Shifting trade patterns are creating new export opportunities for U.S. corn co-products in the South Asian market of Bangladesh.
Distiller’s dried grains with solubles (DDGS) imports to Bangladesh are up 104 percent in the first four months of the 2020/2021 marketing year, with sales of 79,000 metric tons of DDGS (10.25 million bushels in corn equivalent) compared to only 38,500 metric tons (nearly 5 million bushels in corn equivalent) the year before.
After U.S. Grains Council (USGC) staff worked closely with the U.S. Department of Agriculture (USDA), two Bangladeshi banks have recently been approved by the Foreign Agricultural Service’s (FAS’s) Export Credit Guarantee (GSM-102) program. The next steps for the Council will be working with exporters in the States that can avail themselves of GSM-102 credit and with Bangladeshi buyers and FAS staff in Dhaka to bring more banks into the GSM system.
The recent developments with Bangladesh are the result of a 2019 visit with importers and end-users during which Council staff members from the region and the United States were able to learn more about the constraints to and market potential for future sales of U.S. coarse grains and co-products to the country.
“We were seeing growth potential since before COVID-19 because Bangladesh does not have regulatory barriers to most U.S. commodities. However, since the pandemic, that potential is starting to be realized. The Bangladeshi Poultry Association (BPICC) has banded together to face the economic effects of COVID and is coming back united, strong and determined to grow their industry,” said Alejandra Danielson Castillo, USGC regional director for South Asia. “We are very excited to partner with Bangladeshi buyers and see this momentum continue.”
In addition to the import numbers for U.S. DDGS this marketing year, Bangladesh has also imported 8,239 metric tons of corn gluten feed/meal (CGF/CGM) in the first four months of the 2020/2021 marketing year, on par with import numbers from the same time period last year. In the 2019/2020 marketing year, Bangladesh imported 27,368 metric tons of CGF/CGM.
Currently, U.S. commodity prices are high, with sales likely to pick up as prices settle. However, the feed industry in Bangladesh continues to grow across livestock sectors – aquaculture, poultry, layers, broilers and dairy – as populations increase and incomes rise. It is the most densely populated country in the world with 1,200 people per square kilometer, driving fish production and poultry sector expansion.
A lack of knowledge about logistics and poor port conditions are the most critical limits on market expansion. With no on-site storage available, ships dock eight nautical miles away from land and discharge on to small vessels, which then reach the port or the feed storage area via the river system. It is an expensive proposition that creates significant bottlenecks for unloading operations and adds considerable demurrage, adding to the cost of feed ingredients. However, there is interest from individual feed millers in purchasing combination shipments of feed ingredients to store at their facilities in bulk bags.
“Agricultural exports have grown more than 93 percent in the last five years; corn requirement for feed is 55 percent, and even before the pandemic hit, Bangladeshi buyers rallied their government to eliminate tariffs on all feed ingredient imports, and they won,” Danielson Castillo said. “This signals a set of right circumstances to position the U.S. advantage and truly partner with Bangladeshi buyers.
“Helping to address logistical and credit issues will certainly assuage some of the supplier concerns about the challenges of selling to this market, but there is also no doubt Bangladeshi importers are making a strong case for becoming serious and consistent buyers.”
About The U.S. Grains Council
The U.S. Grains Council develops export markets for U.S. barley, corn, sorghum and related products including distiller’s dried grains with solubles (DDGS) and ethanol. With full-time presence in 28 locations, the Council operates programs in more than 50 countries and the European Union. The Council believes exports are vital to global economic development and to U.S. agriculture’s profitability. Detailed information about the Council and its programs is online at www.grains.org.