FTA with Colombia Helps Recapture Corn Market in This South American CountryTue, 19 Aug 2014 06:35:55 CDT
The United States is on track to capture more than 95 percent of Colombia's 141 million bushel corn market this marketing year, which ends Aug. 31. This is a dramatic turn-around from 2013 exports of just 25 million bushels to that country. "The trend that we are seeing clearly illustrates both why the National Corn Growers Association's work in promoting trade agreements benefits U.S. corn farmers and the effectiveness of its work in collaboration with the U.S. Grains Council," said NCGA Trade Policy and Biotechnology Action Team Chair Jim Zimmerman, a farmer from Wisconsin. "Together, NCGA and USGC can affect real change by promoting policies that open markets and building the relationships that capitalize on said policies. While this work may seem ephemeral, the impact on corn demand has very concrete benefits for farmers."
Colombia has traditionally been the biggest importer of U.S. corn in South America. In 2008, U.S. corn imports accounted for 80 percent of the Colombian corn market. However, due to tariff advantages, Colombian importers began switching to Argentina and Brazil to source their corn needs around 2009. By 2011, U.S. corn accounted for only 21 percent of that market. American exporters did not become competitive once again in this vital corn market until the U.S. - Colombia free trade agreement was implemented in 2012. NCGA, along with a variety of other organizations, pushed vigorously for passage of the FTA and, in late 2011, this important trade agreement was ratified by the U.S. Congress. The FTA agreement allows 90 million bushels of U.S. corn to be imported duty-free. The duty-free quota for this year was filled in June, after which market watchers expected Colombian importers to switch back to South American origin as the Argentine crop began to be exported. However, this did not happen.
The low international price of corn has caused Colombia to raise its duties on other origins to more than 30 percent, compared to 18 percent on corn from the United States. As a result, Colombian grain importers returned aggressively to buying U.S. corn. "This year, Colombian importers were able to save millions of dollars in taxes by importing U.S. corn, said USGC Director of Global Strategies Kurt Shultz. "We benefit as a result of years of negotiations over the free trade agreement," Shultz said. "After all these years, it's actually been really beneficial to the U.S. corn producer." In addition to corn, the Council is working with the livestock industry in Colombia to introduce DDGS, which face no import duties, into that market.
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