South and Southeast Asia are regions ripe with potential for wholly new demand for U.S. grain and grain products, including distiller’s dried grains with solubles (DDGS) and ethanol.
Complex, vibrant and growing, countries in this area of the world are increasing both consumption and production of high-quality proteins and biofuel.
Manuel Sanchez, the new director of the Council’s regional office in Kuala Lumpur, Malaysia, discusses this potential and hot topics in the region here.
Manuel Sanchez, USGC South & Southeast Asia Regional Director.
To start off, where is Southeast Asia and why is this region so interesting for U.S. agriculture?
Southeast Asia is located on the complete other side of the world from the Eastern time zone and Washington, D.C., where the Council’s headquarters are located.
We are south of Northern Asia – China, South Korea, Japan.
When you think of Southeast Asia, you are thinking of countries like Vietnam, Malaysia, Indonesia, the Philippines and other countries that make up the Association of Southeast Asian Nations (ASEAN).
This region is a place we are seeing sheer growth not only in consumption but also, in some aspects, in production.
It is the most populous corner of the world: between Pakistan and New Zealand, including India, you have more than 2.2 billion people.
Compared to the population of China, about 1.3 billion people, or the United States, close to 400 million people, this region accounts for a vast quality of humans that live on this globe, and it is growing rapidly.
What does that dynamic mean for feed grain demand?
What it means is that six years ago, Vietnam was importing less than two million metric tons (79 million bushels) of corn.
Today, Vietnam is projected to import 10.4 million tons (413 million bushels) of corn.
In less than a decade, Vietnam has grown from being the #16 corn importer in the world to the #3 corn importer in the world.
It is a tremendous jump.
That is what population growth and a fast moving economy will get you – exponential demand in a very short period of time.
And that is just corn.
If we talk about DDGS, in the first seven months of the year, my region has imported more than a million metric tons of DDGS.
That is a lot of bushels of corn, too, because to produce that, you need 120 million bushels of corn.
That is substantial.
Obviously the region is very diverse – how do you manage that and the quick growth in market development efforts?
Within the South and Southeast Asia regions, we have more than 20 countries and eight different time zones, and every market demands a different need, so we must have a targeted approach.
It is not just a general, one rule fits all.
If you look at Vietnam, that has been a huge market for U.S. DDGS and U.S. corn, so we focused heavily on DDGS promotion.
We just had a great success regaining that market after it had been suspected due to a policy issue.
If you go down to the Philippines, they are not as large of a grain importer but they are a big ethanol importer and a supporter of ethanol in the region.
So, we have targeted programs that directly focus on their biofuel mandates.
In Indonesia, because of policy restrictions, we have shipped very small amounts of corn in recent years, but they are a big DDGS importer.
Today, Indonesia has one of the most expensive corn prices in the world due to protectionist policies.
But they are on track to import half a million tons of U.S. DDGS this year, so our programs have focused on DDGS.
In Malaysia, over this past year, we have seen the return of U.S. corn, and they have purchased over a quarter of a million tons of U.S. corn (12 million bushels) for the first time in six years.
That is substantial, and it's wonderful to see the return of U.S. corn to a market that has been willing to pay a premium to import South American corn primarily because of a quality perception issue.
We also have regional approaches, like aquaculture. We have designed programs specifically for our commodities and aquaculture, and what value they can add to the tilapia, shrimp, catfish industries.
We just had a road show in Vietnam and Thailand promoting sorghum after running some trials that showed sorghum is a successful feed product for aquaculture.
What are the biggest concerns of buyers in your region?
You have some concerns that align with the rest of the world – supply, consistency, availability, pricing.
And then there are more targeted or country-specific concerns.
In the case of Thailand, for example, they are a big exporter of poultry and aquaculture to Europe, so they had specific concerns about the use of antibiotics in feed and needed information about how antibiotics are being used in the ethanol process.
In Indonesia, the government is trying to promote the cultivation of corn domestically, so they put in place restorations on imports.
The concern that customers there have is how to get access to lower-priced feed ingredients because if they have to buy local corn, they are paying $150 per metric ton ($3.81 per bushel) above international pricing, which inhibits the growth of their businesses.
How do trade policy issues impact your region?
Trade policy is extremely important in my region.
If we had access to some of these markets that today we are limited in because of trade policy – Indonesia for corn and sorghum, the Philippines for corn, Thailand for corn – we could go in, build those markets and capture new sales.
If it was not for the work we did recently in Vietnam, we would still be locked out of that market because of a phytosanitary issue affecting DDGS, wheat and corn imports.
I credit our swift engagement and reaction to opening that market back up in what has historically been the fastest time possible.
We did this in eight months, working daily as a liaison to our government, the Vietnamese government, planning a trade team in a matter of weeks.
That is what we do to engage and why being on the ground is so important.
How do you balance all of these various markets?
We are very fortunate to have the staff we have on the ground.
How I balance is ultimately how I delegate to the team that we have – that is really the only way we can manage such a large region.
In Malaysia, we have three employees that each have more than 20 years of experience within the Council.
They are very well-connected to the industry, knows their first names, their husbands and wives.
Those connections add value to our programs.
We have four consultants, one in Indonesia, two in Vietnam and one in India.
We are also looking at how we manage the region to ensure we have strategic direction and can find all of the opportunities available to our members.
There are a lot of moving pieces, so it is not easy, but at the same time, we are fortunate to have the staff we have and for their commitment.
You’re a relatively new director, having moved to the region earlier this year.
What are your impressions as someone who has been there many times before but is now living there day-to-day.
In my prior role as manager of global trade, I would go into a market for a week at a time and work with one specific issue.
I relocated in February to become assistant director, and when you are on the ground, you get to see the extent of the issues that we face and start to have a fundamental understanding of the market.
You are truly exposed to the limitations and challenges our customers face. It is a large region, it is a very dynamic region, and it is a region with a lot of potential for growth.
But you are not going to impact change if you do not roll up your sleeves and really get involved and connected.
In Southeast Asia, relationship trumps anything else.
You need to be in front of your customers and understand their businesses, and you need to develop a relationship so they can open up and tell you what their limitations are and help you understand their needs.
As a professional, how was that change, taking this on and moving your family across the world?
It is a tremendous opportunity for someone of my background to live in Southeast Asia and promote U.S. agriculture products there.
It is a once in a lifetime opportunity.
Most of the growth around the globe that you are seeing, you are seeing in this part of the world.
To be in it is a blessing, from my perspective.
What would you want farmers to know about your region that you don’t think they know?
Collectively, if you look at Asia in general, including China, Japan and South Korea, more than 50 percent of total U.S. grain and oilseed exports go to this part of the world.
China has been a big influence, obviously, given the size of their demand overall, but if you look a few miles south at Southeast Asia, we are getting ready to see an incredible amount of demand that is going to come out of this region.
If India were to import DDGS, it has the potential to consume more than two million tons easily, which would equal 16 percent of total U.S. DDGS exports.
Although it is a very dynamic and sometimes very difficult market, it is a market that has a wealth of potential for U.S. farmers.
Learn more about the Council's work in South and Southeast Asia in an audio update here.