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US farmers tout trade benefits on mission with Mexican buyers
Iowa Correspondent
CORDOVA, Md. — During a trade mission last month to central Mexico, Midwest soybean farmers and representatives of Ag Processing, Inc. (AGP) had an opportunity to strengthen relationships with their largest soybean meal customer and secondlargest buyer of whole beans.
“If you look at the logistics of Mexico, no other country can replace it as a customer for U.S. grain,” said Chip Councell, U.S. Grains Council (USGC) chair and Maryland farmer, last month to the National Assoc. of Farm Broadcasting about the mission. “The logistics by rail, truck and boat give the United States such a huge advantage.”
Funded by Omaha, Neb.-based AGP and several state soybean organizations, including the Iowa Soybean Assoc., the trip was part of the Soybean Research & Development Council’s (SRDC) Latin America project. Accompanied by USGC Mexico Director Ryan LeGrand and Assistant Director Heidi Bringenberg, Councell and USGC President/CEO Tom Sleight offered reassurance of U.S. grain producers’ dedication to customers in Mexico.
The U.S. and Mexico agriculture industries are increasingly integrated, due largely to favorable geographical and logistical advantages built since the North American Free Trade Agreement (NAFTA) went into effect.
According to the U.S. Soybean Export Council (USSEC), Mexico is a growing market for soybeans and soy meal. During the 2015/16 marketing year, the United States exported nearly 132 million bushels of soybeans and almost 2.2 million metric tons of meal (102 million bushels) to the country. Currently, Mexico is now the largest market for U.S. corn, with 13.3 million metric tons (523.6 million bushels) of imports in 2015/16, as well as the top buyer of U.S. barley in 2015/16, with 116,000 metric tons (5.33 million bushels) of malted barley imports.
In addition, Mexico is the second-largest customer for U.S. dried distillers grain (DDGS) and U.S. sorghum, with 2015/16 imports of 1.9 million and 424,000 metric tons (16.7 million bushels), respectively. Councell said the USGC is emphasizing the importance of this top market by working with its sister organizations – including the National Corn Growers Assoc., National Sorghum Producers, United Sorghum Checkoff Program and National Barley Growers Assoc. – and by bringing Mexican importers and feed millers to the U.S. to talk with farmers, government officials and others.
“I think it is extremely important that our friends in Mexico know that U.S. producers are advocating for agriculture,” he said. “The USGC has been working in Mexico for over 35 years to help them build their industry, and it is too important to ignore.”
With 89.5 million acres of soybeans projected to be planted in the United States this year, according to the USDA March 1 Prospective Plantings report, participants said it’s crucial to maintain and increase soy sales to Mexico. Buyers are cautiously optimistic that will happen.
“If things stay the status quo, we will continue to buy,” said Jose Garay, an area manager for Gavilon, an international commodities trading firm. “The country is growing, so we’ll need more protein, and the livestock industry keeps growing 5-8 percent a year. We’re at a (grain and oilseed) deficit here.” Garay works out of Gavilon’s shuttle station near Encarnacion, which brings in shuttle trains of soybean meal, corn and DDGS, mostly from the Midwest. It sells the feedstocks to area livestock producers and feed mills. Last year, the facility imported 173,000 metric tons of soybean meal made from a little more than 8 million bushels of beans.
Company officials said 60 percent was fed to swine, 30 percent to layers and the rest to other animals. The U.S. market share for beans and meal in Mexico is a dominant 86.9 and 91.6 percent, respectively, according to USSEC data.
Greg Greving, a Nebraska Soybean Board member and farmer, said he wants to keep that market share and hopefully increase it. He said that’s why trade missions are always valuable, but take on an added sense of importance during times like these.
mportant to AGP and farmers from Iowa, Nebraska, Kansas and the Dakotas (participating states),” he said while on the trip. “We’re all concerned, but building relationships and just being here making an effort means a lot to keep customers happy.
“Most buyers value contact over a contract. That’s what we’re here to do.”