Peru to expand use of US DDGS in dairy industry

Publish time: 28th October, 2013      Source:
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October 28, 2013


Peru to expand use of US DDGS in dairy industry


The US Grains Council and Gloria, the largest and most progressive milk processor in Peru, have entered a new Memorandum of Understanding (MOU) to take effect on November 1, 2013, in expanding US distiller''s dried grains with solubles (DDGS) use in Peru''s dairy industry.



Currently, Gloria is the only Peruvian importer of US DDGS. Through participation in Council programmes, Gloria determined that Peruvian dairies could benefit tremendously from utilisation of DDGS in rations, which Gloria began importing. As a dairy processor, Gloria is not a feed manufacturer nor involved in raw material distribution to local dairies, and in the past, DDGSimports by Gloria did not flow smoothly to the end users.



The MOU with the Council will bring together Gloria and two major raw material suppliers for the dairy sector in a joint DDGS marketing effort. The Council will provide technical support and marketing to promote DDGS use to customers of these two warehouses with the goal of increasing the consumption rate of DDGS by the dairy sector. If successful, the dairy sector will increase its use 300%, with the longer-term target to eventually achieve a 500% increase compared to the current market.



Kurt Shultz, USGC regional director for the Americas said, "We are helping Gloria, the current only importer of DDGS in Peru, to reduce the cost of storing and transporting DDGS, thereby helping Gloria expand its effectiveness in marketing DDGS to Peruvian dairy farmers."



In this MOU the Council agreed initially to help Gloria develop ties with two independent warehouses. But already Gloria has asked the Council to accelerate the timeline to add a third warehouse partner within six months.



The Peruvian dairy industry has been accepting DDGS in feed rations and is the immediate focus of Council efforts, however it only represents 20% of the long-term market potential for DDGS in Peru. The Council believes that Peru has a long-term potential to use 350,000 tonnes of DDGS, with the poultry and swine sectors representing 80% of this future demand. The dairy sector is currently leading the way and will hopefully open the doors for imports by the poultry and dairy sector in the near future.



Shultz said 2013-14 should be an excellent year for US DDGS and corn exports to Peru. "The abundant US corn crop and a lower corn price are making US corn very competitive in this market. In fact, under the US- Peru Free Trade Agreement the US has a duty-free quota for 660,000 tonnes (26 million bushels) of corn and there is no duty on US corn co-products. More than 180,000 tonnes (seven million bushels) of US corn has already been purchased and the Council anticipates more purchases to come. Promoting US corn and DDGS is part of our strategy to recapture US market share in this vital corn importing market," Shultz remarked.