USGC helps create demand for US ethanol in Vietnam

The U.S. Grains Council labored with the USDA’s Overseas Agricultural Service in Vietnam to interact the Vietnamese Ministry of Trade and Commerce (MOIT) and Ministry of Finance (MOF) to scale back most favored nation (MFN) tariffs on imported ethanol, in the end leading to new tariff traces that spurred extra U.S. ethanol imports by Vietnam.

Vietnam practices a twin gasoline coverage through which ethanol is obtainable in a single grade on the pump and never the opposite. The Vietnam authorities cited common to below-average shopper acceptance of the grade that included ethanol as a rationale for not transferring ahead with greater mix charges. In response, the Council met with trade stakeholders, together with the most important oil corporations, retail gasoline suppliers, merchants, and authorities officers, to dig deeper into this data. After this intensive survey, it was recognized that the tariff on U.S. ethanol was inflicting a burden on the pump, main customers to easily select the cheaper choice.

Having recognized tariffs as one of many main constraints to the natural progress of U.S. ethanol gross sales to Vietnam, the Council partnered with FAS to interact the Vietnamese authorities at each alternative, together with presenting efficiency information, public well being research, and different materials that will encourage the Prime Minister to decrease tariffs on U.S. ethanol.

Regardless of the tariffs in place, Vietnam straight imported roughly 3.5 million gallons (1.24 million bushels in corn equal) of U.S. ethanol within the 2018/2019 advertising and marketing yr, along with round 16 million gallons for gasoline mixing via the South Korean transhipment market.

It was thought a 5 share level discount on import tariffs for ethanol would create alternatives to fill the present 170 million gallons (60.3 million bushels in corn equal) ethanol demand deficit within the nation. Throughout outreach efforts, the Council described a win-win for each U.S. farmers and agribusinesses trying to export extra ethanol to Southeast Asia’s quickest rising financial system and for the Vietnamese authorities, which is trying to attain its aim of a better nationwide gasoline mix mandate to 10 %.

Vietnam’s prime minister signed Decree 27 on Could 25, 2020, lowering the MFN tariff on sure agricultural imports, together with ethanol. Whereas the Council and its companions pushed for a tariff discount consistent with competing merchandise like aromatics and different petrochemical oxygenates, the tariff was ultimately diminished to fifteen from 17 % for 100% pure ethanol and to fifteen from
20 % for 99 % or much less pure ethanol, the utmost discount utilized to any commodity or product throughout this evaluation interval. The brand new tariff price went into impact on July 10, 2020.

Within the short-term, gasoline demand did drop 30 % through the nation’s COVID-19 lockdown, however in the long run, whole Vietnamese gasoline consumption is anticipated to develop practically 15 % over the subsequent 5 years to achieve an estimated 2.38 billion gallons by 2023.

The Council invested $42,443 of Market Entry Program (MAP) funds to assist this consulting engagement. Consequently, Vietnamese ethanol import potential elevated to 170 million gallons valued at $653.334 million {dollars}, a return on funding (ROI) of $15,393 per $1 of MAP funds invested.