Expect the unexpected was the takeaway message from the U.S. Grains Council’s (USGC’s) 12th International Marketing Conference and 55th Annual Membership Meeting speakers Kimberly Atkins, USGC director of global programs, and Kurt Shultz, USGC director of global strategies.
Noting the dramatic roller coaster ride of the last two years, Atkins and Shultz led delegates on a tour of the roadblocks and emerging opportunities the Council faces today around the globe.
In this week’s Global Update, we asked Atkins and Shultz to share a few of their key observations:
Q: Expect the unexpected is usually good advice, but what was the biggest unexpected development of 2014 for each of you?
Atkins: Perhaps the biggest single surprise was the final tally on China’s imports. The halt to corn imports in late 2013 and the disruption of distiller’s dried grains with solubles (DDGS) imports in the summer of 2014 got a lot of attention. But at the end of the year, when we tally up the numbers, China was still a top market for the United States in 2014, with more than 6 million metric tons (236 million bushels) of sorghum and 4 million tons of DDGS, a total of nearly 10.7 million tons for the year.
Shultz: China will continue to be predictably unpredictable. What is clear is that the underlying demand growth in China is very large. Even with the severe disruptions last year, China was a major export market. Because of its current trade barriers, the Chinese livestock industry is now paying the highest feed grains prices in the world. The Chinese industry wants access to global markets. The Council has been engaged in China for more than 30 years, and the investment is paying off.
Q: With two record corn crops in a row, increased availability and competitive pricing, U.S. corn exports have rebounded around the world. Is there any market that stands out as a surprise?
Atkins: We saw significant rebounds in market share for U.S. corn in Latin America, Japan, Korea, Taiwan and the Middle East and North Africa. Pricing is a big part of the story.
But the rebound in Egypt does stand out as a bit unexpected, going from almost nothing in the 2012/2013 marketing year to 2.8 million tons (110 million bushels) in 2013/2014. Two years ago, we had to make a tough decision whether to maintain an office in Egypt when the political situation became uncertain and Ukrainian competition captured the market. We decided to stay, and it’s a good thing we did.
Q: Kurt, your job is to look ahead and figure out where the Council needs to be five and 10 years down the road. What stands out to you as the next big thing for U.S. coarse grains exports?
Shultz: I will take my own advice about expecting the unexpected. It is essential that we remain nimble and ready to respond to opportunities as they emerge, often in unanticipated places. With that caveat, there are a couple of things that stand out.
In partnership with the United States Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS), the Renewable Fuels Association (RFA) and Growth Energy, we have launched a new ethanol export initiative. The potential for ethanol is significant. This won’t happen overnight, but ethanol is the most cost-effective oxygenate and octane booster on the market today, and it has potential to help a number of countries meet their air quality and greenhouse gas emissions targets.
Then there are the big pending trade agreements. The Trans-Pacific Partnership (TPP) could be wrapped up this year. If we can achieve a high-quality agreement, that could open up major new opportunities for U.S. agricultural exports around the Pacific Rim. The Transatlantic Trade and Investment Partnership (T-TIP) appears to be further away, but it also has great potential.
Q: Kimberly, are we leaving anything out?
Atkins: There are too many to touch on them all here, but right next door, we think there is untapped potential in southern Mexico for corn and across Central America for barley malt in the microbrewery industry. President Obama has also called for normalization of relations with Cuba, so a new opportunity may be opening there.
Halfway around the world, India is simply too big to overlook. Thanks to the green revolution, India became self-sufficient in feed grains, but India will soon be the world’s most populous country, and it has the fastest growing major economy. As India begins to hit land and water constraints, it is likely to turn to imports.
Biotechnology issues have been a long-standing trade barrier in India, so it is important to note that India’s Agriculture Minister recently expressed support for biotechnology as an important tool for meeting India’s food security needs. India has also invested in its own biotechnology industry and is moving to field trials of several domestically-developed varieties. So there may be important policy changes in the near future in that country.
More information about the Council’s most recent annual meeting is available here.