U.S. Producers Losing Export Market Opportunity in Colombia

U.S. Grains Council director in Latin America Kurt Shultz traveled to Colombia in early September to find the lack of progress on the U.S.-Colombia Free-Trade Agreement (FTA) is continuing to have a devastating impact on U.S. corn, soybean and wheat producers. Colombia is a traditional market for U.S. corn producers, importing approximately 3 million metric tons (118 million bushels) of yellow corn annually. However, since 2009, Colombia has been gradually switching its corn imports to South American origins at the expense of U.S. producers.

This switch is due to an agreement with Mercosur countries (primarily Argentina and Brazil) which will gradually phase out their grain import duties. Meanwhile, the United States, which has had an FTA agreement negotiated since 2006, has been unable to get the agreement before the U.S. Congress for a vote.

“As a result of this inaction, the Argentinean market share for corn has increased from 3% in 2007, to 67% through June 2010. Furthermore, the U.S. market share, previously 96 percent in 2007, now stands at only 22 percent,” says Shultz.

“To further highlight the economic impact this is having on U.S. farmers in the first six months of 2010, Argentinean corn exports to Colombia have soared to $201 million, while U.S. exports have dwindled to $67.6 million,” says Shultz.

“The U.S. government needs to ratify this already signed FTA before it’s too late,” Shultz says. “Once these competitors’ trade patterns and relationships are established, U.S. market penetration will be significantly damaged not only in Colombia, but it could result in continued erosion of the U.S. market share in neighboring countries, such as the Dominican Republic which has imported 80,000 metric tons (3.1 million bushels) of South American corn.”

OSHA Issues Stern Reminder on Bin-Entry Procedures

On Aug. 4 the Occupational Safety and Health Administration (OSHA) issued a stern reminder to the grain handling industry concerning proper and required grain bin entry procedures following the recent increase in engulfment incidents.

In doing so, the agency also announced a proposed $721,000 civil penalty against a Wisconsin grain handling facility for 10 alleged willful violations of OSHA standards, including an incident in which an employee was trapped in a bin of soybeans in February for four hours before being rescued successfully.

“OSHA has investigated several cases involving worker entry into grain storage bins where we have found that the employer was aware of the hazards and of OSHA’s standards, but failed to train or protect the workers entering the bin,” wrote OSHA administrator David Michaels in a letter to all U.S. grain storage facility managers that included a copy of the agency’s grain handling facility safety standard. “OSHA has aggressively pursued these cases and we will continue to use our enforcement authority to the fullest extent possible,” he said. “If any employee dies in a grain storage facility, in addition to any civil penalties proposed, OSHA will consider referring the incident to the (U.S.) Department of Justice for criminal prosecution….” 

DDGS Transport Proposal to the IMO Approved

This week in London the key subcommittee of the International Maritime Organization (IMO) approved a U.S. proposal that distiller’s dried grains with solubles (DDGS) be classified as a non-hazardous cargo.

“This is a major step toward resolving confusion that has emerged about shipping requirements for DDGS,” said Erick Erickson, U.S. Grains Council special assistant for planning, evaluation and projects.

The subcommittee decision is expected to be ratified by the Maritime Safety Committee when it meets in December.

“Even though the new classification will not become binding in the IMO code until 2013, the decisions this week and its expected ratification in December will have significant force in the international marketplace in the interim,” said Erickson.

DDGS exports have grown rapidly in the past five years, but some insurance companies insisted that DDGS be treated as a hazardous cargo. This confusion has led to shipping disruptions and higher transportation costs for DDGS exports.