Chinese Ministry of Commerce ("MOFCOM") Initiates Antidumping Probe Into U.S. Exports of Dried Distillers Grains

On December 28, 2010, the Chinese Ministry of Commerce ("MOFCOM") initiated an investigation into whether U.S. exporters of dried distillers grains (with or without solubles) are dumping this co-product in the Chinese market. This investigation could have important trade implications and impact the profitability of ethanol producers – particularly in light of the increasing economic importance of this ethanol co-product.

Background

Overall, as an export market, China is the largest buyer of dried distillers grains. Currently, dried distillers grains are not subject to Chinese import quotas or rules on genetic modification (i.e. like corn and other commodities). As a result, Chinese demand for dried distillers grains has surged, with 2009 exports rising 56% over the same period in 2008 (as of mid-2009).

Timeline of Investigation

The status of this proceeding and the timeline of the upcoming investigation are summarized below:

• November 16, 2010: An application for an antidumping ("AD") investigation was submitted to MOFCOM on behalf of four Chinese complainants.
• December 28, 2010: MOFCOM announced that it had concluded its examination of the application and was beginning its investigation. To this end, MOFCOM will or has already sent out questionnaires to various adverse parties listed above.
• Additionally, parties not receiving questionnaires can voluntarily submit information during this period.
• The current deadline for all responses is January 17, 2011.
• If, however, a producer does not respond before the deadline, they will not be able to submit information later and may also be subject to any determinations made by MOFCOM on the basis of the information that is available to it (i.e. the imposition of any applicable ADs).

Expected Timeline of the Chinese Investigation

• The investigation is scheduled to take place over a period of one year, which if necessary can be extended by an additional six months.
• After sixty days, MOFCOM may make a preliminary determination that dumping exists and causes injury to domestic injury, and in turn, impose temporary AD measures.
• Ultimately, MOFCOM will make a determination which could lead to the imposition of an AD for a period of up to five years.

Again, the deadline for responses is January 17, 2011. Providing the applicable information to MOFCOM is important in order to reflect the realities of the current market for dried distillers grains. Additionally, it may be important for smaller producers to provide information regarding their production costs to provide a more complete and full picture of U.S. costs of production of this co-product.