After several years of lagging behind competitors from South America – for reasons ranging from quality concerns to high prices to a lack of ratified free trade agreements – grain exports from the United States to the Western Hemisphere are rebounding dramatically. So far this marketing year (Sept. 1 through April 17), U.S. corn exports have totaled more than 12 million metric tons (472 million bushels) versus 4 million tons (157 million bushels) over the same period last year.
Changes to internal tariff systems in the region coupled with a drop in international agriculture commodity prices triggered the activation of the price band system in Colombia and Peru. This is designed to reduce domestic price instability by buffering fluctuation in international pricing through a variable import tariff. This is currently giving U.S. commodities a distinct advantage over regional suppliers, including Argentina, Brazil and Paraguay.
In order to improve perceptions of U.S. corn quality and promote the advantages of sourcing grains from the United States, the U.S. Grains Council recently presented the 2013/2014 Corn Export Cargo Quality Report to key companies and organizations in Costa Rica, Panama, Peru, Colombia and Dominican Republic. "Each year, these reports gain more relevance as buyers become more sophisticated and demand more information about what they are buying," said Kurt Shultz, USGC regional director of the Western Hemisphere. "Most of these countries are net grain importers and there is a need for them to find the most favorable suppliers in terms of quality, price and logistics."
The series of seminars reinforced trust and confidence in the 2013 U.S. corn crop and the United States' reputation as the long-term reliable supplier of grains. The Council allayed concerns about overall corn quality, physical factors, including stress cracks, and logistics. "Our group was well-received at each stop and it's a great opportunity to put ourselves in front of our customers on a regular basis," said Bill Christ, USGC Western Hemisphere advisory team leader and Illinois Corn Marketing Board chairman. "They want to buy from the United States because of proximity and more reliable quality; other producer countries don't issue quality reports."
Also discussed were planting intentions for 2014, how U.S. farming has evolved in recent years and the impact of ethanol on the corn industry.
"The executives we met with appreciate the comprehensive narrative of the quality report and have been pleased with the crop the past two years," Shultz said. "They also have a deeper understanding of the availability the future of the U.S. grains industry."