Seizing export opportunities

RFA membership has made growing export market opportunities one of our top priorities, writes Bob Dinneen. This column appears in the February issue of EPM.
By Bob Dinneen | January 20, 2016

If you are a regular reader of the Renewable Fuels Association’s monthly export, import summaries, then you know that ethanol exports are once again on the rise, on track to surpass 850 million gallons this year, the second-highest total ever. Given the U.S. EPA’s decision in November to inexplicitly curtail renewable fuel use in the United States and limiting ethanol to the so-called blend wall, exports of ethanol are going to continue to be a critical market and the key to profitability in the industry.  As a result, the RFA membership has made growing export market opportunities one of our top priorities.

RFA publishes the “Ethanol Export & Import Statistical Summary,” which provides an in-depth review of international ethanol trade over the past decade. It reflects the growth in ethanol exports over that time, and lists the more than 50 countries importing U.S. ethanol today. Canada, of course, remains the largest market for U.S. ethanol, receiving 29 percent of all ethanol exports last year.  Brazil, the Philippines, South Korea and India also remain top five export destinations. But this year, China emerged as a growing market for U.S. ethanol, becoming the sixth largest market for exports.

A troubling threat to the Canadian market was averted in December, when the U.S. Congress included a repeal of Country of Origin Labeling requirements in the Omnibus spending bill after the World Trade Organization found COOL violated international trade law and awarded Canada and Mexico up to a $1 billion each in potential countervailing duties that could have included fuel ethanol. RFA continues to fight the unjustified 9 percent duty imposed on U.S. ethanol by the European Union, and when it is ultimately repealed, that important market should once again provide significant opportunities. 

If the on again, off again distillers grains trade with China has taught us anything, it is that overdependence on one international market is fraught with peril, and the industry must work to develop new export markets in every corner of the globe. Toward that end, the RFA helped form the Ethanol Export Partnership with the U.S. Grains Council and Growth Energy to combine resources and maximize the effort’s effectiveness. Working through the USDA, the partnership has already conducted trade missions to Mexico, Japan, India, China and the Philippines. More are planned this year.

The RFA has also worked closely with the U.S. Department of Commerce to expand international trade opportunities. RFA has sponsored business-to-business trade missions to Brazil and the Philippines, and the National Ethanol Conference was selected to host an International Buyer Program in February, bringing pre-screened foreign buyers from Brazil, Mexico, India, China and the Philippines to the NEC for networking with U.S. producers and marketers. International trade specialists from the commerce department will be at the International Trade Center on-site at the NEC to provide export counseling, matchmaking services, market analysis and more. 

It is perhaps unfortunate that the U.S. ethanol industry is forced to build export markets because our own EPA fails to appreciate the value of maximizing, rather than artificially limiting, the amount of ethanol that can be blended domestically. But through these efforts, and the commitment to growing international markets by producers, the U.S. is poised to realize its full potential in any case.

Author: Bob Dinneen
President and CEO,
Renewable Fuels Association
202-289-3835