CLEAR SAILING FOR DDGS

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(Posted Wed. Jan 23rd, 2013)

 Jan. 23: A barrier impeding the rapid export growth of U.S. distiller's dried grains with solubles came down earlier this month as the ethanol co-product gained official classification as a non-hazardous cargo. The reclassification, which became final and mandatory under the code of the International Maritime Organization on Jan. 1, 2013, was the culmination of a process initiated by the U.S. Grains Council, of which the National Corn Growers Association is a founding member.

“While DDGS have effectively been shipped as a non-hazardous cargo for years now, the final classification by the IMO is an important success which will benefit corn farmers across the country,” said NCGA President Pam Johnson. “This status provides additional assurance that DDGS buyers and producers can access the lower freight rates assessed for non-hazardous cargo. U.S. farmers work diligently to ensure at every point in the process that we continue to provide the stable, consistent, quality product that our export markets expect.”

The Grains Council push for non-hazardous cargo classification launched in 2010 in coordination with DDGS producers and shippers and the U.S. Coast Guard, which is the official U.S. representative to the IMO. While the recommendation of the relevant IMO subcommittee and acceptance of that recommendation by the responsible committee of the IMO were obtained in 2010 and 2011 respectively, turning a proposal into a mandatory classification is a multi-year process.

"Previously, DDGS had not been classified by the IMO,” said USGC Director of Global Strategies Erick Erickson. “But as DDGS trade grew, several insurance organizations communicated their opinion that DDGS was a hazardous cargo, raising the prospect that DDGS cargoes would be required to be shipped on vessels equipped with special fire suppression equipment – thus raising the cost of DDGS shipments."

After the IMO subcommittee accepted the U.S. proposal to classify DDGS as non-hazardous in November of 2010, the U.S. Coast Guard issued a letter to the Council affirming that the Coast Guard would consider DDGS as non-hazardous. Since that date, DDGS has been loaded as a non-hazardous cargo on the authority of that letter. Now, the letter is no longer needed as the classification of DDGS as non-hazardous is final, official and mandatory in the IMO code.

The classification provides savings in the form of lower freight costs which, in turn, increase the return to ethanol plants producing the high quality feed ingredient.

Currently, the Council is working toward the final, official and mandatory reclassification of corn gluten feed and corn gluten meal as non-hazardous cargo. In 2012, the IMP subcommittee accepted this proposal and the new classification will be published in the IMO code in 2014, becoming mandatory in 2015.