U.S. Grains Council 2007 Sorghum Mission
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1 U.S. Grains Council 2007 Sorghum Mission February 20 28, 2007 Dominican Republic & Guatemala 1
2 Purpose of the Mission To assess market opportunities for U.S. sorghum in the wake of the implementation of the U.S./Central America and Dominican Republic Free-Trade Agreement. Members of the 2007 Sorghum Mission visit the Aliansa Feed Mill in Guatemala 2
3 Dominican Republic 3
4 Opportunities in the Dominican Republic Feed rations are primarily corn and soy based, and with the recent run-up in the cost of these two ingredients the Dominican livestock and poultry producers are interested in diversifying their ingredients in hope of lower the cost of rations. There was a lot of interest in sorghum, primarily because it would allow diversification of feed ingredients currently used and may offer an opportunity for feeders to reduce their cost of production. Agri-Feed, a commercial feed producer who has used domestic sorghum, produced pellets that were not as susceptible to breakage when compared to corn. 4
5 Challenges in the Dominican Republic Transportation is a major constraint. Roads are mostly narrow and two-lane, trucks are old and appear to be unsafe and in general logistics for moving goods, let alone people, is cumbersome. Storage is a major constraint. At present producers only have storage for corn and soy. In order to diversify ingredients they would have to construct additional storage facilities. Most of the non-corporate livestock and poultry producers utilize on-farm pre-mixes with labels that tell producers the amount of corn and soy they are to blend with the premix. As a result, it is doubtful that any independent livestock or poultry producer is blending with sorghum. 5
6 Recommendations for the Dominican Republic Target Pollo Cibao, the DR s leading poultry company, initially for future sorghum promotional efforts. They have the storage capacity, and market presence to take advantage of diversification in feed ingredients. During a meeting with the Secretary of Agriculture we made him aware of a potential problem with a 3 percent value-added tax applied to sorghum. As a result of our meeting he has asked the third largest buying group to research the subject and report the findings. USGC should monitor this and take actions, where appropriate, to insure the VAT is eliminated. 6
7 Guatemala 7
8 Opportunities in Guatemala Some feed millers and pork producers have used domestically produced sorghum and liked how it performed in rations. The Guatemalans are cost conscious and are looking for ways to reduce their feed costs. At present, all rations are corn/soy based. Groups met are willing to look at new ingredients. The window is open because there are no trade restrictions for sorghum with CAFTA in place. Guatemala is more developed that the DR in regards to infrastructure. Roads connecting principle cities and the port are well maintained and storage doesn t appear to be a constraint. 8
9 Challenges in Guatemala The level of knowledge on using sorghum is rudimentary. There are no buying groups or consortiums for importing. Each company buys on their own account. One multi-national company trades 80 plus present of the feed ingredients imported by Guatemala. Growth of the livestock and poultry industries is stagnant because of recent increases in the cost of production, vis-à-vis high ingredient costs. Any future expansion will be based on meat exports as increases in domestic consumption aren t anticipated. 9
10 Recommendations for Guatemala Guatemala s swine producer s association serves as a gateway for supplying ingredients to their members. However, there is limited information on the structure of the industry to determine if the association could serve as a link in the marketing chain for sorghum. USGC continues to track and assess the sector. There are opportunities to develop a sorghum market in Guatemala. This would require a step-by-step progression in marketing to include the dissemination of information on sorghum s nutritional values and handling properties, providing samples for use in commercial feeding trials, hosting field days to disseminate trial results to key industry contacts, and educating prospective importers on the U.S. grain sorghum marketing system. 10
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