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Chinese ethanol, DDGS moves prompt plea to Trump

China last week increased punitive tariffs on imports of a U.S. distillers' dried grains with solubles (DDGS) and corn and ethanol byproducts, raising complaints from the U.S. corn and ethanol industries and a plea to President-elect Donald Trump to take quick action.

"The ruling is a major victory for China's fledgling ethanol industry, which had complained the U.S. industry was unfairly benefiting from subsidies, and followed a year-long government probe," Reuters said.

U.S. Grains Council President and CEO Tom Sleight said that China's decision to subject DDGS "to anti-dumping and countervailing duties (AD/CVDs) is the latest in a rash of measures taken by the Chinese government to restrict access to that market for U.S. feed grains and related products, specifically corn, distiller's dried grains and ethanol."

"It came just 10 days after action by the Chinese government to dramatically increase tariffs on imported U.S. ethanol from 5 to 30 percent, effectively stopping a growth market for U.S. farmers and ethanol producers. U.S. farmers also continue to wait for China's approvals of biotech corn events, which last happened in 2014," Sleight said.

"The U.S. 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 U.S. DDGS and ethanol industry with MOFCOM (China's Ministry of Commerce) investigations," Sleight added.

"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 procedures and with China's international obligations," he continued.

SHORT SIGHTED

"The decisions to raise tariffs on ethanol and to delay further the approval of helpful plant technology that enhances food safety and environmental protection are (short-sighted) trade barriers that also, ultimately, most hurt the Chinese people, who deserve cleaner air and increased food security through both production and trade," Sleight concluded.

Marquis Energy, an Illinois company, said in a news release, "The Chinese tariffs are negatively impacting the U.S. ethanol industry's exports, of not only ethanol, but our co-product of dry distillers grain, a high-quality animal feed that is favored by Chinese livestock producers and is the largest export market for U.S. DDG," says Mark Marquis, CEO of Marquis Energy.

"U.S. farmers say these unfair tariffs will cost U.S. agriculture at least $2 billion per year," Marquis added.

"These tariffs are the poster child of bad trade deals," he continued. "It is our opinion that the Chinese calculations are not in line with WTO trade rules."

Marquis said preliminary tariffs on U.S. DDGS, totaling more than 40 percent, were imposed by China several months ago, causing the price of DDGS to drop by about 30 percent, or about $60 per ton, affecting the 36 million tons of DDGS produced annually in the U.S. The combined tariffs, now totaling more than 80 percent, will effectively close the Chinese animal feed market to U.S. DDGS.

"Marquis Energy and U.S. farmers are hopeful that the new Trump administration will immediately take up the issue of these tariffs directly with China, rather than waiting the several years that a WTO challenge would take while the tariffs remain in place, harming U.S. trade," Marquis concluded.

— The Hagstrom Report