China hits animal feed product with higher duties

The U.S. Grains Council called the announcement by China that it will subject U.S. distiller’s dried grains with solubles (DDGS) to anti-dumping and countervailing duties “rash.”

   A leading containerized export commodity from the U.S to China, distiller’s dried grains with solubles (DDGS), is being hit with anti-dumping and countervailing duties.
   The U.S. Grains Council said in a statement, “The announcement Tuesday by China’s Ministry of Commerce (MOFCOM) that it will subject U.S. distiller’s dried grains with solubles (DDGS) to anti-dumping and countervailing duties (AD/CVDs) is the latest in a rash of measures taken by the Chinese government to restrict access to that market for U.S. feed grains and related products, specifically corn, distiller’s dried grains (DDGS) and ethanol.”
   DDGS is a byproduct of ethanol production and is widely used for animal feed.
   The council said the decision to subject DDGS to the duties “came just ten days after action by the Chinese government to dramatically increase tariffs on imported U.S. ethanol from 5 to 30 percent, effectively stopping a growth market for U.S. farmers and ethanol producers. U.S. farmers also continue to wait for China’s approvals of biotech corn events, which last happened in 2014.”
   Exports of DDGS “remain the top U.S. containerized grain export,” according to an article in the January 5 issue of the U.S. Department of Agriculture’s Grain Transportation Report.
   The report by USDA’s April Taylor noted “DDGS volumes have been slow since April due to fears of a dumping determination from the Chinese government. It has been widely reported in the trade press that U.S. grain organizations worked with China during much of 2016 to keep officials from implementing trade restrictions. However, in September, China announced a preliminary dumping determination on U.S. DDGS exports, and implemented an import duty on U.S-origin DDGS. This has further slowed DDGS movements to its top export market. DDGS exporters expect data in subsequent months to show further declines through the end of 2016.”
   According to an article on the website of Feedstuffs magazine China’s Ministry of Commerce (MOFCOM) announced it would subject DDGS from the U.S. to antidumping and countervailing with immediate effect.
   The duties “will remain in place for five years. In a final ruling, the MOFCOM said it would impose antidumping duties ranging from 42.2% to 53.7%, up from 33.8% in its preliminary decision in September. Antisubsidy tariffs will range from 11.2% to 12%, up from 10% to 10.7%.” the magazine said.
   “Total DDGS exports (including bulk, container, and cross border movements) have grown from 1.2 million metric tons (mmt) in 2006 to a peak of 12.7 mmt in 2015,” says the USDA. “The main importer of U.S. DDGS is China representing 50 percent of the market followed by Mexico (13 percent), Vietnam (5 percent), and South Korea (5 percent). The growing trend slowed in 2016; year-to-date DDGS exports are 7.6 mmt, 11 percent below the same period last year.”
   Taylor noted in an Oct. 27 edition of the Grain Transportation Report that DDGS is unusual because it is “the only grain export that uses both bulk and container transportation almost equally.”
   “Most grain products use containers only minimally because of the demand for large volumes of the primary feed products. In fact, only 8 percent of waterborne grain exports in 2015 were moved in containers. U.S. DDGS exports dominate the containerized grain export market—shipments represent nearly 50 percent of containerized grain exports each year.
   “On average, DDGS exports are moved in containers 60 percent of the time,” she explained. “As a feed supplement, large bulk volumes of the product are not needed in many cases.”
   Containerized transport is even more important when moving DDGS to China where 82 percent of the DDGS exported moved in containers in the first eight months of last year.
   “While painful and damaging to the U.S. DDGS industry, their biggest negative impact will ultimately be on China’s feed and livestock industries, which risk losing access to an important and cost-effective feed ingredient, and on millions of Chinese households that will likely face greater food price inflation and less access to affordable, wholesome pork, poultry and dairy products,” the grain council said.