September 7, 2010

Un-ratified FTA affects US grain exports to Columbia

The US government needs to ratify the FTA with Columbia before the US grain market share is further eroded, according to US Grains Council director in Latin America, Kurt Shultz.

In his recent trip to Columbia, Shultz found that a lack of progress on the US-Colombia Free-Trade Agreement is continuing to have a devastating impact on US corn, soy and wheat producers.

As an example, Colombia traditionally purchases approximately three million tonnes of yellow corn annually. However, since 2009, Colombia has been gradually switching its corn imports to South American origins at the expense of US producers.

The US, which has had an FTA agreement negotiated since 2006, has been unable to get the agreement before the US Congress for a vote. As a result of this inaction, Shultz said the Argentinean market share for corn has increased from 3% in 2007, to 67% through June 2010. The US share of the market, previously 96% in 2007, now stands at only 22%. In the first six months of 2010, Argentine corn exports to Colombia have soared to US$201 million, while US exports have dwindled to US$67.6 million.

"The US government needs to ratify this already signed FTA before it's too late," Shultz said. "Once these competitors' trade patterns and relationships are established, US market penetration will be significantly damaged and it could result in continued erosion of the US market share in neighbouring countries, such as the Dominican Republic which has imported 80,000 tonnes of South American corn.