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The U.S. Wheat Industry’s Partnership with Japan Adds Perspective to Current Trade Negotiations

There is renewed hope this week that the United States and Japan are making good progress toward a trade agreement that we hope will ensure U.S. wheat can continue competing with Canadian and Australian wheat based on quality, variety and value. Currently, under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), Japan’s effective tariffs on Canadian and Australian wheat imports are discounted and will continue being discounted to the tariff on U.S. wheat imports. U.S. Wheat Associates (USW) has every confidence that our agricultural trade negotiators working with Japan fully understand the need to mitigate the risk to U.S. wheat farmers in an agreement. We thank them for their efforts.

As the talks move forward, USW thinks it is important to review the indelible link between the Japanese people and U.S. wheat producers. It began when the Oregon Wheat Growers League (OWGL) organized a trade delegation to investigate opportunities for expanding U.S. wheat sales to Japan in 1949. In 1956, with a vision to the future, OWGL opened an office in Tokyo to share information the wholesome goodness of wheat foods. The success of this endeavor helped encourage wheat farmer organizations in the state of Washington and Oregon to join OWGL in forming Western Wheat Associates (WWA), which merged with Great Plains Wheat in 1980 to become USW.

In the early years, USW’s legacy organization focused on acquainting the Japanese people with the nutritional value of wheat foods. Perhaps the most famous were “Kitchens on Wheels” traveling through rural Japan to promote wheat foods to Japanese consumers, conducted jointly by OWGL and the Japan Nutrition Association with financial assistance from USDA’s Foreign Agricultural Service (FAS), which has remained an essential partner with USW and our Japanese customers. Eventually, management of these programs transitioned to eight key prefectures. Another early program involved the introduction of bread to school lunch programs.

Kitchen buses helped introduce the Japanese people to the nutritional value of wheat foods. This project started in 1956 was the first of many successful wheat promotion programs sponsored by U.S. wheat farmers in close cooperation with the Japanese government, millers, bakers and the grain trade over the last 60 years.

 

Starting with bread donations, the U.S. wheat industry continued to help introduce bread to school lunch programs allowing Japanese children to enjoy the taste and nutrition of a new type of food.

As market conditions changed, the wheat industry’s Tokyo office contracted with the Japan Institute of Baking to conduct functional and quality testing offering proof that flour products milled from U.S. hard red spring and hard red winter wheat classes could compete with Canadian spring wheat. Those early efforts continued to expand and change as Japan’s milling and baking industries advanced in sophistication and automation to set global standards of cleanliness, uniformity and variety of products for consumers.

Working to Increase Confidence. For example, Japanese flour mills and their customers demand very high standards of cleanliness and uniformity in addition to the variety of wheat classes to make the wide range of flour products for hundreds of different wheat food products — and U.S. wheat producers consistently meet those standards. Recognizing that our customers in Japan needed the confidence they could contract for and receive wheat of the highest quality, USW took action. Managers worked closely with the Ministry of Agriculture, Fisheries, and Forestry (MAFF), Japan’s grain trade and flour millers to refine specifications in tenders for U.S. wheat. At the same time, USW and its state wheat commission members worked with the U.S. grain trade to respond to these specifications. Partly as a result, Pacific Northwest export elevators changed their processes to improve segregation and installed cleaners. That commitment to reliability and customer service combined with the high quality and end-use performance is why Japanese flour mills prefer and choose to source 50 percent of their annual needs – almost 3 million metric tons per year on average – of wheat from the United States.

In 2016, U.S. wheat farmers and U.S. Wheat Associates traveled to Tokyo to celebrate the founding of a U.S. wheat export office in Japan in 1956. Here is that delegation at the offices of the Japan Flour Millers Association. Bringing Japanese millers and U.S. wheat farmers together builds a closer working relationship. The result is greater trust and a big reason why Japanese millers keep producing flour from U.S. wheat.

Over the years, a strong trust had grown between U.S. wheat farmers, state wheat commissions, USW, MAFF, millers and bakers, as well as the Japanese grain trade and their quality assurance partners. USW and the farmers we represent take this opportunity to renew our commitment to producing the highest quality, highest value wheat for our customers in Japan and around the world.

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Bakery Technician Joins U.S. Wheat Associates Team in South Asia

U.S. Wheat Associates (USW), which represents the interests of U.S. wheat farmers in export markets, is pleased to announce that Mr. Adrian “Ady” Redondo recently joined the organization as a Bakery Technician in its Manila, Philippines, office.

USW Regional Vice President Joe Sowers said there is a strong connection between increased imports of U.S. wheat and the organization’s investment in technical milling and food production support, which is the role Redondo will play in the Philippines and across growing Southeast Asian markets.

“Our long-term effort to help customers improve their products and processes through technical support has helped established strong and consistent export markets for U.S. wheat farmers,” Sowers said. “We are expanding our technical support team in South Asia to provide similar returns. Ady will spend a lot of time working closely with our experienced technicians in the region, but his professional experience in food technology and interpersonal skills will serve him — and the wheat farmers we represent — very well in what we hope will be a long career with U.S. Wheat Associates.”

Born in the Philippines, Redondo earned a bachelor’s of science degree in food technology from the University of the Philippines in 2001. He went on to amass experience in quality assurance, research and development, production and sales in the thriving Philippines food and bakery industries. Most recently, Redondo was a key accounts manager with Ingredion Philippines, Inc., a global ingredient solutions company manufacturing starches, sweeteners, nutrition and biomaterial ingredients for food, pharmaceuticals and industrial applications.

USW’s mission is to “develop, maintain, and expand international markets to enhance wheat’s profitability for U.S. wheat producers and its value for their customers.” USW activities in more than 100 countries are made possible through producer checkoff dollars managed by 17 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service. USW maintains 15 offices strategically located around the world to help wheat buyers, millers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six U.S. wheat classes. For more information, visit the USW website at www.uswheat.org.

Ady Redondo.

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USW Takes its Video Team to Washington’s Iconic Palouse Region

Sculpted by the cataclysmic Missoula floods millions of years ago at the end of the last ice age, the rolling, fertile hills of the Palouse region in the Pacific Northwest is one of the most distinct agricultural landscapes in the United States. In Washington’s Whitman County—the largest U.S. wheat producing county—Gary Bailey farms both winter and spring wheat.

Capturing footage of wheat harvest in Eastern Washington.

 

Gary Bailey, Washington Grain Commission Chairman and USW Board Member does his interview.

U.S. Wheat Associates (USW) is producing a video that focuses on the people who contribute to the wholesome quality of U.S. wheat for dozens of different food products around the world. Recently, the Baileys and LM Farms was the third stop for the project that will be completed in 2020, with visits already made to Kansas and Ohio and many more to come.

After starting his career with Farm Credit, a major farm lending institution, Gary left to join the farm full-time in 1989 with his parents and two brothers to be a part of the legacy that his parents started and to give his children the same kind of upbringing that he had. Today, Gary works the farm’s 4,500 acres alongside his brother Mark and his young niece Erin—the next generation.

Gary Bailey with USW Director of Communications Amanda Spoo.

During USW’s visit, Gary hosted a USW-sponsored trade delegation of grain buyers from Myanmar and Malaysia on the farm to learn firsthand about what he does as a U.S. wheat farmer to produce the high-quality wheat these export markets are looking for. This was the participants’ first time visiting the United States and the first time any of them had seen or touched wheat plants.

 

A USW-sponsored trade delegation from Malaysia and Myanmar hosted by the Washington Grain Commission.

USW and the video crew also visited Tri-Cities Grain in Pasco, Wash., and HighLine Grain Growers in Waterville, Wash., to capture footage of the journey U.S. wheat takes from the local grain elevators to river and train terminals where it is loaded and transported to export terminals.

Barge at Tri-Cities Grain.

Thanks to Washington Grain Commission Program Director Joe Bippert for his help arranging our visit and Damon Filan (Tri-Cities Grain) and Paul Katovich (HighLine Grain Growers) for hosting us at their facilities. And many thanks to the Bailey family for graciously taking so much time to share their love of producing U.S. wheat for the world.

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USDA Plan to Ease Biotech Regulations Splits Industry

By Philip Brasher, Executive Editor, Agri-Pulse

Copyright © 2019, Agri-Pulse Communications, Inc., Excerpted with Permission

 

Crop developers say USDA’s effort to streamline its regulation of biotech crops will still slow the commercialization of many gene-edited products, but groups representing grain traders, food processors and restaurant chains are slamming the department’s proposal, claiming it could lead to trade disruptions and undermine consumer confidence.

 

Under the proposed rule issued in June, bioengineered plants would be exempted from regulation by USDA if the modifications could be produced through traditional breeding techniques, making them unlikely to pose a greater plant pest risk than conventionally bred crops.

 

Crop developers would have three options under the proposed rule: They would be allowed to decide on their own whether their modifications are exempt from regulation; Companies could seek confirmation letters from USDA of the exempt status; Or they could ask USDA to determine whether the trait is regulated or not.

 

The National Grain and Feed Association, Corn Refiners Association, National Oilseed Processors Association, North American Export Grain Association and North American Millers Association said in a joint statement to USDA that the proposal is “fundamentally flawed and is inconsistent with the agency’s obligation to protect the economic value of U.S. agricultural and food exports.”

 

Other food industry groups, including the Grocery Manufacturers Association, National Restaurant Association and American Bakers Association, joined the grain industry on a shorter statement that said the proposal also risked undermining consumer confidence.

 

“If USDA is unable to inform consumers on what is available in the market, it is likely that consumer confidence in USDA will wane. Additionally, we believe the proposed regulatory framework opens the door for significant criticism of APHIS and genetic engineering technologies,” the statement said.

 

The groups called on USDA to slow implementation of the changes to its regulatory system until the Food and Drug Administration and Environmental Protection Agency issue rules or guidance on how they plan to oversee gene-edited crops.

 

Tuesday was the deadline for industry organizations, advocacy groups and the public to file comments on a proposed rule issued in June to rewrite USDA’s Part 340 regulatory process for genetically engineered plants.

 

The Biotechnology Innovation Organization (BIO) and American Seed Trade Association urged USDA’s Animal and Plant Health Inspection Service to expand the proposed regulatory exemptions, which are based on the concept that modifications that could be achieved through “traditional breeding techniques” should not require USDA approval. The four exemptions include modifications achieved solely through the deletion of genetic material or through single base pair substitutions.

 

The American Seed Trade Association says “significant applications of genome editing” could fail to qualify for the proposed exemptions. The group said the exemptions should cover a range of genetic changes that have been traditionally made through mutations, sometimes with chemicals or radiation.

 

More than 3,200 crop varieties, from heat-tolerant cotton to Ruby Red grapefruit, have been bred since the 1950s through induced mutations, the group said.

 

Plants modified through mutations induced by chemical means or radiation can be used in organic production.

 

BIO said, “Techniques commonly used by plant breeders today are capable of creating a much broader array genetic modifications than the limited exemptions proposed.”

 

Nina Fedoroff, a molecular biologist who served as the State Department’s science and technology adviser during the George W. Bush administration, agreed that the exemptions were too limited.

 

“The kinds of modification that can be made through traditional breeding, which now defined to include chemical and radiation mutagenesis, cover a much larger array of genetic changes than is included in the detailed list of exemptions listed in the proposed rule,” wrote Fedoroff, who is a science adviser in the Olsson Frank Weeda Terman Matz law firm.

 

But the groups representing grain traders and processors argued that USDA hasn’t provided scientific justification for the exemptions in the proposed rule and that the self-determination approach “risks undermining consumer acceptance and international regulatory recognition of APHIS’s regulatory oversight.”

 

The biotech industry acknowledged that USDA should require some form of mandatory notification. BIO, which represents a wide range of biotech companies, said breeders should be required to file a notification, which would include details of why it is exempt from regulation, at least 90 days before putting the product on the market. The information would later be posted on an agency website. The notification requirement would apply to a product that a developer self-determines to be exempt, not just to those products for which the developer seeks formal confirmation from USDA that it is exempt.

 

“BIO looks forward to working with the Agency on implementing guidance that achieves transparency without limiting innovation in either commodity or specialty crops,” the group said in its 43-page filing with APHIS.

 

ASTA also supports mandatory notification, although the industry is still debating what the requirements should be, said ASTA President Andy LaVigne.

 

The National Corn Growers Association cautioned the agency to consider how a mandatory notification system “might be perceived in international markets” and whether and how the notification process would “hinder global acceptance” of biotech products.

 

The National Association of Wheat Growers, which also is concerned about protecting its export markets, called on the federal government to “actively engage with our trading partners as soon as possible to work toward consistent, science-based policies across countries to avoid trade disruptions.

 

“All foreign customers expect the continued oversight by USDA to ensure consistent food safety, which is fundamental to their confidence in purchases of U.S. wheat,” the group said in its comments, noting that half the wheat American farmers grow is sold for export.

 

The vast majority of the more than 5,400 comments that have been posted online so far have been critical of the administration for seeking to streamline biotech regulations.

 

The Center for Science in the Public Interest, a consumer advocacy group that is generally supportive of agricultural biotechnology, also thinks USDA is going too far in deregulating the products.

 

CSPI specifically opposes allowing companies to self-determine whether their products are subject to regulation and says the proposed exemptions are too expansive, not too narrow, as BIO, ASTA and Fedoroff argue.

 

The proposed rule would eliminate USDA oversight of many ‘traditional’ plants that are genetically engineered, “which could result in harm to human health, the environment, and/or U.S. agricultural interests. We are also concerned that many of the proposed exemptions from oversight are not supported by the necessary scientific data and analysis that would ensure they will not result in adverse impacts,” CSPI said in its comments.

 

The group goes on, “U.S. consumers and trading partners will not accept unregulated GE products unless the basis for exempting oversight is based on scientific evidence.”

 

An advocacy group that has long fought USDA in court over biotech regulation, the Center for Food Safety, claims in its comments that the exemptions would “drastically shrink the scope of regulation to a small subset” of genetically engineered organisms.

 

“This exemption scheme is arbitrary and capricious, and contrary to sound science, because as APHIS itself concedes, it is impossible to determine whether a specific GE modification on a specific plant could in fact have been effected by means of traditional breeding techniques,” CFS says.

The organization contends the exemption criteria are so explicit that crop breeders won’t bother to consult with APHIS on whether their products are regulated.

A USDA official said recently that the department should be on track to finalize the regulatory changes in mid-2020.

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Wheat Industry News

Recent news and highlights from around the wheat industry.

Quote of the Week: “Trade policy throughout the past several decades has opened up new markets for agricultural exports, increased access in existing markets, and lowered or eliminated various tariffs and technical barriers to trade. Opportunities for improvement still abound; however, the benefits far outweigh the drawback for the agricultural community.” – Michelle Erickson-Jones, Wheat Farmer and Past-President of the Montana Grain Growers Association. Click here to read more.

Weekly Commercial Sales are Up. USDA reported net U.S. wheat export sales of 487,700 metric tons for the week to August 1. That is 27% higher than the preceding week and 17% above the prior four-week average. U.S. Wheat Associates (USW) publishes a Commercial Sales report every Thursday with more details.

USDA Should Consider Export Customer Concerns. This week, the National Association of Wheat Growers (NAWG) submitted comments to the U.S Department of Agriculture on proposed rule changes to regulations on plant biotechnology. In a statement about its comments, NAWG said: “… its highest priority concern is that any rule change contemplated by the USDA APHIS needs to consider its impact on importing countries of U.S. produced grain. NAWG encourages USDA APHIS to develop and execute an international engagement strategy that defines USDA’s rationale on pre-market regulatory approaches. All foreign customers expect the continued oversight by USDA to ensure consistent food safety, which is fundamental to their confidence in purchases of U.S. wheat.” Click here to read the entire statement.

No Vote on USMCA “Disappointing.” In a news release, the Washington Grain Commission (WGC) and the Washington Association of Wheat Growers (WAWG) said the failure of the U.S. Congress to approve the U.S.-Mexico-Canada Agreement on Trade (USMCA) prior to its August recess “jeopardizes trade with two of America’s most reliable customers as it threatens wheat shipments to our most important market.” They urged Congress to schedule an expedited vote on the important trade agreement. Although the Pacific Northwest exports little grain to Mexico, wheat is traded on the world market and undermining exports to Mexico “will depress prices further for all wheat farmers” the organizations stated.

IAOM-KSU Basic and Advanced Milling Principles. Through hands-on training in the Kansas State University milling facilities and classroom discussions at the IGP Institute, these two courses will further develop participants basic and advanced milling skills and understanding of the milling process. The IAOM-KSU Basic Milling Course will be held Oct. 7 to 11, 2019. Click here for more information about these courses and the IGP Institute.

Subscribe to USW Reports. USW publishes a variety of reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online. Visit our page at https://www.facebook.com/uswheat for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter at www.twitter.com/uswheatassoc and video stories at https://www.youtube.com/uswheatassociates.

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Reduced Wheat Production Estimates Boost Russian Export Prices

By Claire Hutchins, USW Market Analyst

Extremely high temperatures and below-average precipitation levels prompted USDA to reduce its Russian wheat production forecast from 78.0 million metric tons (MMT) in its June World Agricultural Supply and Demand Estimates (WASDE) report to 74.2 MMT in its July WASDE report. That is a 5% reduction month over month. Russia’s leading agriculture consultancies also reduced their Russian wheat production forecasts. Between June 11 and July 24, SovEcon reduced its 2019/20 Russian wheat production forecast by 10% from 82.2 MMT to 73.7 MMT. Between early June 12 and August 5, IKAR reduced its Russian wheat production estimate by 6% from 80.2 MMT to 75.5 MMT.

All sources point to lower Russian wheat production, but SovEcon and IKAR differ in how they see reduced exportable supplies affecting Russian export prices. Despite reducing its wheat production forecast, SovEcon estimates “Russia’s wheat crop issues are not big enough to impress the market.” Accordingly, it quoted Russian FOB values for 12.5 protein wheat (equal to 11.0 protein on a 12% moisture basis) at $197/MT on July 29 and at $195/MT on August 2. IKAR, on the other hand, believes the country’s reduced exportable supplies contribute to rising FOB values. According to IKAR, Russian FOB values for 12.5 protein wheat rose from $193/MT on July 23 to $196/MT on July 30.

How should these price differentials be interpreted? A look at recent tenders from Egypt’s state commodity-procurement agency, the General Authority for Supply Commodities (GASC) provides some insight. Through GASC, Egypt publicly offers to purchase wheat in set amounts from global exporters. Grain trading companies source wheat from multiple origins to bid on the GASC tenders, vying to offer the lowest FOB prices available. The tender results are available to the public, offering a clear picture of current export prices by origin source.

Often, conditions affecting exportable supplies in the Black Sea are apparent in GASC tender results. For instance, between May and July 2018, USDA reduced its Russian wheat production forecast by 7% on abnormally wet conditions affecting spring wheat planting and abnormally dry conditions affecting winter wheat areas. In 2018, for example, Black Sea supply concerns made their way into GASC’s tender results. On June 12, 2018, Russia’s lowest offer at the GASC tender was $209/MT FOB. By August 2, 2018, Russia’s lowest offer reached $235/MT FOB as supply concerns worsened.

While Russian 2019/20 wheat production is expected to increase 3% over 2018/19 levels to 74.2 MMT, its exportable supplies (beginning stocks plus production minus domestic consumption) are expected to fall 2.0 MMT from last year to 49.0 MMT in 2019/20. This year’s weather challenges are again present in recent Egypt’s GASC tender results. Between June 11 and August 6, the lowest FOB offer Russian wheat increased 4% from $197/MT to $204/MT. It is worth noting that the August 2 U.S. Wheat Associates (USW) Price Report estimated Gulf FOB export price for U.S. hard red winter (HRW) with equivalent protein for September delivery at $205/MT.

U.S. Wheat Associates (USW) believes these price trends could continue if hot, dry conditions persist across Russia’s predominant wheat growing regions.

Every month, USW publishes a graphic summary of the latest data from USDA’s WASDE report, including global wheat market factors, major country and regional export history and U.S. wheat supply and demand summaries by class. View the monthly summary here.

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Demonstrating Value in U.S. Wheat to Change Baking Preferences in Colombia

Colombia’s flour milling industry depends on imported wheat and is separated into regional clusters by the location of Colombian ports. Wheat arriving in Buenaventura on the Pacific coast is trucked to flour mills in Cali and Bogotá to serve the country’s largest regional baking industry. Much of the wheat unloaded at Buenaventura, however, is Canadian Western Red Spring (CWRS). That is because the price and discounting tactics of the now defunct Canadian Wheat Board helped built a traditional preference for CWRS. Bakers in Cali and Bogotá, in turn, learned to mellow this strong flour with additives; logistics kept them from seeing an alternative in U.S. hard red winter (HRW).

USW’s representatives in South America saw an opportunity to change that, at first by showing a large, influential bakery in Bogotá the value of using flour from excellent quality HRW. Through the second half of 2018, USW Regional Director for South America Miguel Galdos made in-person trade servicing calls to the bakery. In early 2019, the bakery agreed to USW’s proposal to bring in a baking consultant to demonstrate an alternative baking method, sponge and dough, using flour milled from HRW.

The consultant compared the alternate method to the bakery’s standard method using flour milled from Canadian spring wheat with additives. The results in the most popular Colombian bread products and new products (functional breads, sweet breads) were very good using flour blended from at least 40% HRW and 60% CWRS with no additives. The HRW flour blend improved mixing and fermentation, dough characteristics and machine processing without hurting finished product volume and appearance. The bakery’s management decided to adapt the HRW blended flour immediately.

Galdos reported that because there was no HRW blended flour available from their Bogotá suppliers, the bakery contacted a flour mill in Cartagena because U.S. HRW and other classes were moving into Colombia through its northern Caribbean ports. The mill’s representative flew to Bogotá and Galdos reports that the mill now has a new customer purchasing flour milled exclusively from U.S. HRW.

USW recently demonstrated a similar comparison at another bakery in Medellin, Colombia, to help build a larger data base of performance benefits with HRW flour. Looking ahead, USW is sharing the benefits of the HRW blend alternative with flour mills in Cali and Bogotá and their bakery customers. The long-term goal is to increase demand for U.S. HRW to be imported through Pacific ports. USW believes this will also help create new opportunities in the Bogotá market for U.S. soft white (SW) for blending and pastry flour, and hard red spring (HRS) delivered to Colombia’s Pacific ports now dominated by Canadian spring wheat.

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U.S. Wheat Farmer Testifies on Importance of Grain Inspection System for U.S. Export Markets

Original news release by the National Association of Wheat Growers published here.

The Senate Committee on Agriculture held a hearing July 31, 2019, looking at perspectives around reauthorizing the Grain Standards Act. Brian Linin, a wheat farmer from Goodland, Kan., testified on behalf of the National Association of Wheat Growers (NAWG) on the importance of reauthorizing the Grain Standards Act. Linin also serves as a board member of the U.S. Wheat Associates and works for Frontier Ag, Inc.

Highlights from his testimony can be found below:

“The Grain Standards Act serves a critical role in exporting grains and oilseeds, including U.S. wheat, of which about 50% is exported each year. With such a large volume of wheat being exported, our export markets are critical to wheat farmers’ bottom lines…”

“The grain inspection system is one that is valued by our overseas customers and adds value to our commodities. Foreign customers can be assured that an independent agency has certified shipments to meet the grade requirements specified in a contract. This certainty and reliability has helped wheat and other U.S. commodities to grow our export markets and serves as a significant advantage of purchasing U.S. wheat versus wheat from other origins…”

Brian Linin and Senator Pat Roberts (KS).

“A properly functioning grain inspection system is critical, and we urge Congress to reauthorize the Grain Standards Act this year. Despite the significant impacts of tariffs on exports, U.S. wheat has maintained some competitiveness in the international market in part thanks to the advantage and premium international buyers place on the U.S. grain inspection system.”

“Given the current uncertainty in trade agreements and many of the bearish factors working against U.S. wheat exports, it is critical we maintain one of our key advantages. Foreign and domestic customers value an independent agency certifying shipments to meet the grade requirements of contracts.”

To read Brian Linin’s testimony in its entirety, visit NAWG’s site here.

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Trade Promotion Assistance Will Support USW Activities in New and Established Markets

Under the Agricultural Trade Promotion (ATP) program administered by USDA’s Foreign Agricultural Service (FAS), U.S. wheat farmers recently welcomed additional support for the effort to build overseas demand for the high-quality wheat they produce.

FAS awarded $8.2 million to U.S. Wheat Associates (USW) in cost-share assistance in May 2019 and awarded an additional $2.6 million on July 19 earmarked for wheat export promotion through September 2022. To apply for the funding USW was required to demonstrate that wheat farmers were hurt by import barriers laid down as a result of trade disputes. In 2018, USW reported that farmers had experienced losses of more than $330 million as a result of China’s retaliatory tariffs on wheat and a slow down in imports by Mexico.

José Luis Fuente, President of Camara Nacional de LA Industria Molinera de Trigo (CANIMOLT) at the USW Mexico Wheat Trade Conference, June 2 to 4, 2019.

USW will do all it can to use these additional resources as effectively as possible and demonstrate how the addition of ATP funds will help grow new opportunities for wheat farmers and differential service for overseas customers. These include on-going efforts to develop emerging wheat export markets in Myanmar, Malaysia, Vietnam and Indonesia as well as niche soft wheat markets in the Middle East and North Africa.

USW is already putting these ATP funds to work. In June, USW held a very successful conference for Mexican wheat buyers that brought together wheat farmers, the grain trade and flour millers who represent more than 80% of Mexico’s total wheat import volume. USW sees growth potential in Chile and with ATP funding sponsored a representative of a large Chilean buyers’ group to participate in the recent Wheat Quality Council’s annual hard red spring (HRS) wheat tour in North Dakota. ATP funding is now helping build increased awareness of U.S. wheat’s superior baking quality in flour blends in the large regional market around Bogotá, Colombia.

These ATP funds come at a critical juncture for the U.S. wheat industry, said USW President Vince Peterson.

Participants take measurements to estimate yield at the recent 2019 Spring Wheat Quality Tour in North Dakota.

“We appreciated the support for the traditional Market Access Program and Foreign Market Development program in the most recent Farm Bill,” he said. “However, those program apportionments have remained essentially unchanged for 17 years with FMD and 13 years with MAP and the ravages of time and inflation have eaten away at their effective bottom lines. This renewed financial capability is an important response that will help USW adequately address both today’s trade challenges and tomorrow’s new market opportunities.”

Peterson cited several trade challenges. Mexico for example is a leading buyer of U.S. wheat, but almost everything about that relationship depends now on the passage of the pending U.S.-Mexico-Canada Agreement on Trade. In Japan, a strong preference for several U.S. wheat classes there is threatened by the growing tariff advantage for Canadian and Australian wheat supplies under the new Trans-Pacific Partnership agreement. Since March 2018, China has turned to Canada to supply what had been U.S. wheat before tariffs were implemented and just this week its government announced changes that will make it possible to import Russian grain supplies. USW is encouraged by apparent progress in those negotiations reported on July 31.

The Trump Administration’s support through the ATP program, combined with the Market Facilitation Program (MFP), is welcomed by wheat farmers affected by low prices and other risks related to on-going trade challenges. It is no exaggeration to say that the long-term health of an industry that contributes about $6 billion per year to wheat farm families and U.S. wheat supply businesses hinges on a swift and favorable end to the on-going trade disputes.

*Header Photo Caption: Panel on “Optimizing Rail Operations of U.S. Wheat Shipments and Minimizing Additional Expenses for Mexican Importers.” at the USW Mexico Wheat Trade Conference, June 2 to 4, 2019.

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Federal Grain Inspection Service Gives U.S. Wheat a Differential Advantage in the Marketplace

By Casey Chumrau, USW Marketing Manager, Santiago Office

The Federal Grain Inspection Service (FGIS) may be somewhat unfamiliar to most farmers but serves as a major competitive advantage for U.S. grains on the international market. Based on two congressional acts establishing a standardized inspection process, all wheat exported from the United States is inspected and given a grade as it is loaded onto the export vessel, whether it be a train or ship. This independent process sets the United States apart by providing a form of certainty and protection for buyers.

An official FGIS grade certificate is sent to buyers before the vessel arrives, allowing them to make important production decisions in advance based on the characteristics of the wheat before it arrives. In addition, the buyer knows that an independent agency will certify that every shipment meets the grade requirements specified in their contract, avoiding costly conflicts between the buyer and seller. The U.S. farmer works hard to produce a high-quality crop demanded by the market, and the FGIS inspection process helps maintain that quality all the way to the end user. This is a significant differential advantage of purchasing U.S. wheat versus other origins.

FGIS has an international affairs office that provides educational training programs explaining the roll and procedures of the agency. U.S. Wheat Associates (USW) has used this service many times over the years, most recently July 15 to 19, 2019, in Peru, an import market of about 2.0 million metric tons (73.5 million bushels). FGIS agent Jose Robinson traveled to Peru to conduct half-day seminars in the five largest wheat importing companies in the country. Robinson gave presentations and demonstrated parts of the inspection process to 53 participants from the quality control departments of the five mills. The participants shared their processes with Robinson, showed examples of the wheat they inspected in plant and were able to test their abilities to conduct similar inspections while receiving guidance from an expert.

The participants gained a deeper understanding of the FGIS inspection protocol and testing methods and left with increased trust and confidence in the FGIS certification process. The changes implemented in the mills following the training sessions will result in fewer discrepancies between the FGIS grade and the results of local, in-plant inspections, leading to increased satisfaction with U.S. wheat.

The ability to send an FGIS agent overseas allows USW to train a large number of participants at a fraction of the cost it would require to train even a few customers in the United States.

The USW Santiago Office plans to repeat this training activity in four other South American countries over the next two years. Learn more about how USW works with buyers here.

 

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