USGC celebrates DDGS expansion in Mexico with MOU signing

By U.S. Grains Council | April 04, 2019

The U.S. Grains Council, the Missouri Corn Merchandising Council and the Regional Livestock Pork Producers Union of Sonora (Union) met the last week of March in Ciudad Obregon, Mexico, to sign a memorandum of understanding (MOU) acknowledging and celebrating a multi-year effort marking the import of more U.S. distillers dried grains with solubles (DDGS) into the country.

The project is a joint investment made between Missouri Corn and the Union in 2018 in which each group purchased hard car unloaders—known as “stingers”—for the Ciudad Obregon rail terminal in the state of Sonora, where U.S. DDGS will be stored and utilized.

A stinger is a hydraulic arm that decreases the time and number of employees needed to unload DDGS from rail cars. The new equipment in Sonora will help increase the efficiency of DDGS shipments arriving at the terminal.

“Northwest Mexico is an underserved market for U.S. DDGS—there is virtually no DDGS coming into the region today,” said Ryan LeGrand, USGC director in Mexico. “The Council and Missouri Corn partnered with swine producers here to purchase a stinger, and the producers here, in turn, purchased their own. Now the potential for U.S. DDGS here is enormous.”

The three groups agreed in the MOU to develop a master plan to facilitate U.S. DDGS trade and conducted a ribbon-cutting ceremony while in Sonora. The stinger will help the Union unload DDGS efficiently, and U.S. farmers will benefit from increased exports of the product.

“Global market access has always been a key component of what the Missouri Corn Merchandising Council and our longstanding partners at the U.S. Grains Council do to find new demand for corn and corn co-products, including ethanol and distiller’s dried grains with solubles,” Missouri Corn Chairman Mike Moreland said. “The Missouri corn checkoff has made significant investments to help build the relationship with Mexico as a grain customer.”

The Council took a regional approach, dating back to 2016, to make this project a success when it identified Sonora as a potential market for U.S. DDGS. To increase purchases, it worked with the Union and the Sonora Poultry Association, whose members will also benefit from the import of U.S. DDGS into the region.

Sonora is the second-largest pork producing state in Mexico, producing 229,600 metric tons per year with 2 percent growth year-over-year. The Union uses about 50,000 metric tons of feed grains monthly—40 percent from the United States—and makes consolidated grain purchases for their members. The association’s members operate large-scale programs that include breeding, fattening and processing.

Sonora is also the third-largest egg-producing state in the country, and Sonora’s poultry association members use 20,000 metric tons of feed grains monthly to feed their 12 million layers.

To tap into that potential, the Council hosted pork producers via a trade team to Kansas and Minnesota in 2017, showcasing the merits of DDGS and identifying the constraint of having no stingers at the rail terminal in their area. Missouri Corn stepped in to help fund the purchase of one stinger, and the Union purchased a second one to make unloading even more efficient.

“We are grateful to the U.S. Grains Council and the Missouri Corn Merchandising Council for the assistance with the stinger. The celebration of the installation of the two stingers is important because U.S. DDGS will help us lower our production costs at the farm level,” said Gerardo Ramos, treasurer of the Union. “For years, we were unable to use DDGS because the freight costs were killing us. With these stingers, we can more cost effectively incorporate it into our livestock diets.”

The MOU signing caps off the program, but the effort does not end there. The parties agreed to schedule periodic reviews of the equipment, evaluate progress and identify opportunities, problems and strategies for successful, ongoing development of the project.

“There will certainly be follow-up and we will continue our relationship by bringing nutritionists to the area offering technical support to make sure these farmers are maximizing their inclusion levels of DDGS and using it in the right way.”

Mexico is the top buyer of U.S. corn, barley and DDGS with purchases of 2.13 million metric tons of DDGS in 2017/2018, up 3 percent year-over-year.

“Mexico has always been a loyal customer and we will work to make sure that partnership continues,” LeGrand said. “While this week’s celebration is the start of a relationship with poultry and swine producers in Northwest Mexico, we are also here to continue to celebrate one of our best customers—Mexico.”

View the MOU signing ceramony.