE concerns. Beijing later lifted the outright ban but the U.S. has been unable to overcome continued barriers involving the inspection of the beef. More recent talks with China came up with a staged-basis solution to getting U.S. beef into the country.

Who is our competition for getting beef into China? China allows beef imports from seven countries, including Costa Rica which was approved recently. The main competitors include Australia, Uruguay, New Zealand and now, Canada.

Worldwide beef exports from the U.S. are strong. According to the U.S. Meat Export Federation (USMEF), year-end reports for 2012 reported weekly exports were up 4 percent from 2011. However, for the leading markets of Mexico, Japan, Korea, Vietnam/Hong Kong, Russia and Taiwan, reported exports were 1 percent lower. Export growth in 2012 was led by Vietnam/Hong Kong (+18 percent) and Russia (+12 percent), with Japan and Canada each up 1 percent. Exports were lower for Korea (-9 percent), Mexico (-7 percent) and Taiwan (-39 percent).

Interestingly enough, some of those exports to the Southeast Asia region are making their way into China (off the record).

There is a potential for having a future with China in the beef export market. Even at a relatively low per-capita consumption level, China still consumes about 10 percent of total global beef production. Challenges to China’s domestic beef industry, including high input costs, are making it increasingly likely that China will have to increase beef imports to meet growing demand, led by a booming restaurant industry.

What is the potential if we can open up this export market? U.S. beef exports would likely reach $200 million in value in the first full year of access, swiftly putting China among the top five export markets.

In a recent food exhibition in China with USMEF to promote U.S. pork, Joel Haggard, USMEF-Asia/Pacific senior vice president said, “…almost every Chinese meat buyer we met asked when U.S. beef will return to the market.”

It seems that Chinese meat buyers and consumer want U.S. beef, but politics are getting in the way. Thankfully, USMEF is working to overcome this issue to allow U.S. beef back into China. China’s market for beef has changed considerably since U.S. beef’s exit a decade ago. Unlike pork and poultry production, which has grown due to an influx of private investment and government subsidies, the Chinese beef industry has languished. Domestic production has fallen 10 percent over the past 5 years, from 6.13 million metric tons (13.5 billion pounds) in 2007 and 2008 to an estimated 5.54 million metric tons (12.2 billion pounds) this year, according to USDA statistics.

Hopefully this will provide for a future break to take over from our many missed opportunities. 谢谢 (thank you), China.