A new Memorandum of Understanding (MOU) – effective Nov. 1, 2013 – between the U.S. Grains Council and Gloria, the largest and most progressive milk processor in Peru, will help Gloria overcome the major logistical bottleneck to expanding U.S. distiller’s dried grains with solubles (DDGS) use in Peru’s dairy industry.

Currently, Gloria is the only Peruvian importer of U.S. DDGS. Through participation in Council programs, Gloria determined that Peruvian dairies could benefit tremendously from utilization of DDGS in rations, which Gloria began importing. As a dairy processor, Gloria is not a feed manufacturer nor involved in raw material distribution to local dairies, and in the past, DDGS imports by Gloria did not flow smoothly to the end users.

The MOU with the Council will bring together Gloria and two major raw material suppliers for the dairy sector in a joint DDGS marketing effort. The Council will provide technical support and marketing to promote DDGS use to customers of these two warehouses with the goal of increasing the consumption rate of DDGS by the dairy sector. If successful the dairy sector will increase its use 300 percent, with the longer-term target to eventually achieve a 500 percent increase compared to the current market.

“The Council is a catalyst, a ‘matchmaker’ with unique capabilities to bring together various players in the marketing chain that otherwise do not know how to find each other,” remarked Kurt Shultz, USGC regional director for the Americas. “In this case we are helping Gloria, the current only importer of DDGS in Peru, to reduce the cost of storing and transporting DDGS, thereby helping Gloria expand its effectiveness in marketing DDGS to Peruvian dairy farmers.”

In this MOU the Council agreed initially to help Gloria develop ties with two independent warehouses. But already Gloria has asked the Council to accelerate the timeline to add a third warehouse partner within six months.

The Peruvian dairy industry has been accepting of DDGS in feed rations and is the immediate focus of Council efforts, however it only represents 20 percent of the long-term market potential for DDGS in Peru. The Council believes that Peru has a long-term potential to use 350,000 metric tons of DDGS, with the poultry and swine sectors representing 80 percent of this future demand. The dairy sector is currently leading the way and will hopefully open the doors for imports by the poultry and swine sector in the near future.

“2013-14 should be an excellent year for U.S. DDGS and corn exports to Peru,” Shultz said. “The abundant U.S. corn crop and a lower corn price is making U.S. corn very competitive in this market. In fact, under the U.S. – Peru Free Trade Agreement the United States has a duty-free quota for 660,000 metric tons (26 million bushels) of corn and there is no duty on U.S. corn co-products. More than 180,000 metric tons (7 million bushels) of U.S. corn has already been purchased and the Council anticipates more purchases to come. Promoting U.S. corn and DDGS is part of our strategy to recapture U.S. market share in this vital corn importing market.”