Grain News

Tunisian Government Turns Barley and Feed Wheat Purchases to Private Sector ... Could Dramatically Increase U.S. Corn, Sorghum and DDGS Exports

Date Posted: August 22, 2008

This article is reprinted from the U.S. Grain Council August 21 Global Update.

The Tunisian government announced that it would no longer control the import of barley or feed wheat.

Kurt Shultz, U.S. Grains Council director in the Mediterranean and Africa, said in the past, the Office of Cereals controlled all imports of barley and feed wheat.

They provided the barley to small-scale livestock producers at levels below world market prices.

“This created an artificial situation where livestock producers were essentially being subsidized by the government and there was a lot of abuse of the program by feed millers,” said Shultz.

“The government has been discussing turning barley imports over to the private sectors for years because the current system was becoming increasing inefficient.”

He said this week’s announcement is significant in that Tunisia imported approximately 700,000 metric tons of barley (32 million bushels) primarily from Europe and the Black Sea region in 2007/2008.

Meanwhile, Tunisia imported only 650,000 tons (25.6 million bushels) of corn in 2007/2008 with roughly 70 percent coming from the United States.

Shultz said he anticipates a dramatic increase in corn, sorghum and co-products imports by Tunisia because barley is currently approximately $40 per metric ton more expensive than the other two commodities.

“In the best case situation, corn imports have the potential to double from 650,000 metric tons (25.6 million bushels) to 1.3 million tons (51.1 million bushels), he said.

“Local traders are more realistic and projecting that corn imports will grow significantly in the first year, but the complete transition from barley to corn, sorghum or co-products will take a few years as traditional livestock producers adjust their formulas to the new prices.

Realistically, you will likely see Tunisia’s corn, sorghum and co-products imports increase by 200,000 to 300,000 metric tons and most will likely go to corn.”

Shultz said this decision will have a reverse effect on barley growers, but the negative impact on U.S. barley producers will be very minimal.

Historically, Tunisia has imported very little U.S. barley, only 20,000 metric tons (918,592 bushels), which is a 3 percent market share, in each of the last two years.

Tunisia’s largest barley import countries, the European Union and Black Sea barley industry, will be impacted the most. Overall, this is a win for U.S. feed grains producers.

“As we go forward, all grains will now compete on an equal basis rather a preferential governmental program, creating a much more dynamic livestock industry in Tunisia,” said Shultz.

For more information, call 202-789-0789.

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