Brazil Signs Protocols with China for Ethanol Byproduct Exports
Brazil has recently signed protocols with China to allow the export of a byproduct from ethanol used in animal feed, challenging the United States’ dominance in the market amidst the ongoing trade dispute between the world’s two largest economies.
Background on Key Figures and Relevance
The person central to this development is Luiz Inácio Lula da Silva, the President of Brazil. His visit to China has facilitated these agricultural ties strengthening between the two nations. The byproduct in question, Distillers’ Dried Grains with Solubles (DDG), is highly valued in animal feed, especially for pigs, cattle, and poultry.
The Significance of DDG in the Global Market
In 2024, the United States was nearly the sole supplier of DDG to China, controlling almost 99.6% of China’s volume-based imports valued at $65.7 million, according to Chinese customs data.
Brazil’s Growing DDG Production
Guilherme Nolasco, President of the Brazilian Union of Corn Ethanol (UNEM), mentioned that Brazil and China have been working since 2022 to finalize a health agreement for DDG exports. With current geopolitical shifts, Nolasco sees this as a favorable time to conclude the agreement.
- Question: Who is Luiz Inácio Lula da Silva and why is his visit to China significant?
- Answer: Luiz Inácio Lula da Silva is the President of Brazil. His visit to China has facilitated strengthening agricultural ties between the two nations, leading to Brazil signing protocols with China for DDG exports.
- Question: What is Distillers’ Dried Grains with Solubles (DDG), and why is it important?
- Answer: DDG is a byproduct from the ethanol production process, highly valued in animal feed for pigs, cattle, and poultry. In 2024, the United States dominated DDG exports to China with nearly 99.6% market share.
- Question: How does this development impact the current US-China trade relationship?
- Answer: This move challenges the United States’ dominance in the DDG market, highlighting Brazil’s growing role as an alternative supplier for China. It reflects the shifting geopolitical landscape and Brazil’s ambition to deepen its agricultural connections with China.
Brazil’s Expanding DDG Production Capacity
Nolasco anticipates that Brazil’s DDG production could potentially reach 5 million tonnes by the 2025/26 season, with over 10 new plants expected to start producing corn ethanol and DDG in the coming two to three years, coinciding with China’s market opening.
Additional Export Agreements
In addition to DDG, Brazil and China have also signed protocols for the export of poultry and seafood products from Brazil to China, as per the government document.
