Building a World Market from Scratch

By Alvaro Cordero | January 16, 2012

rom a barely recognized feed alternative 10 years ago, distillers dried grains with solubles continues to gain recognition and markets. DDGS is now widely recognized internationally, where its use continues to evolve.

Forty-four countries imported DDGS in the first nine months of 2010, and in 33 of those markets last year, purchases increased over 2010 levels. Excluding China, world sales volume also increased. In the European Union, growth was spectacular: Portugal and the Netherlands went from zero purchases in the first nine months of 2010 to 23,595 metric tons and 32,222 tons, respectively. France, which imported just 7,346 tons in all of 2010, bought 59,896 tons. British imports grew almost 60 percent, from 67,283 tons to 106,957 tons, and Spanish purchases exploded from 16,495 tons to 111,538 tons. Buying increased in a host of other countries. In Asia, Japan’s imports grew by 41 percent and Taiwans’ and the Philippines’ by 51 percent. Honduras bought 65 percent more DDGS, and sales to Morocco and Malaysia were 78 percent higher.

“DDGS is now a commodity in demand around the world,” says Wendell Shauman, chairman of the U.S. Grains Council, which has spearheaded international programs to promote DDGS. In 2011, the Council’s DDGS programs scored multiple successes, helping to offset one major setback: China’s decision to initiate an antidumping case against U.S. DDGS sales. Filed in December 2010, the case created uncertainty for Chinese importers and is dampening DDGS demand until the Chinese government resolves the case. A decision was due at the end of 2011, although China could extend the case for an additional six months.

Despite the uncertainty, Chinese imports totaled more than 5.9 million tons by the end of September, down 49 percent from the previous year, but still almost double China’s 2009 purchases. “We continue to see great market potential for distillers grains in China and expect to maintain council efforts to expand its use,” said Shauman, noting that the council has continued educational work in China, such as its highly successful workshops in Guangzhou and Qingdao. “We had 200 to 250 people at each session, a much larger attendance than we expected,” he reported.

In another successful effort, the council matched buyers’ workshops with nutrition short courses for customers in Central America, South America, North Africa and the Middle East. “These buyers are currently importing feed grains, but while they are aware of coproducts like DDGS, many haven’t yet committed the resources to develop internal markets for them,” explained Chris Corry, USGC senior director of international operations. Meanwhile, nutritionists from the same companies completed short courses at Kansas State’s International Grains Program. “Now, when the buyers confer with their nutritionists, they will have good data on how coproducts like DDGS can fit into their feed formulations,” he explained.

Participation by U.S. DDGS suppliers is a key component of such conferences. “These buyer conferences included a half-day for personal meetings between buyers and sellers,” Corry said. “The buyers could schedule 30-minute meetings with individual suppliers, and we know deals were being made.”

In addition to workshops, the council’s one-on-one technical consultations with key end-users continue to be a highly effective way to educate customers and convince them to use DDGS. In some regions, resolving regulatory issues is another essential step toward DDGS sales. For example, in a major success culminating years of council work, Saudi Arabia added both DDGS and corn gluten feed to its import feed ingredient list. The action establishes a subsidy intended to keep feed input costs low for Saudi feed producers and end users and creates a strong incentive for sales. “Ingredients not on the list have historically attracted little attention,” said Joe O’Brien, USGC regional director in the Middle East. “Saudi Arabia is a lucrative feed importing market that could quickly build its DDGS purchases to a half-million tons and could reach a million tons in time.”

As the DDGS economy evolves, the council is further adapting its DDGS programs to meet new challenges, including the ethanol industry’s move into oil extraction. “As the supply of lower-oil DDGS increases, we need to educate foreign buyers about its different characteristics,” said Shauman. “The lower oil content means a difference in how it will perform in livestock rations. “As this newer form of DDGS moves into the marketplace, we want to make sure our customers aren’t surprised. We need to educate them about what to look for and how to recalibrate feed formulas.”

Author: Alvaro Cordero
Manager of International Operations for DDGS
U.S. Grains Council
(202) 789-0789
[email protected]