Opening of the Chinese market to Brazilian DDG and DDGS repositions Brazil in the geopolitics of agricultural inputs

MAIN INFORMATION

● During President Lula's last visit to China, agreements were signed that authorized the export of DDG (dried distillers grains) and DDGS (dried distillers grains with solubles) to the Chinese market;

● China, which until then imported 99,6% of its DDG/DDGS from the USA, moved US$ 65 million in imports of the product in 2024 and now has Brazil as a new authorized supplier;

● DDG/DDGS are co-products of corn ethanol, used in animal nutrition (pigs, poultry, cattle), being an economical alternative to corn and soybeans;

● Brazilian production of DDG/DDGS in the 2024/25 harvest was 4,1 million tons, with 21,8% destined for export. The expectation is to reach 6 million tons by the 2030/31 harvest;

● The opening of the Chinese market is seen as a strategy by the Asian country to diversify suppliers and mitigate geopolitical risks in its food supply chain, in addition to representing an opportunity for Brazil to consolidate its global presence in animal feed markets;

● To consolidate itself as a global player, Brazil will need to invest in logistics, certifications, commercial intelligence and institutional dialogue with strategic markets.

On May 13, 2025, during the official visit of President Luiz Inácio Lula da Silva to China and his meeting with President Xi Jinping, two important bilateral agreements[1] were signed in the field of agricultural cooperation. On that occasion, the Brazilian Minister of Agriculture and Livestock, Carlos Fávaro, signed two protocols and a memorandum of understanding with the General Administration of Customs of China (GACC), establishing regulatory frameworks for the expansion of Brazilian exports of agricultural products. Both agreements have been seen as a strategic advance in trade relations between the two countries, especially because they consolidate Brazil as a relevant player in the supply of food and agro-industrial inputs to the Chinese market, but also as a strategic gateway for China when considering its trade diversification policy in the face of tariff increases with the United States.

The agreements themselves resulted in the opening of the Chinese market to five Brazilian products: (i) duck meat, (ii) turkey meat, (iii) chicken giblets (heart, liver and gizzard), (iv) dried distillers grains, by-products of corn ethanol production (DDG and DDGS), and (v) peanut meal. These products are part of global food supply chains and China is one of the main global consumption hubs. According to data from the Asian DDG market, demand for this specific input generated approximately US$65 million in imports in China in 2024. Until then, the United States held virtually all exports to the Chinese market, accounting for approximately 99,6% of the imported volume. The authorization granted to Brazil to enter this segment represents not only a commercial opportunity, but also a reconfiguration of the global supply map for this by-product. In this context, these agreements must be understood as part of a broader strategy of diversification of origins and strengthening of food security by China in the face of the tariff turbulence surrounding the China-US relationship.

Quite pragmatically, there are a few ways to understand the issue of DDG and DDGS and their context for China. As the largest producer and consumer of pork in the world, its agrifood system has a massive domestic demand for animal feed. This reality has placed pig feed as a central factor in discussions on food security. Feed for Chinese pig farming is traditionally composed of a combination of energy and protein sources, with emphasis on corn and soybean meal. Both inputs are essential not only for their caloric and protein availability, but also for their consolidated role in global supply chains. In other words, DDGs have emerged as a relevant nutritional and economic alternative. DDGs have a very high protein profile, in addition to good digestibility and competitive cost.

The use of DDGs has contributed significantly to the diversification of the feed matrix of Chinese pig farming, by allowing a relative reduction in dependence on soybeans and fresh corn. In strategic terms, this represents an advantage in periods of price volatility or trade tensions, as observed in the recent tariff disputes with the United States, which is also the world's largest corn producer. In recent studies on the development of unconventional feeds, DDGs have been valued for their high content of crude protein, fat, digestible fiber and effective phosphorus, characteristics that qualify them as a high-quality protein raw material, especially when compared to corn. Although they are not perfect energy substitutes for corn, DDGs have proven to be highly efficient sources of protein and lipids, especially in systems aimed at reducing costs without compromising zootechnical performance.

Nutritional composition of different ingredients of unconventional feed and corn substitution coefficient

Source: Adapted and translated from Fan Dan, Fan Chuanqi, Hu Xiaoping (2017). 替代品进口对中国玉米消费市场的影响, p. 4.

This substitution has also been largely driven by the so-called “redial price”, according to which the savings obtained by replacing domestic corn with imported DDGs exceed 0,20 Yuan/kg[2], leading to a considerable increase in imports. The absence of tariff quotas for DDGs, combined with their nutritional and economic efficiency, has caused Chinese consumption to jump from 3,5 to 9,9 million tons between 2009 and 2015 over the last few years, significantly reorganizing the food matrix and contributing to the national corn surplus. Thus, more than a mere substitute, DDGs have become a critical variable in China’s food security policy and in the stability of its domestic grain market.

The advantages go beyond pig farming systems: growing evidence has shown that DDGs are also an ally in poultry and cattle supplementation[3]. For ruminants, especially in confinement systems and intensive grazing, indicating that DDGs not only reduce the costs of high-quality protein, but also represent a viable alternative for emissions mitigation strategies in beef cattle chains. In the Chinese context, this means a double benefit, since China has increasingly sought to modernize its livestock chain. With the United States dominating almost all of the supply of DDGs to China by 2024, Brazil's entry as a new authorized exporter represents more than a mere market expansion: it is a move aligned with China's effort to ensure greater security in the supply of animal feed through supplier diversification.

The domestic production context cannot be underestimated. Brazil has been consolidating itself as an important producer of DDG/DDGS, driven by the expansion of the corn ethanol industry. Mato Grosso, currently the country's main corn producer, is expected to harvest around 46,8 million tons in the 2024/25 harvest, according to data[4] from the National Supply Company (Conab). This growing availability of raw materials has supported the expansion of ethanol production and co-products such as DDG/DDGS, which are essential for animal nutrition. The 2024/25 harvest produced[5] almost 4 million tons of DDG/DDGS, of which 21,8% were exported. Most of the production, however, is absorbed by the domestic market, especially by the cattle, pig and poultry farming chains. From April 2023 to April 2024, 791,9 thousand tons were shipped, with Vietnam, Turkey, Spain and New Zealand among the main destinations. The opening of the Chinese market should, however, change this scenario. The projection is that Brazil will produce 6 million tons of DDG/DDGs by the 2030/31 harvest, according to data from the Mato Grosso Institute of Agricultural Economics (Imea), which will require robust strategies to access new markets.

Despite recent US moves to de-escalate the tariff war with China, Beijing has been steadily advancing its strategy of diversifying its trading partners and supply sources. The agreement signed with Brazil last week is not an isolated gesture, but rather yet another piece placed precisely on the Chinese geopolitical chessboard. At the market level, this is a clear signal of how China should operate in the long term to mitigate structural risks to its food security, especially in sensitive sectors such as animal protein production.

In this context, the opening of the Chinese market to Brazilian DDG/DDGS should be seen less as a gesture of goodwill and more as part of an active policy to reorganize its input chains. This is a strategic opportunity for Brazil to occupy a relevant space in a highly demanded chain that, until now, was entirely focused on exports to the United States. The challenge now is to consolidate this insertion, either by expanding domestic production or by maintaining quality standards, regularity and competitiveness in international trade. Brazil, in turn, is experiencing a key moment, in which the consolidation of corn ethanol as a vector for agro-industrial development opens up new fronts for exports and added value. However, for Brazilian DDG/DDGS to establish itself as a globally competitive player, it will be necessary to go beyond production: investing in logistics, certifications, commercial intelligence and institutional dialogue with strategic markets. Entering the Chinese market, therefore, is not just a diplomatic feat, but an opportunity to test the maturity and coordination between the Brazilian public and private sectors in the dispute for new spaces in the food geoeconomy.

*The text above is the responsibility of the authors and does not necessarily reflect the opinion of Insper Agro Global.

[1] Source: China opens five new markets for Brazilian agricultural products and advances in sanitary and phytosanitary cooperation 

[2] 范丹; 范传棋; 胡小平. 替代品进口对中国玉米消费市场的影响. Chugoku国农村经济, vol. 5, p. 18-30, 2017.

[3] 印遇龙; 杨哲. 非常规饲料的开发与高效利用. Published in: 网站: 山东省畜牧总站 (Shandong Provincial Livestock Station), 25 Feb. 2025.

[4] Available here.

[5] Available here.

Are you already following our official channels? Click and follow our whatsapp channel, follow us on LinkedIn and sign up to receive our biweekly Newsletter. Stay up to date with research and knowledge on global agribusiness issues.