Groups partner with pork producer group to develop master plan to facilitate U.S. DDGS trade.

March 29, 2019

4 Min Read
USGC stinger Mexico FDS.jpg

The U.S. Grains Council (USGC), the Missouri Corn Merchandising Council and the Regional Livestock Pork Producers Union of Sonora (Union) met this week in Ciudad Obregon, Mexico, to sign a memorandum of understanding (MOU) acknowledging and celebrating a multiyear effort marking the import of more U.S. dried distillers grains with solubles (DDGS) into the country.

The project is a joint investment Missouri Corn and the Union made in 2018 in which each group purchased hard car unloaders – known as “stingers” – for the Ciudad Obregon rail terminal in the state of Sonora, Mexico, where U.S. DDGS will be stored and utilized.

A stinger is a hydraulic arm that decreases the time and number of employees needed to unload DDGS from railcars. The new equipment in Sonora will help increase the efficiency of DDGS shipments arriving at the terminal.

“Northwest Mexico is an underserved market for U.S. DDGS; there is virtually no DDGS coming into the region today,” Ryan LeGrand, USGC director in Mexico, said. “The council and Missouri Corn partnered with swine producers here to purchase a stinger, and the producers here, in turn, purchased their own. Now, the potential for U.S. DDGS here is enormous.”

The three groups agreed in the MOU to develop a master plan to facilitate U.S. DDGS trade and conducted a ribbon-cutting ceremony while in Sonora. The stinger will help the Union unload DDGS efficiently, and U.S. farmers will benefit from increased exports of the product, USGC noted.

“Global market access has always been a key component of what the Missouri Corn Merchandising Council and our long-standing partners at the U.S. Grains Council do to find new demand for corn and corn co-products, including ethanol and distillers dried grains with solubles,” Missouri Corn chairman Mike Moreland said. “The Missouri corn checkoff has made significant investments to help build the relationship with Mexico as a grain customer.”

USGC explained that it took a regional approach, dating back to 2016, to make the project a success when it identified Sonora as a potential market for U.S. DDGS. To increase purchases, it worked with the Union and the Sonora Poultry Assn., whose members will also benefit from the import of U.S. DDGS into the region.

According to the council, Sonora is the second-largest pork-producing state in Mexico, producing 229,600 metric tons per year, with 2% growth year over year. The Union uses about 50,000 mt of feed grains monthly – 40% from the U.S. – and makes consolidated grain purchases for its members. These members operate large-scale programs that include breeding, fattening and processing.

Sonora is also the third-largest egg-producing state in the country, and Sonora’s poultry association members use 20,000 mt of feed grains monthly to feed their 12 million layers, USGC noted.

To tap into that potential, USGC hosted pork producers via a trade team to Kansas and Minnesota in 2017 to showcase the merits of DDGS and to identify the constraint of having no stingers at the rail terminal in the area. Missouri Corn stepped in to help fund the purchase of one stinger, and the Union purchased a second one to make unloading even more efficient.

“We are grateful to the U.S. Grains Council and the Missouri Corn Merchandising Council for the assistance with the stinger. The celebration of the installation of the two stingers is important because U.S. DDGS will help us lower our production costs at the farm level,” Gerardo Ramos, treasurer of the Union, said. “For years, we were unable to use DDGS because the freight costs were killing us. With these stingers, we can more cost-effectively incorporate it into our livestock diets.”

The MOU signing caps off the program, but the effort does not end there. The parties agreed to schedule periodic reviews of the equipment, evaluate progress and identify opportunities, problems and strategies for successful, ongoing development of the project.

“There will certainly be follow-up, and we will continue our relationship by bringing nutritionists to the area, offering technical support to make sure these farmers are maximizing their inclusion levels of DDGS and using it in the right way,” the groups said.

USGC relayed that Mexico is currently the top buyer of U.S. corn, barley and DDGS, with purchases of 2.13 million mt of DDGS in 2017-18, up 3% year over year.

“Mexico has always been a loyal customer, and we will work to make sure that partnership continues,” LeGrand said. “While this week’s celebration is the start of a relationship with poultry and swine producers in northwest Mexico, we are also here to continue to celebrate one of our best customers: Mexico.”

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