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CMPM: Unlocking opportunities next door

LANSING, MI -- The U.S.-Canadian market is already highly integrated, but there are still many opportunities to further enhance cross-border trade. This week a team from Ontario, Canada, visited eastern and central Michigan to explore ways to cut costs and increase trade in corn and DDGS.

"All that lies between Michigan and Ontario is the St. Clair River," said Jim Zook, Executive Director of the Corn Marketing Program of Michigan. "Despite the proximity, there are recurring price differentials for corn, and freight cost are often inflated by truck deadheading. Those are problems we can address."

The Canadian team included representatives from three large swine producers, three commercial feed companies, a large grain handler and marketer of corn and DDGS, a corn processing plant, a major ingredient reseller, and one of Canada's largest veal producers. A Canadian ag journalist also participated. The team was sponsored by the Corn Marketing Program of Michigan, with support from the U.S. Grains Council's Canadian consultant, Neil Campbell.

The visit included a tour of an ethanol plant in Marysville, MI, a real highlight for some of the Canadian participants who had never seen an ethanol/DDGS production facility. The Marysville plant exports 90 percent of its DDGS to Canada, and the visit included lively discussions about the use of antibiotics in ethanol production, constraints on DDGS inclusion rates in feed due to pelleting problems, and the value to some buyers of retaining a higher fat content in DDGS for the Ontario market. The team was also eager to the current outlook for the U.S. corn crop and 2015 DDGS production.

Truck logistics were a second area of focus. Complaints from several participants noted that trucks were deadheading in both directions, wasting capacity and driving up costs at a time when truck availability is a recurring problem. The team expressed interest in developing a more comprehensive list of trucking contacts and improving coordination on both sides of the border. Differences related to axel weight and other regulations also need to be addressed.

"We want our Canadian neighbors to get comfortable with the sourcing that is available just across the river," said Zook. "Canadian imports of DDGS are up more than 80 percent in January-May 2015 as compared to the same period a year ago. We want to make crossing the river is as easy as crossing town. It's just good business to do more business with our next door neighbors."