“This was not at the request of USTR [US Trade Representative],” a UGC spokesperson told us.
Distiller’s dried grains with solubles (DDGS) are the nutrient rich co-product of dry-milled ethanol production. DDGS utilization as a feed ingredient is well documented as both an energy and a protein supplement.
Combined, US ethanol plants possess the capacity to produce more than 15 billion gallons of ethanol and 44 million metric tons of DDGS.
According to an article on Reuters, citing a statement from China's commerce ministry, the Chinese officials are investigating the request; provided it meets legal requirements, they will decide whether to review the case.
If the ministry decided to proceed with a review, it would carry out an impartial and fair investigation, and make a final decision based on the results, the statement said.
The UGC request comes as negotiations are underway between the US and China to try and reestablish their economic relationship.
Background to measures on US DDGS
China launched anti-dumping and countervailing duty investigations into the imports of US DDGS in January 2016. A petition for those investigations was brought to MOFCOM by the China Alcoholic Drinks Association.
At that time, the US Grains Council (USGC) said that the US was not dumping the feed ingredient.
Anti-dumping and countervailing duties on the feed ingredient were increased to 42.2-53.7% with an 11.2 to 12% anti-subsidy tax in 2017 for a five-year period. Previously, anti-dumping duties of 33.8% had been in place on DDGS in September 2016.
“The decision 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,” Tom Sleight, USGC president and CEO told us at the time. “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.”
In late 2017, some progress was made regarding reducing the fees on US DDGS as an 11% value-added tax (VAT) was removed, according to information from the USGC. However, other fees continued at that time.
Following the loss of the export market to China, efforts increased to develop alternative markets, Sleight said in a previous interview regarding efforts to support exports of DDGS.
“You have to get busy developing alternative markets – we’ve done that over the course of the last several years with DDGS, and we’ve really been able to have success there,” he said. “The price has gone down, but in the volume, we’re doing well in places like Korea and Japan.”
From January to November of 2015, China imported more than half of the DDGS that the US exported about 5.4m metric tons, reported the USGC.
China remained the largest purchaser of the feed ingredient in 2016, according to information from the USGC. But the total imported also dropped, amounting to about 3.3m metric tons.
By November 2017, import levels in China fell to 739,000 tons, the Council said.
However, overall went to 49 different countries in 2017/18, said the USGC. Mexico has become the top importer accounting for about 18% of the export market, followed by South Korea, Turkey, Vietnam and Thailand.
So far in the 2018/19 marketing year, Mexico remains the top importer, followed by Vietnam, the EU, Indonesia, Thailand and South Korea, according to Council data. Imports for both Vietnam and the EU have increased by 67%.