Corn Farmers Definitely In A Global Market

Corn Farmers Definitely In A Global Market

Use of corn for ethanol and livestock feeding in the U.S. is very important, and so are corn exports to overseas markets to feed livestock and people. Here's how these markets work.

More corn is grown in Iowa than many countries and with the 2010 harvest, about 1 in 6 rows will be exported to help feed livestock and people in growing nations across the globe. To see how these markets work and to talk face-to-face with customers, farmers along with US Grains Council and the US Meat Export Federation periodically sit down to discuss top issues.

After a tough harvest in 2009, customers worried about grain quality and after our most recent harvest, foreign buyers were worried about supplies. By taking the time to sit down and talk to them about their concerns, the Iowa corn export market stays strong.

Dick Gallagher, a farmer near the town of Washington in southeast Iowa, who is active in the Iowa Corn Growers Association, hosted a foreign delegate during the 2010 harvest.

An Iowa farmer, Larry Klever was chosen to participate as one of a six-member delegation of U.S. corn farmers and industry representatives on a trade mission in December 2010. They met with more than 25 key customers and trade partners in Japan, Taiwan and China to explore the use of U.S. corn and its co-products in established and emerging markets, and to strengthen relationships and encourage future partnerships.

U.S. corn can meet foreign buyers' demands for high-quality grain

The delegation began their mission in Japan, the number-one buyer of U.S. corn—importing more than 625 million bushels in 2009. While there, they focused conversations on the quality of the 2010 U.S. corn crop. "Japan's number-one concern is quality," notes Klever, a farmer from Audubon, Iowa, representing the Iowa Corn Promotion Board. "The United States is well positioned to meet their demands. This year's corn crop produced hard kernels, which should transport very well and maintain high quality."

While in Taiwan, the U.S. group aimed to maintain important relations with key traders, users and buyers of U.S. corn and distiller's dried grains with solubles—a co-product of U.S. ethanol production. "As the fourth-largest importer of U.S. corn, Taiwan is a very important customer," says Kenny McNamar, a farmer from Gorin, Mo. "While the focus in Japan is primarily on quality, for Taiwanese markets, U.S. farmers must also ensure our prices are competitive with other corn exporting countries, such as Argentina and Brazil, in order to maintain our U.S. market share."

The last leg of the mission brought the delegation to China where they met with grain traders and explored the outlook for U.S. corn and DDGS. Visits were also made to a feed mill and container port to gain a better understanding of the grain trade process in China.

China corn imports may surge; ICPB hosts many trade visitors

China, the world's second-largest corn consumer, probably will quintuple imports of grain in the next five years as demand increases for livestock feed. Imports next year may be 2 million to 3 million metric tons of corn and jump to 15 million by 2015. China is on pace to become the largest buyer of U.S. dried distillers grain, a corn-based byproduct of ethanol production used as animal feed, this year buying some 1.5 million tons.

China's imports of dried distillers grain may rise to 2.5 million to 3 million tons. Demand for feed and livestock production is growing at a rate of 3% to 6% annually, according to US Grains Council estimates. Industrial use of corn, including for adhesives, cleaners and chemicals, may rise to 45 million tons in China this year, according to USDA data.

China imported 432,191 tons of corn in August, the Beijing- based customs office said in an e-mailed report on Sept. 20, 2010. There is a short supply of corn in China right now due to production shortfalls driven by poor weather while demand has remained strong. Plus, China's population and economic growth is contributing to the corn demand.

Julius Schaaf, a farmer from Randolph in southwest Iowa, is past chairman of the Iowa Corn Promotion Board and secretary of the U.S. Grains Council, says after his trade mission trip to China, "the Chinese seem to be turning to a goal of corn supply security with the U.S. corn farmer as a critical part of that plan." Schaaf says rapid growth of the economy in China is evident with miles and miles of new roads and busy traffic on those roads.

Market development key to growing U.S. corn exports

The Iowa Corn Growers Association and the Iowa Corn Promotion Board have been working with trade mission groups from around the world throughout 2010 to welcome them to Iowa and show them quality corn production and products firsthand. Groups have come from China, Taiwan, Japan, Korea and many more areas around the world to visit Iowa corn farmers and see the industry.

The U.S. agricultural trade surplus is estimated to be some $28 billion, the second largest in history. In fact, ag exports are expected to reach $104 billion this year, the second largest in history and below only the record $115 billion in 2008. In an effort to increase exports across all industries, the Obama Administration has launched the National Export Initiative with a goal to double exports over the next five years.

U.S. corn has global market potential in other countries too

The Colombian government recently announced a reduction in tariffs for the import of U.S. distiller's dried grains with solubles, opening the door for more purchases of the product.

Originally set at 15%, tariffs are now 10% with these same rates applying to imports of U.S. corn gluten feed and 3,000 other items. While the changes are a result of the government's efforts to counteract the appreciation of the Colombian peso, they also create a greater need for education on the proper use of DDGS.

In 2010, Colombia imported 69,000 tons of U.S. DDGS and 59,000 tons of CGF. However, with a free trade agreement in place along with proper market education, these imports could reach 700,000 tons per year.

U.S., Korea reach Free Trade Agreement; Pact to benefit both countries

After more than three years at the negotiation table, the U.S. and South Korea reached an agreement in bi-lateral free trade talks. The U.S.-Korea Free Trade Agreement represents an ocean of opportunity for both parties involved.

For the U.S., the agreement will result in increased jobs, exports and benefits to the economy while Korean consumers will for the first time have more access to American goods. The free trade pact is especially good news for U.S. producers who will benefit from the agreement as the United States enjoys a 70%  market share of Korea's 8.6 million metric ton feed grains import market.

The passage of this agreement will be critical to ensuring the United States' dominant market share in the face of competition from other sources. From DDGS to corn imports for food use, Korea has been an important customer of U.S. producers. In addition to large imports of DDGS and feed grains, Korea also imported corn for food and industrial use, showing a 53.5% increase on a year-to-year basis at 1.6 million tons.

Whether you are looking at growing current markets, hosting foreign buyers on Iowa farms or the potential for exports to grow in new parts of the world; corn grown in Iowa is vital to feeding and fueling the globe.

Editor's note: This market information is courtesy of the U.S. Grains Council. The Iowa Corn Promotion Board, works to develop and defend markets, fund research, and provide education about corn and corn products. The Iowa Corn Growers Association is a membership organization lobbying on ag issues on behalf of its 6,400 farmer members. Both organizations work on the joint mission to create opportunities for long-term Iowa corn grower profitability.

 

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