Ethanol leaders: China is a potential market
May 23, 2014 | 03:50 PM
Three ethanol industry advocates who participated in a recent Agriculture Department trade mission to China said this week they believe there is a market for ethanol there, even though China now bans ethanol imports.
“There is tremendous potential to penetrate that market for ethanol as well as for distillers dried grains,” but developing those markets will take “patience and persistence,” said Jim Miller, a former Agriculture undersecretary for farm and foreign agricultural services who is now a vice president and chief economist for Growth Energy.
He said the Chinese had indicated “a willingness toward flexibility, particularly in markets not being served well by their own industry.”
Miller said he did not know exactly why the Chinese have banned ethanol imports but noted they are trying to develop their own renewable fuels industry as well as a petroleum industry. China is the world’s third largest producer of ethanol behind the U.S. and Brazil, he added.
Miller also said it is “important” that Agriculture Secretary Tom Vilsack announced that ethanol will be considered an agricultural commodity because that means USDA — rather than Commerce or any other agency — will be in charge for foreign market development of the product. Vilsack’s announcement, he said, will make ethanol eligible for USDA loan guarantees and other export programs.
The major competition for supplying China with ethanol, Miller said, is Chinese domestic production and alternative oxygenates. The Chinese have “had conversations” with Brazil about importing sugar-based ethanol, but Miller contended that Brazil is “unlikely to be a reliable supplier” because it always faces the question of whether its sugar will be used to make ethanol or food sugar.
Growth Energy, the Renewable Fuels Association and the U.S. Grains Council have already formed a partnership to promote exports of dried distillers grains (DDGs), Miller said. He noted that China has rejected some DDGs over biotech concerns, but that it is also the biggest importer of DDGs.
Kelly Davis, director of regulatory affairs at the Renewable Fuels Association, noted that the number of vehicles is rising quickly in China and that air quality concerns there should mean having ethanol as a choice to deal with oxygen needs.
“The potential ethanol export market in China is substantial,” said National Farmers Union President Roger Johnson, who also made the trip.
“Demand for ethanol is high, and domestic production meets less than half of their projected ethanol needs,” he said. “However, in order to meet this demand, it is clear that we must first resolve some government regulatory and environmental issues.”
“Second, DDG exports to China will likely continue to be difficult and sporadic until China modifies its biotech approval process so it is comparable to that of the rest of the world,” Johnson said.
▪ Reuters — China imports of distillers grains at record high in April
“There is tremendous potential to penetrate that market for ethanol as well as for distillers dried grains,” but developing those markets will take “patience and persistence,” said Jim Miller, a former Agriculture undersecretary for farm and foreign agricultural services who is now a vice president and chief economist for Growth Energy.
He said the Chinese had indicated “a willingness toward flexibility, particularly in markets not being served well by their own industry.”
Miller said he did not know exactly why the Chinese have banned ethanol imports but noted they are trying to develop their own renewable fuels industry as well as a petroleum industry. China is the world’s third largest producer of ethanol behind the U.S. and Brazil, he added.
Miller also said it is “important” that Agriculture Secretary Tom Vilsack announced that ethanol will be considered an agricultural commodity because that means USDA — rather than Commerce or any other agency — will be in charge for foreign market development of the product. Vilsack’s announcement, he said, will make ethanol eligible for USDA loan guarantees and other export programs.
The major competition for supplying China with ethanol, Miller said, is Chinese domestic production and alternative oxygenates. The Chinese have “had conversations” with Brazil about importing sugar-based ethanol, but Miller contended that Brazil is “unlikely to be a reliable supplier” because it always faces the question of whether its sugar will be used to make ethanol or food sugar.
Growth Energy, the Renewable Fuels Association and the U.S. Grains Council have already formed a partnership to promote exports of dried distillers grains (DDGs), Miller said. He noted that China has rejected some DDGs over biotech concerns, but that it is also the biggest importer of DDGs.
Kelly Davis, director of regulatory affairs at the Renewable Fuels Association, noted that the number of vehicles is rising quickly in China and that air quality concerns there should mean having ethanol as a choice to deal with oxygen needs.
“The potential ethanol export market in China is substantial,” said National Farmers Union President Roger Johnson, who also made the trip.
“Demand for ethanol is high, and domestic production meets less than half of their projected ethanol needs,” he said. “However, in order to meet this demand, it is clear that we must first resolve some government regulatory and environmental issues.”
“Second, DDG exports to China will likely continue to be difficult and sporadic until China modifies its biotech approval process so it is comparable to that of the rest of the world,” Johnson said.
▪ Reuters — China imports of distillers grains at record high in April
