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Ethanol’s market is expanding

By Staff | Feb 12, 2016

The news has been filled with dire economic reports from China in recent months. That giant nation is undergoing some major uncertainties as an economy that has been booming for several years appears to be headed for a period of slower growth.

With all the sober news coming out of China, Iowans may have missed a positive development that may have long-term implications for the Hawkeye State – China is buying more ethanol.

Just before Christmas 2015, the U.S. Department of Agriculture announced that ethanol exports to China have jumped. This may be due in part to the impact of a USDA-led trade mission in 2014 that included representatives from nine state departments of agriculture and 28 U.S. companies, including renewable fuels businesses. The group visited northeast China.

“Our objective for every trade mission is to create new markets for farm products made in rural America,” said USDA Under Secretary for Farm and Foreign Agricultural Services Michael Scuse, who led the mission. “U.S. ethanol exports to China have jumped from $8 million to more than $86 million since our May 2014 visit. In October, we exported more ethanol to China than in the previous 10 years combined.”

According to information provided by the USDA, the delegation met with gasoline companies, fuel blenders, oil companies, commodity traders, and government officials to promote the benefits of using higher ethanol blends.

Subsequent developments have been highly positive. The December USDA release said that in October China imported 32.5 million gallons of ethanol – 46 percent of U.S. ethanol exports for October. To put that in context, the value of the ethanol exported that month was $57 million. The USDA estimates the average monthly sales of ethanol to China between 2005 and 2014 at a mere $3 million.

The upswing in ethanol exports is a very welcome development for the American trade picture and more specifically Iowa, which is our nation’s largest ethanol producer.

Farm News lauds the USDA’s efforts to help an important Iowa industry increase its overseas sales. Agricultural exports to China already benefit our state greatly. The prospect that ethanol manufacturers may be finding an improved market there for their product is good news.

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