China imposes 'punitive' DDGS anti-dumping tax, US looks to new markets

By Aerin Einstein-Curtis contact

- Last updated on GMT

© iStock/florencemcginn
© iStock/florencemcginn

Related tags: International trade

The US Grains Council (USGC) is ramping up international sales expansion efforts for US generated dried distiller’s grains with solubles (DDGS) after a slowdown in Chinese sales due to a trade dispute. 

Earlier this week, China’s Ministry of Commerce (MOFCOM) said it would raise the amount of anti-dumping and countervailing duties on the US feed ingredient. It had previously set anti-dumping duties of 33.8% against the US for sales of DDGS citing injury to its domestic market.

MOFCOM has reportedly set a 42.2-53.7% anti-dumping tax for importers and a 11.2-12% anti-subsidy tax.

The decision, along with other related actions, is “deeply disappointing,”​ said Tom Sleight, president and CEO of the USGC.

However, the Council had been working to find alternative markets and expand current ones for the feedsstuff in light of the anti-dumping and countervailing duty investigation that China launched against the US in 2016.

“The investigation has been going on for a year, since January 2016,” ​he told FeedNavigator. “We have doubled and redoubled the USGC work around the world​.” 

The USCG has continued to stress, since the beginning​ of the investigation, the US was not dumping product on the Chinese market and had not acted inappropriately.

“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 [anti-dumping/countervailing duty] procedures and with China's international obligations,” ​said Sleight. “While painful and damaging to the US 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.”

Developing alternative markets

China had been the US’s top market for DDGS exports from the US, said Sleight. And purchases early in 2016 mean that it remains the largest market.

However, sales performance has been good in other markets including Mexico, Korea, across southeast Asia and northern Africa, he said.

“With China not buying as much as they usually do, the price has reflected that,”​ he said. Expansion into other markets has not completely covered the portion China has previous purchased, but it has increasesd, he added.

“Korea is one of our more successful stories,” ​said Sleight. “They weren’t much of an importer, and now they are – and we’re trying to push inclusion rates there.”

However, the group also intents to open dialogue with China in an attempt to improve trade relations.

“This is one of the topics that will be a key for the new administration to tackle and put it on the list with NAFTA and so forth,”​ he said.  

Other trade actions

Sleight said the move by China was "the latest in a rash of measures" ​taken by the government there "to restrict access to that market for US feed grains and related products."

The Chinese government has also increased tariffs on ethanol imported from the US and farmers are waiting for approvals on some strains of biotech corn, he said.

"The US Grains Council is deeply disappointed in this series of events that is a severe departure from our industry's three decades of broad, cooperative work with China's government and livestock industry and that follows a year of extensive cooperation on the part of the US DDGS and ethanol industry with MOFCOM investigations,”​ said Sleight.

The USCG has been working with China for 35 years, he said. “The implication of these recent moves is clearly that we are less than welcome in their market, and this will challenge the extent of our engagement with China,”​ he added.

“We look forward to and will continue to work toward the day when US-China trade relations are back on a better and more sensible course that results in benefits for both countries, their farmers and their consumers,”​ he said. “Thirty-five years of solid work and cooperation have showed this is possible."

Related topics: Policy, East Asia, Supply chain, China

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