Thursday April 16 Ag News

April Rural Mainstreet Index Collapses to Record Low: Nine of 10 Bank CEOs Expect Rural Recession

The Creighton University Rural Mainstreet Index (RMI) plummeted in April to its lowest level since beginning the survey in January 2006. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, this represented the second straight record low with a reading well below growth neutral.     

Overall: The overall index for April slumped to 12.1 from 35.5 in March. April’s decline represents the largest one month fall since the survey was initiated in January 2006.

“More than nine of 10 bank CEOs expect the coronavirus to produce a recession in their market area. This is up significantly from March when 61.3 percent of bankers anticipated such a recession,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. 

Approximately 94%, of bankers reported a decline in client or customer visits over the past two weeks as a result of the coronavirus.  Almost one-third, or 30.3%, indicated that their bank had experienced higher loan delinquency rates resulting from the coronavirus threat over the same two-week period.

Farming and ranching: Farmland prices continue to slide. April’s reading fell to 40.9 from March’s 46.6. This is the 76th time in the past 77 months the index has been below growth neutral.

The April farm equipment-sales index dropped to 20.0 from 37.5 in March. This marks the 79th month straight month that the reading has remained below growth neutral 50.0. 

Below are the state reports:
Nebraska: The Nebraska RMI for April tumbled to 10.1 from March’s 32.6. The state’s farmland-price index slipped to 39.8 from last month’s 45.2. Nebraska’s new-hiring index plunged to 14.5 from March’s 33.9. “U.S. Department of Labor’s reported initial claims for unemployment benefits for the last two weeks Nebraska were 51,513 which was a 41-fold expansion from the same period in 2019,” said Goss

Iowa: The March RMI for Iowa fell to a regional low 7.1 from March’s 31.0. Iowa’s farmland-price index dropped to 38.8 from March’s 44.6. Iowa’s new-hiring index for April sank to a regional low of 4.2 from February’s 47.7. “U.S. Department of Labor’s reported initial claims for unemployment benefits for the last two weeks for Iowa were 123,300 which was a 32-fold expansion from the same period in 2019,” said Goss

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities, and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.  

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.



Webinar Series: COVID-19's Impact on Nebraska Ag

The University of Nebraska-Lincoln’s Department of Agricultural Economics’ Farm and Ranch Management team will present a series of webinars focusing on COVID-19’s impact on agriculture in Nebraska.

Register for these webinars here.... https://go.unl.edu/manage2020. 

USDA Farm Service Agency Program Tools to Assist Producers During the COVID-19 PandemicThursday, April 23, noon.
Ben Herink, Farm Loan Program Specialist
Doug Klein, Price Support and Conservation Program Chief, USDA Nebraska Farm Service Agency State Office
USDA Farm Service Agency (FSA) in Nebraska remains open for business across the state, using phone, email, mail and fax communication to deliver program services to farmers and ranchers while in-person access to offices is limited. The agency is offering some program flexibilities during this time to aid producers, including relaxing some processes within the farm loan program and extending the maturity deadline for commodity crop marketing loans. These changes are designed to assist producers with cash flow during a challenging time for marketing crops and livestock.

Leading Yourself, Your Workforce, and Your Business in the COVID-19 Crisis
Thursday, April 30, noon.
Dr. Robert Milligan, Senior Consultant, Dairy Strategies, LLC; Professor Emeritus, Cornell University; Human Resource Management Expert.
Dr. Bob Milligan will discuss the three keys to managing in this crisis: leadership, planning, and communication/collaboration. As a leader of your farm business, you have two key leadership roles: 1. Leading yourself and your workforce in these unprecedented times, and 2. Positioning your farm business to survive/thrive in this crazy environment. Dr. Bob will provide timely tips on a) taking care of yourself so you can lead, b) keeping your workforce safe, focused, and motivated, and c) effective collaboration between your partners and the outside world to survive/thrive in this difficult time.

Strategies for Business Success
Thursday, May 7, noon.
Dave Goeller, Deputy Director of North Central Risk Management Education Center, Farm Management/Transition Specialist, University of Nebraska-Lincoln (retired).



National Wind Energy Market Report Highlights Nebraska’s Growth and Potential as Wind Power Producer

Wind power today is America’s top choice for new power installations and its top renewable energy provider, and Nebraska continues to be one of the fastest growing wind states in the country with some of the greatest potential for further growth.  In 2019, the percentage of electricity share Nebraska receives from wind energy grew to nearly 20 percent, up from 14 percent in 2018.  The state also registered the highest average wind energy capacity factors in the nation at 43 percent, and Nebraska ranks as the second fastest growing state for wind energy generation. These findings were among those released today in the Wind Powers America Annual Report 2019, the American Wind Energy Association’s annual market report.

“Wind energy continues to be an economic growth engine in rural Nebraska,” said Josh Moenning, director of New Power Nebraska, a renewable energy development organization.  “We continue to utilize our world-class, consistently powerful wind resources to emerge as one of the fastest growing wind energy states in the nation.  Our tremendous wind power potential means more room to grow in the way of new farm income from wind farm land leases, new tax revenues for local governments and schools, and new good-paying jobs for young people wanting to build careers in rural places.”

The annual market report shows that Nebraska ranks first in the nation in the efficiency and productivity of its wind facilities, registering an average 43 percent capacity factor (page 76). The state is the 2nd fastest growing state for wind generation (page 33), 7th in wind energy share of electricity generation at nearly 20 percent (page 33), 11th in new capacity additions in 2019 (page 31), and 14th in cumulative capacity in the country. Its share of electricity generation from wind jumped from a ranking of 13th in 2018 to 7th in 2019.

Nationally, wind energy was the largest source of new, utility scale electric generation capacity in 2019, capturing 39 percent of new power plant installations as wind energy became the top source of renewable energy in the country.  U.S. wind energy contributes $1.6 billion in new tax revenues for states and local governments and land lease payments to landowners. The costs of producing wind energy have fallen nearly 70 percent in 10 years, and new projects represent $62 billion in new investment in the near term.



NRCS Announces $4.4 Million Award for Nebraska On-Farm Conservation Project

U.S. Senator Deb Fischer (R-Neb.), a member of the Senate Agriculture Committee, released the following statement today after the Natural Resources Conservation Service (NRCS) announced that The Nature Conservancy in Nebraska’s project, “Resilient Futures for Nebraska Soil,” was selected for a Regional Conservation Partnership Project (RCPP) in the amount of $4,419,304. The application was strengthened by the support of Senator Fischer and Representative Don Bacon.

“I am pleased that The Nature Conservancy’s Nebraska project was selected for this award,” said Senator Fischer. “This is a good conservation win and an example of how public-private partnerships can work to support Nebraska’s farmers and ranchers in their continued efforts to be good stewards of the land. I look forward to seeing how this award created by 2018 Farm Bill will foster partnerships to benefit farmers as they care for the land and implement soil health practices.”

“I’m excited to announce the first RCPP awards under the 2018 Farm Bill,” said NRCS Chief Matthew Lohr. “Through collaboration and aligning our resources toward a common goal, we’re making an impact for natural resource conservation that could never have been realized on our own.”

More information:
The five-year award from NRCS, matched by companies in the agricultural supply chain, will provide farmers in central Nebraska with technical and financial assistance as they adopt soil health practices on an estimated 100,000 acres. 

Eligible producers will have the option of implementing three soil health practices: cover cropping, reduced tillage, and diversified crop rotations. The project will serve as an Ecosystem Services Market Consortium pilot, which connects farmers to private sector payments for soil health practice adoption. The Ecosystem Services Market Consortium, while new, provides a way to scale up practice adoption.



IDALS Secures Additional Funding to Support Water Quality Improvement Efforts

Iowa Secretary of Agriculture Mike Naig announced today that the Iowa Department of Agriculture and Land Stewardship has been selected to receive funding for two conservation projects, totaling $13 million, to help support water quality improvement projects in the state. The funding is part of the Regional Conservation Partnership Program (RCPP) sponsored by the United States Department of Agriculture (USDA) Natural Resources Conservation Service (NRCS).

The Department was selected for a $10 million RCPP project to launch the Iowa Systems Approach to Conservation Drainage (ISACD) project in the Des Moines Lobe, which encompasses north-central Iowa. The Department is working with 16 public and private partners on this demonstration project. The groups will work with farmers and landowners to demonstrate the benefits of pairing agronomic production systems with edge-of-field conservation and in-field management practices to improve soil health and water quality.

“I want to thank USDA for its ongoing financial and technical support of the conservation work happening in Iowa,” said Secretary Naig. “There’s tremendous value in federal, public and private partners working with farmers and landowners to test, measure and implement new approaches to conservation. We’re working to deploy the most effective, cost-efficient conservation practices across the state to improve water quality locally and downstream.”

Another $3 million RCPP project will help the Department and its Soil and Water Conservation District partners build upon water quality improvement projects already underway in the Turkey River Watershed in northeast Iowa.



Award-Winning Ethanol Plant Makes Iowa Safer With SIREtizer
Jackie Pohlman, RFA Manager of Member Relations
   
Southwest Iowa Renewable Energy (SIRE) made headlines last year for hosting tours and events for multiple political figures, including Congresswoman Cindy Axne, Senator Amy Klobuchar, Iowa Agriculture Secretary Mike Naig-- and even President Donald Trump. A leader in the ethanol industry, SIRE earned the “2020 Industry Award” for its important role that it played in setting the stage for ethanol leadership at the national level.

Now, SIRE is making headlines again for its role in combating COVID-19. “SIREtizer” is a self-branded hand sanitizer that is being produced and bottled onsite at their facility in Council Bluffs, Iowa. From there, it will continue to make its way across southwestern Iowa and eventually throughout the state and across the Midwest.

SIRE Regulatory Manager Justin Schultz serves on the Pottawattamie County Board of Supervisors, which is where he was able to gain real-time information regarding the impact of COVID-19 on the community. It was at a board meeting where was made aware that local hospitals were running out of personal protective equipment (PPE) and hand sanitizer. Since then, he has worked closely with local, state and federal offices to obtain a conditional-use permit that allowed SIRE to begin legally producing hand sanitizer. “The impact of the COVID-19 situation became ‘real’ to us at SIRE and it sparked the conversation between [SIRE Plant Engineer] Eric Dreessen and I to find a way to do something about it.”

A plan was quickly put into action. As a trained chemical engineer, Dreessen was able to follow the World Health Organization’s (WHO) recipe and designed a process that features an “outdoor factory” and an indoor bottling site where SIRE employees are able to bottle 500 – 1,000 gallons in a 24-hour period. Because SIRE’s fuel ethanol production has been scaled back due to market interruptions caused by COVID-19, many members of SIRE’s staff were able to transition their roles to work on the SIREtizer project.

SIRE CEO Mike Jerke says that the success of the project is due to the hard work and dedication of SIRE’s staff. “I am very proud of our whole team. We’ve asked them to adjust work schedules in order to provide more isolation. We’ve asked them to help us think outside the box during this unprecedented period. We’ve asked them to help with the SIREtizer project. They’ve stepped up every time.”

The team at SIRE also formed a business model that allowed them to maintain the production process and provide much needed product to their local communities. They’ve partnered with local restaurants and bars that provide takeout food to provide the brick and mortar locations for members of the community to purchase hand sanitizer. The restaurants take a portion of the profits and the rest of the sale goes back to SIRE to create a funding source for SIRE to donate SIREtizer directly to the Omaha/Council Bluffs Metro Area hospitals. SIRE is also forming partnerships with other organizations to provide larger quantities to government offices and businesses in the area and a bottling company and distribution networks that allow them to reach beyond their local community.

The county contract that was formed as a result of the SIREtizer project has enabled the product to reach rural communities and volunteer fire-departments that otherwise would never have been able to purchase hand sanitizer. Schultz is also in the process of forming a contract with the state which will allow SIREtizer to reach other first-responders across Iowa.

According to Schultz, the SIREtizer project has done more for the community than to help fight COVID-19. “The whole SIREtizer project is just one small way our company can give back to the community in a time of need. SIREtizer has restored some hope to many of our front-line workers that are dealing with COVID-19 first-hand.”

In addition to SIREtizer, SIRE has donated ethanol to Iowa Prison Industries who has utilized ethanol donations from across the state to produce and donate 10,000 gallons of hand sanitizer to priority locations such as veteran’s homes and childcare facilities. 



USDA Unveils More Details on Milk, Meat Purchases

The Trump administration plans to buy milk and meat from U.S. farmers as part of an initial $15.5 billion effort to help them weather the impact of the coronavirus outbreak, Agriculture Secretary Sonny Perdue said on Wednesday.

The decision comes amid rising pressure from the U.S. farm lobby for government purchases as growers and ranchers struggle to get their goods to market because of disruptions caused by the pandemic, forcing some of them to throw out their supplies.

"We want to purchase as much of this milk, or other protein products, hams and pork products, and move them into where they can be utilized in our food banks, or possibly even into international humanitarian aid," Perdue said in an interview on Fox News.

Reuters reported on Monday that Department of Agriculture will spend up to $15.5 billion in the initial phase of its plan to bolster the nation's food supply chain against the impacts of the outbreak, the first big push to ensure the pandemic doesn't trigger consumer food shortages.



DHS, USDA Temporarily Changes H-2A Visa Rules

The Department of Homeland Security, with the support of the U.S. Department of Agriculture (USDA), announced Wednesday a temporary final rule to change certain H-2A requirements to help U.S. agricultural employers avoid disruptions in lawful agricultural-related employment, protect the nation's food supply chain, and lessen impacts from the coronavirus (COVID-19) public health emergency. These temporary flexibilities will not weaken or eliminate protections for U.S. workers.

Under this temporary final rule, an H-2A petitioner with a valid temporary labor certification who is concerned that workers will be unable to enter the country due to travel restrictions can start employing certain foreign workers who are currently in H-2A status in the United States immediately after United States Citizenship and Immigration Services (USCIS) receives the H-2A petition, but no earlier than the start date of employment listed on the petition. To take advantage of this time-limited change in regulatory requirements, the H-2A worker seeking to change employers must already be in the United States and in valid H-2A status.

Additionally, USCIS is temporarily amending its regulations to protect the country's food supply chain by allowing H-2A workers to stay beyond the three-year maximum allowable period of stay in the United States. These temporary changes will encourage and facilitate the continued lawful employment of foreign temporary and seasonal agricultural workers during the COVID-19 national emergency. Agricultural employers should utilize this streamlined process if they are concerned with their ability to bring in the temporary workers who were previously authorized to work for the employer in H-2A classification. At no point is it acceptable for employers to hire illegal aliens.

"This Administration has determined that continued agricultural employment, currently threatened by the COVID-19 pandemic, is vital to maintaining and securing the country's critical food supply chain. The temporary changes announced by USCIS provide the needed stability during this unprecedented crisis," said Acting Secretary of Homeland Security Chad F. Wolf.

"USDA welcomes these additional flexibilities provided by the Department of Homeland Security today," said Secretary of Agriculture Sonny Perdue. "Providing flexibility for H-2A employers to utilize H-2A workers that are currently in the United States is critically important as we continue to see travel and border restrictions as a result of COVID-19. USDA continues to work with the Department of Homeland Security, the Department of Labor and the Department of State to minimize disruption and make sure farmers have access to these critical workers necessary to maintain the integrity in our food supply."

The temporary final rule is effective immediately upon publication in the Federal Register. If the new petition is approved, the H-2A worker will be able to stay in the United States for a period of time not to exceed the validity period of the Temporary Labor Certification. DHS will issue a new temporary final rule in the Federal Register to amend the termination date of these new procedures in the event DHS determines that circumstances demonstrate a continued need for the temporary changes to the H-2A regulations.

The H-2A nonimmigrant classification applies to alien workers seeking to perform agricultural labor or services of a temporary or seasonal nature in the United States, usually lasting no longer than one year, for which able, willing, and qualified U.S. workers are not available.



Oil State Governors Wrong to Target Renewable Fuel Standard, Rural Jobs

The governors of five oil states—Texas, Oklahoma, Wyoming, Utah and Louisiana—sent a letter to the U.S. Environmental Protection Agency late Wednesday asking the agency to waive renewable volume obligations under the Renewable Fuel Standard due to the impact of the COVID-19 pandemic on the oil industry. Geoff Cooper, president and CEO of the Renewable Fuels Association, offers the following response:

“Apparently toilet paper isn’t the only thing in short supply in oil states these days—clearly, these governors are experiencing an acute shortage of facts and reality too. It’s clear they know absolutely nothing about how the Renewable Fuel Standard actually works. They outrageously claim that a waiver is needed because of ‘depressed demand for transportation fuel.’ But because EPA translates the RFS into a percentage each year, the renewable fuel blending requirements already adjust in tandem with changes in gasoline and diesel consumption. So, if COVID-19 causes 2020 gasoline and diesel demand to drop 15 percent, for example, the renewable fuel blending requirements drops by the exact same amount.

“In any event, the EPA has no authority to grant relief when the RFS itself is not the cause of the ‘severe economic harm,’ a fact that has been reconfirmed by EPA multiple times in the past when it denied similar nonsensical waiver requests. The governors themselves acknowledge the problems facing refiners today are driven by COVID-19 and cratering oil prices, not the RFS. These same factors are impacting the ethanol industry as well, and to an even greater extent: Nearly half of the nation's ethanol production capacity has been idled as a result of falling gasoline demand. A general waiver at this point would only serve to close more ethanol plants and kill more jobs across rural America.

“The governors also apparently have forgotten about the record supply of low-cost banked compliance credits (RINs) available to refiners. Today, refiners can purchase two or three RIN credits—each representing a gallon of renewable fuel—for the same price as one physical gallon of ethanol. COVID-19 is exactly the sort of market disruption that EPA had in mind when it developed the RIN credit trading market mechanism.

“The bottom line is, this letter comes nowhere close to satisfying the well-defined statutory criteria and requirements established for requesting a waiver. It can’t even be called a petition. EPA should reject it out of hand and return to focusing on efforts that will actually help Americans get through this challenging period. These governors may still be practicing social distancing, but they should not be distancing themselves from the facts as well.” 



Growth Energy Condemns Oil-Backed Effort to Steal Biofuel, Farm Markets

Today, Growth Energy CEO Emily Skor rejected the requests in a letter from five oil-state governors to the U.S. Environmental Protection Agency, which asked the agency waive the refiners' obligations to blend ethanol into their fuel as required by the Renewable Fuel Standard:

“This is an offensive attempt by refiners to steal markets from struggling biofuel producers and farmers. Any move to unravel the RFS now would dim any hopes of economic recovery in rural America, where so many in the U.S. biofuel industry have been impacted by furloughs and plant closures, and millions of farmers are struggling to stay afloat.

“We've seen the courts reject this kind of abuse before. Even oil companies admit that biofuel credits don’t impose a real cost on refiners. We see this as a non-starter and call on this administration to focus on restoring – not destroying – rural jobs."



 ACE: States’ RFS waiver request illegitimate, fuel demand drop already waiving blending volumes and EPA must adjust RVO upward

In response to governors of five U.S. states requesting a nationwide waiver exempting oil refiners from their Renewable Fuel Standard (RFS) blending obligations due to the coronavirus, American Coalition for Ethanol (ACE) CEO Brian Jennings pointed out that ACE’s letter to the Environmental Protection Agency (EPA) earlier this month provides the counterpoint — EPA must adjust the percentage of renewable fuel volume obligated parties must use in 2020 upward to offset the nosedive in gasoline use as a result of coronavirus, otherwise EPA will be violating the RFS statute which amounts to an illegal waiver of blending volumes. Jennings released the following statement in reaction:

“Not only should EPA dismiss the oil-state governors’ RFS waiver request, the Agency should act swiftly to increase blending obligations in 2020 because the economic fallout from COVID-19 is destroying demand for ethanol below statutory levels. ACE’s recent letter to EPA is the counterpoint to the governors’ RFS waiver request. Unless and until EPA increases the percentage of renewable fuel volume obligated parties must use in 2020, it is already handing oil refiners a nationwide waiver illegally.

“EPA has no other choice than to reject this most recent ploy to waive the RFS based on precedent from previous waiver appeals in 2008 and 2012 which require EPA to determine that the RFS itself must be proven to be the cause of severe economic harm to justify a waiver, not outside factors such as coronavirus or a drought. The RFS is clearly not the cause of the economic catastrophe brought on by coronavirus and the Saudi-Russian oil price war, and the oil industry should direct its blame elsewhere.

“We remind the Administration that oil refiners are not the only ones suffering from the economic fallout of the current situation. Ethanol producers, and the farmers supplying them corn, are suffering a proportional economic disaster. EPA should in fact do the opposite of the governors’ request and issue an interim rule to increase the RVO for 2020 to the percentage necessary to ensure that the full 20.09 billion gallons required by law are used.”



NBB Opposes Waiver of 2020 RFS Volumes

The National Biodiesel Board (NBB) today strongly opposed petitions from five state governors to waive 2020 Renewable Fuel Standard volumes. The petitions were submitted by Govs. John Bel Edwards (D-LA), Greg Abbott (R-TX), Gary Herbert (R-UT), Kevin Stitt (R-OK), and Mark Gordon (R-WY). A waiver of RFS volumes set more than a year in advance would severely harm the biodiesel industry. Texas and Louisiana are two of the top states in producing biodiesel and renewable diesel; an RFS waiver would particularly hurt tens of thousands of workers in the two states.

Kurt Kovarik, NBB's VP of Federal Affairs, said, "NBB and its members condemn the oil industry's attempt to use the current national emergency as an excuse to undermine the RFS. The waiver sought by the oil state governors would devastate renewable fuel producers, cost essential critical infrastructure jobs in multiple states, reduce incomes for soybean farmers, and lead to dirtier air and higher carbon emissions.

"EPA long ago established that waiver petitions must demonstrate that the RFS is the direct cause of severe economic harm. Federal courts have upheld that interpretation. The refining sector's current economic challenges stem from state and federal stay-at-home orders related to COVID-19 along with the international crude oil price war; they have nothing to do with the RFS.

"The fact is the decline in transportation fuel demand hurts refiners and biofuel producers equally. Refiners' RFS obligations are set as a percentage of the fossil fuel they produce or import, which means that lower fuel demand directly reduces the amount of renewable fuel they blend. Additionally, EPA has consistently demonstrated that refiners recoup the costs of any credits they purchase."

Waiving the RFS requirements for 2020 would be particularly devastating to biodiesel and renewable diesel producers. EPA sets the biomass-based diesel volume requirement more than a year in advance to give all stakeholders time to plan and invest. Now that EPA has translated the volume requirements into the annual percentage obligation, a waiver would provide little additional benefit to refiners but undercut the investments and plans of biodiesel producers.

An RFS waiver would be particularly harmful to the economies of Texas and Louisiana in addition to those of Midwest states. Nationwide, the biodiesel industry supports more than 60,000 jobs and $17 billion in economic activity. With more than 20 percent of the nation's biomass-based diesel production capacity, Texas and Louisiana reap significant benefits from producing and using these fuels. A waiver would cost jobs and economic investment in the two states.



Low-Fat DDGS Fit Feed Needs Of Japanese Dairy Producers

Balancing fats, proteins and carbohydrates is just as complex for animal diets as for human ones. Constructing the perfect diet to maintain good animal health and growth is particularly important for dairy producers, who also must optimize milk production. In Japan, dairy producers have more options to include in their feed rations - U.S. low-fat distiller’s dried grains with solubles (DDGS) - thanks to the work of the U.S. Grains Council (USGC) with Japanese industry and government.

“DDGS is an excellent source of energy, readily fermentable starch, protein and minerals for lactating dairy cows, dry cows and replacement heifers,” said Tommy Hamamoto, USGC director in Japan. “The Japanese industry understands the benefits of DDGS as a feed ingredient and how to incorporate it into compound feed, thanks to the Council’s active involvement in promoting DDGS, including low-fat types, through feeding trials and other customer servicing activities.”

Overall, Japan set a record for U.S. DDGS imports for the second year in a row in 2018/2019, at nearly 487,000 metric tons. Six months into the 2019/2020 marketing year (September 2019-February 2020), Japan has purchased nearly 307,000 tons of U.S. DDGS.

Low-fat DDGS is of particular interest to the Japanese dairy industry, and the Council has promoted fat-extracted DDGS to this sector since 2014. Low-fat DDGS has a specific benefit to dairy animals as it can reduce the risk of acidosis in the rumen. Acidosis occurs when the pH of the rumen falls, depressing appetite, decreasing milk production among other, more serious impacts on the animal’s health.

Before low-fat DDGS could be introduced into Japan, however, it had to meet the strict regulatory standards for feed ingredients there. The Japanese government requires each new feed ingredient to be registered with the Ministry of Agriculture, Forestry and Fisheries (MAFF) after Japanese regulatory authorities approve its nutritional value.

In 2014, the Council worked with Japanese authorities to register the original fat content DDGS as well as a 7 percent low-fat DDGS. The Council then promoted the benefits of this new type of DDGS to Japanese dairy farmers during a series of seminars in the northern island of Hokkaido, the largest dairy-producing region.

Since that time, similar seminars in Japan, on-farm feeding trials, feed industry team visits to the United States and Export Exchange conferences introduced other new products to the Japanese dairy sector, including DDGS with even lower fat content, as low as 2 percent. The Japanese industry registered this new DDGS containing 2 percent with the government in February, and MAFF officially approved registration in March.

“As a result of the Council’s diligent promotion of low-fat DDGS, the Japanese industry found fat-extracted DDGS well-suited as a dairy ingredient,” Hamamoto said. “We expect these new products will extend the DDGS market to even more Japanese livestock producers.”