On Feb. 2, 2023, the National Customs Service of Ecuador (SENAE) officially ruled in favor of the domestic feed industry’s request for a value added tax (VAT) exemption for distillers dried grains with solubles (DDGS). In the letter, the governmental entity confirmed imports of DDGS for animal feed use may enter the country at a zero percent VAT. Previously the tax was 12 percent.

The domestic feed industry has worked to get DDGS exempted since 2021. Since then, DDGS exports were already more than 50,000 metric tons (MT), or 1,968,400 bushels in corn equivalent, a 160 percent growth in two years, and the most relevant end-users understood the nutritional and economic benefits of including DDGS in feed rations.

“The domestic industry led the effort here. Their engagement was key for this final result that we applaud today and that benefits the feed, poultry and livestock producers in Ecuador as they will have access to this nutrient source with the same conditions as other ingredients for animal feed,” said Ana Ballesteros, USGC marketing director for the Latin America region. “The Council worked on this effort since 2021, monitoring results at each step of the process and checking the need for additional engagement, while providing a portion of the technical information the Ministry of Production needed during the early stages of the effort.”

The Council supported the industry’s efforts to get the exemption by providing technical information needed by the authorities. In April 2021, the Ecuadorian Ministry of Production issued a favorable technical report to support the industry’s request and notified the customs and taxes agency (SRI) about it so they could proceed to eliminate the VAT on DDGS. However, SRI also needed to rule in favor of the removal, and it was not until this year they did so. In the official letter from SENAE, they confirmed the SRI’s pending concept and DDGS are now exempt from VAT.

This is a great win for DDGS in Latin America, as the VAT made DDGS more expensive than other feed ingredients not subject to any duty. The Ecuadorian feed and shrimp feed industry can utilize more than 200,000 MT, or 7,873,600 bushels in corn equivalent, of DDGS (MY2021/2022 exports were 92,000 MT). Removing the VAT will help DDGS exporters realize that potential.