Groups seek foreign buyers for ethanol cereal byproduct

Source: By Don Jenkins, Capital Press • Posted: Thursday, October 23, 2014

SEATTLE — Two U.S. business groups hosted a conference this week to meet and impress people like Manzoor Elahi of Bangladesh.

Elahi is shopping for feed for poultry, fish and shrimp, which are being raised in a country that lags behind its neighbors in per capita consumption of meat.

“We are hungry. We are 160 million people,” he said. “There is an opportunity for you and an opportunity for us, too.”

Representatives from 32 countries gathered at the Sheraton Hotel Oct. 21-22 for Export Exchange, a meet-and-greet organized by the U.S. Grains Council and Renewable Fuels Association.

The spotlight was on distillers dried grains with solubles (DDGS).

Once viewed as little more than waste left over from converting corn into ethanol, DDGS has become an $8 billion to $9 billion a year product, said Geoff Cooper, senior vice president of the Renewable Fuels Association.

Cooper said the supply of DDGS will grow with the ethanol industry. What’s uncertain, he said, is whether demand will keep pace.

The grains council and fuels association are eager to promote DDGS as a way to feed the animals that will feed the world’s growing population.

For grain producers, DDGS is another source of revenue for farmers.

For ethanol manufacturers, the livestock feed combats the claim that alternative fuels cuts into the food supply.

Almost one-third of the grain used by ethanol plants is converted into DDGS to feed cows, hogs, poultry and fish, according to the fuels association.

As the ethanol industry grew, U.S. production of DDGS grew sevenfold in the past decade to about 37 million metric tons a year, according to the fuels association.

U.S. farmers use about 25 million tons and the other 12 million are exported.

China took about 6 million tons, half the export total, until disallowing the import of U.S. distillers grains in July.

The Chinese demanded the U.S. Department of Agriculture guarantee no shipment contains Syngenta’s biotechnology corn trait MIR 163.

The Chinese action caused DDGS prices to collapse, Cooper said.

The issue has yet to be resolved.

“I think there is a lot of uncertainty where this is heading with China,” Cooper said.

Cooper estimated that exports to other countries in the meantime could grow by more than 1 million tons in the next year.

The potential customers are businessmen such as Elahi, chief coordinator for the Paragon Group in Bangladesh.

“I came here to look for the opportunity to get good, quality raw material for my feed mills and, of course, for a good price,” he said in an interview.

Elahi said he has bought small volumes of DDGS to feed poultry and fish and wants to buy more.

“Gradually, we are increasing orders here,” he said.

He said future orders will depend on transportation, supply and price.

“I have to have an unbroken supply chain,” he said. “I believe U.S. farmers can provide the supply, but again, the price is the most important factor.”

Conference speakers talked about global economics, animal nutrition and other topics related to making, delivering and using DDGS.

During breaks, at the urging of conference organizers, the some 300 people at the conference mingled.

Portugal livestock producer Jose Romao Leite Braze said his family’s business, Financor Agro-Alimentar, has been buying U.S. distillers grains shipped from Savannah, Ga., for two years.

“It’s good for production, good for the animals. It’s a very valid alternative,” he said.

The U.S. Grains Council’s regional director for South and Southeast Asia, Kevin Roepke, singled out Vietnam, Indonesia, Thailand and India as countries with the greatest potential to import more U.S. distillers grains.

Populations and incomes are growing, he said. “The demand for animal protein will only increase as long as that is happening.”

He delivered a speech that was understated but clear: The U.S. has the capital, transparency and ingenuity to deliver safe livestock feed.

Montana farmer Buzz Mattelin, who grows wheat, barley and sugar beets in the northeast corner of the state, has never cultivated a crop for fuel, but said he believes ethanol’s demand for corn helps wheat farmers.

“I don’t know if I can substantiate that, but I certainly have that feeling,” Mattelin said in an interview. “What’s good for corn is at least positive for wheat.”

The ethanol and DDGS industries could suffer a setback this year if the U.S. Environmental Protection Agency pulls back on renewable fuel standards, the amount of ethanol oil refineries are required to blend into transportation fuels.

The EPA made a preliminary proposal to cut back the renewable fuel mandate from 16.5 billion gallons in 2013 to 15.2 billion gallons this year. Some 13 billion gallons would be made from corn ethanol, while 2.2 billion gallons would be made from other biofuels.

The EPA has yet to make a final rule. Its proposal angered cornbelt leaders, especially with farmers sitting on a record crop.

The chairman of the U.S. Grains Council, Illinois corn and soybean farmer Ron Gray, said he thinks ethanol and DDGS will remain politically popular, and good markets for growers.

“If air quality is an issue for you, ethanol is on your list of priorities,” Gray said. “If protein for livestock is an issue for you, DDGS will be high on your list.”

If ethanol demand falters, farmers will adjust, he said. “We grow for the markets.”