WASHINGTON, Jan. 11, 2017 – A long-feared ruling by China’s Commerce Ministry to slap import duties on U.S. distiller’s dried grains with solubles (DDGS) will effectively kill U.S. exports to the country, U.S. Grains Council President Tom Sleight said today.
China issued a preliminary decision on the duties in September and finalized the ruling Tuesday.
Sleight said the new anti-dumping (AD) and countervailing duties (CVD), together with existing duties and taxes, would total roughly 90 percent of the price of U.S. DDGS.
The industry is bracing for a sharp downturn in what has been a lucrative trade relationship for years. U.S. exports of DDGS to China have been on the rise in recent years as U.S. companies sold hundreds of millions of dollars of the livestock feed product that is a byproduct of ethanol production.
China bought 6.3 million tons of DDGS in 2015, valued at about $1.6 billion, according to U.S. Grains Council officials. That was up from 4.3 million tons, worth about $1.25 billion, in 2014.
Sleight said the Grains Council has been working together with the U.S. Trade Representative for over a year to counteract Chinese allegations that that the U.S. subsidizes DDGS production and that the product was being dumped in China at below-market prices.
"The decisions in the anti-dumping and countervailing duties investigations are not supported by the evidence and raise serious questions regarding the Ministry’s compliance with standard AD/CVD procedures and with China’s international obligations,” Sleight said in a statement released Wednesday.
“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.”
Sleight said the action taken against U.S. DDGS comes just 10 days after the Chinese government acted to increase tariffs on imported U.S. ethanol from 5 percent to 30 percent, effectively stopping a growth market for U.S. farmers and ethanol producers.
With the Chinese market for DDGS now gone, Sleight said in an interview, U.S. exporters are focusing on growing demand in other importing countries like South Korea and Mexico. The Grains Council has been focused on gaining traction in alternative markets for the past year, Sleight said, and those efforts have been successful.
But the loss of the Chinese market still hurts, he said, adding that he Council is hoping to meet with the incoming Trump administration on working to improve trade ties with China.
“Trade is too important to U.S. agriculture to let it devolve into further friction, so we want to engage the (Trump) administration on the importance of agricultural trade with China and try to get some progress towards solutions … It’s important that we get this right.”
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