In a ceremony on Friday, representatives of Illinois government and the government of Taiwan joined farmers to sign a letter of intent that cements our trading relationship with the Asian nation.
The letter of intent for corn purchases was signed by Illinois Corn Marketing Board (ICMB) Chairman Jim Raben and witnessed by Illinois Governor Bruce Rauner.
“We thank Taiwan for their continued support of the state’s agriculture industry,” said Governor Bruce Rauner in a press release. “Agriculture helps our state secure a strong position in the global economy. We look forward to a long, continued relationship with our friends from Taiwan so that together we can help feed the world.”
ICMB Chairman Jim Raben said, “This ceremony emphasizes how important these relationships are to our export customers. This Taiwanese delegation has invested quite a bit of time in understanding corn farmers and corn farming here in the U.S. and they remain committed to us. We remain committed to Taiwan, as well, and look forward to shipping Illinois corn their way.”
The letter of intent indicates that the Taiwanese marked considers agricultural imports from the U.S. to be “highly regarded” and as such, the Taiwan Feed Industry Association intends to purchase 197 million bushels of corn and 0.5 million metric tons of corn co-products in 2016-2017. The value of these purchases is estimated to be about $1.23 billion. Illinois’ share of that, based off current market prices, is an estimated $116 million, according to the Illinois Department of Agriculture.
According to Raymond Defenbaugh, Illinois Renewable Fuels Association President, ”The export of DDGS is critical to the sustainability of the Illinois ethanol industry which relies on the export market for the sale of approximately 90 percent of the co-products it produces.”
Taiwan is an important buyer of U.S. agricultural products, especially U.S. corn. For the 2014/2015 marketing year, Taiwan was the sixth largest market for U.S. corn and a top buyer of U.S. distiller’s dried grains with solubles (DDGS), a co-product of ethanol production that is a high-protein feed ingredient for livestock.
In the 1990s, Taiwan was importing more than 6 million metric tons (236.2 million bushels) of corn per year. However, a 1997 outbreak of foot-and-mouth-disease led to a steep decline in pork production and a resultant decline in feed grain demand.
The U.S. ethanol industry has been utilizing corn oil extraction equipment, which removes a portion of the non-food grade corn oil in distiller's dried grains with solubles (DDGS), during the ethanol production process, making the oil available for other use. This also changes the feeding characteristics and potential value of DDGS, as regular DDGS may contain 10-12 percent oil (fat), while the low-oil variety may contain 6 to 9 percent.
For the Taiwan feed industry, low-oil DDGS is a relatively new product. Taiwanese DDGS importers want to know how to adapt to the low-oil DDGS and still maintain their current level of nutrient availability, information that the Council is working to provide. With almost all the large feed mills in Taiwan using DDGS, it is important to educate these importers and end-users so U.S. DDGS market share can continue to grow in Taiwan.
Almost all the large feed mills in Taiwan are using DDGS already. Taiwan currently produces about 7 million metric tons of animal feed rations each year, meaning if there was an average 10 percent inclusion rate of U.S. DDGS, the potential market demand for U.S. DDGS could be as large as 700,000 tons, compared to less than 250,000 tons last year.