usaid office of food for peace guatemala bellmon estimation

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There is no domestic production of soybean meal. The entire supply of soybean meal is met
through commercial imports and monetized food aid. USDA Awardees frequently monetize
soybean meal.
The study team recommends bulk US soybean meal (48 percent protein) for monetization in
FY12 for the following reasons:
There is a substantial commercial market for US soybean meal, with growing
commercial imports already sourced almost exclusively from the US.
Trade policies favor the import of US soybean meal, as there are no quotas or tariffs for
soybean meal from the US.
Monetization of a small volume of soybean meal would have no discernible impact on
normal trade relations between Guatemala and its usual trading partner in the soybean
meal market (the US), but would simply substitute for a very small volume of normal US
commercial sales in support of food security activities in Guatemala.
Provided the monetization is conducted through an open and competitive process, the team
finds that monetization of up to 25,315 MT per year would have no discernible negative impact
on the Guatemalan soybean meal market, and could generate approximately US$11.3 million
annually 9
in funds for food security activities in Guatemala assuming a CIF Puerto Quetzal of
US$447 per MT.
NFDM. Consumption of milk and milk products is low in Guatemala relative to many of its
Central American neighbors. Powdered milk is the main form of milk consumed in the country,
but they compete with maize-based, or maize/soy-based powdered products for making atols
(e.g., Incaparina). Although both consumption and domestic milk production have grown in
recent years, Guatemala's production and consumption are among the lowest in the region.
There is no domestic production of powdered milk (fat, non-fat, or skim milk powder).
The market for NFDM is limited, and monetization of a reasonably small volume would generate
just under US$563,000, assuming monetization of ten percent of average annual commercial
volumes (i.e., 169 MT at US$3329 per MT). 10
Given the lack of experience in the NFDM market,
and the apparent disinterest of potential buyers, the study team recommends against
considering monetization of NFDM in FY12, or for the foreseeable future.
General recommendations. The lead agent should continue to monetize CDSO under contract
with the current buyer (Olmeca), but future Title II Awardees need to take a market basket
approach if only to increase their bargaining power, and ensure sufficient funds are available for
food security programming.
Diversification of the commodity basket for monetization will complicate life for Title II partners,
and will add to the administrative and logistical burden associated with raising funds through
food aid monetization. One logical option available to Title II PVOs is to outsource the
monetization of one or more additional commodities (soybean meal, yellow maize, and/or rice)
99
As of this writing, CIF Puerto Quetzal reference price for delivery in September 2011 is US$447per MT.
10
As of September 1, 2011, t he current price for US NFDM Grade A is US$3,328.98 per MT (per
http://marketnews.usda.gov/portal/da.) Price from Chicago CME
time series data available here: http://future.aae.wisc.edu/data/monthly_values/by_area/21.csv?area=Central%2CEast
BEST Analysis – Guatemala Chapter 1 – Executive Summary 7