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U.S. Wheat Farmers Also Need FTAs in Africa

According to the United Nations, over a quarter of the world’s population will live in Africa by 2050. That will be something like 2.5 billion people. With less than 4 percent of the world’s wheat production, Africa will require significant imports to feed its growing population. A major factor in in ensuring a predictable, stable supply of a staple food like wheat is through predictable, rules-based trade policies.

That is one reason why the Office of the U.S. Trade Representative (USTR) should start transitioning countries from the one-sided preferential arrangement of the African Growth and Opportunity Act (AGOA) to a more reciprocal trading relationship based around free trade agreements (FTAs).

Gerald Theus has represented U.S. wheat farmers in Sub-Saharan Africa as U.S. Wheat Associates (USW) Interim Regional Director in Cape Town, South Africa for nearly three decades. He highlighted the need for reciprocal trade, for the benefit of both U.S. farmers and African millers and consumers, in recent submission to the U.S. International Trade Commission.

The submission points out that the United States only has one FTA in Africa – with Morocco – and that FTA has significant limitations. There is a pressing need to negotiate new agreements with African countries so that trade policies can be reciprocal and those countries can benefit from both exports and imports.

Theus laments that the European Union (EU) has managed to outmaneuver the United States by converting its trade preferences into reciprocal access, pointing to the 300,000 ton duty-free quota enjoyed by its exporters into southern Africa, sidelining U.S. opportunities in that region.

If U.S. farmers are to be competitive in Africa, the U.S. government needs to negotiate new market access (the same holds true in Latin America, the Asia-Pacific region, and elsewhere). No new deals have been struck since 2007.

USTR Robert Lighthizer recently stated that it was his intention to negotiate a “model” FTA with an African country. That is an encouraging step, because the United States clearly needs to develop closer trading relationships with its African partners. As Theus notes, there should be strong affinity between the views expressed in his submission and the statements of USTR Lighthizer on reciprocal free trade.

There is plenty of opportunity in Africa. U.S. farmers hope to see their wheat play a part in a bright future for the continent.

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Lesaffre Competition to Find Next Baking Masters

The “Masters de la Boulangerie” competition, organized by Lesaffre, will be held Feb. 3 to 6 in Paris, France, as part of the “Europain” trade show. It is the final stage in a prestigious, three-year team competition cycle, comprised of the 2014-2015 Louis Lesaffre Cup and the 2016 Coupe du Monde de la Boulangerie.

Based on talent and potential from the competition cycle, 18 experienced candidates will compete in one of these categories: Nutritional Bread Making, Gourmet Baking and Artistic Bread Making. A panel of six jurors will evaluate candidates on technique, sales, marketing and communication skills, economic factors and “social and environmental responsibility linked to bread making,” according to the competition website. Each category includes specific challenges for the candidates “linked to evolutions in baking and the profession’s future.”

Related demonstrations during the competition, following a “Sharing and The Future” theme, include sharing how the candidates responded to challenges, their bakery “tips and tricks,” innovations from competition sponsors and a spotlight on “Young Bakery Hopefuls.”

Like USW, Lasaffre is committed to helping the world’s baking industry grow to its fullest potential. USW admires the mission of its baking competition cycle. We wish all the candidates good luck, including bakers from the United States, as well as bakers from U.S. wheat importers Japan, Taiwan, South Korea, China and Brazil.

Read more online at www.mastersdelaboulangerie.com, or follow the competition on Facebook, Twitter and Instagram, and by following #BakeryMasters2018 and #MastersBoulangerie2018.

 

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Global Supplies of High Protein Wheat Keep Tightening

By Stephanie Bryant-Erdmann, USW Market Analyst

In the Nov. 2, 2017, issue of “Wheat Letter,” we analyzed the tight supply of high protein U.S. wheat (minimum of 13.0 percent protein at 12 percent moisture basis (mb)) and its effects on pricing. The latest production and quality analysis suggests that global high protein wheat production in marketing year 2017/18 is down as much as 39 percent from average. That strengthens the conclusion that price premiums will continue at least into the first quarter of marketing year 2018/19 (June to May).

Based on available data, U.S. Wheat Associates (USW) has estimated that the world’s wheat suppliers produce about 50 million metric tons (MMT) of high protein wheat in an “average” year. Of that total, USW estimated that about 27 MMT on average are available to export markets, including:

  • 0 MMT of hard red spring (HRS) from the United States;
  • 0 MMT of Canadian Western Red Spring (CWRS);
  • 0 MMT from Kazakhstan, Russia and Ukraine; and
  • 0 MMT of Australian Prime Hard (APH) and Australian Hard (AH).

Looking at 2017/18, high protein wheat production was well below average.

USDA data showed that total U.S. HRS production was down 26 percent year over year at 10.5 MMT, with about 9.0 MMT having at least 13.0 percent protein (12 percent mb). Roughly half of U.S. HRS is exported annually, putting U.S. high protein HRS exports at 4.5 MMT. Carry-in stocks from 2016/17 totaling 6.4 MMT push total HRS supply higher, and potentially also enlarge the supply of high protein HRS. In 2016/17, the average protein was 14.6 percent (12 percent mb), but the protein content of the remaining stocks carried into 2017/18 is unknown. Year to date, the Federal Grain Inspection Service has inspected 3.94 MMT of HRS, 98 percent of which had at least 13.0 percent protein (12 percent mb), and USDA reported an additional 1.26 MMT of HRS sales that have not yet shipped as of Jan. 25. To meet that demand, high protein HRS stocks will need to be pulled out of storage, indicating premiums for HRS are unlikely to shrink in 2017/18.

Of the 19.2 MMT of CWRS produced in 2017/18, about 78 percent, or 15.0 MMT, graded #1 CWRS according to Canadian International Grains Institute (CIGI) data. The average protein for #1 CWRS is 13 percent (12 percent mb), with roughly 75 percent of #1 CWRS samples averaging above 13.0 percent (12 percent mb). If production values match sampling ratios, then Canada produced roughly 11.0 MMT of high protein wheat in 2017/18. On average, Canada exports roughly 70 percent of total wheat production putting total high protein wheat exports at an estimated 8.0 MMT. Weber Commodities, a Canadian-based analyst firm, believes Canada carried in just 1.0 MMT of high protein stocks, putting the estimated total Canadian high protein wheat exportable supply at 9.0 MMT.

Black Sea high protein exports are expected to fall to 3.0 MMT — all from Kazakhstan — due to above average rainfall that significantly lowered protein levels in Russian and Ukrainian wheat.

Australian Prime Hard is only produced in Queensland and New South Wales where La Niña-related drought conditions have sharply cut yields. Generally dry conditions are also expected to hurt Australian Hard wheat yields. USW estimates that Aussie high protein exportable supplies will only reach about 1.5 MMT.

The shrinking supply of high protein wheat can be seen in the prices of the top suppliers. According to the International Grains Council (IGC), the average price for 13.5 percent protein (12 percent mb) HRS exported from the Pacific Northwest (PNW) is up 16 percent year over year. IGC uses the Canadian designation of CWRS as 13.5 percent protein (13.5 percent mb). It reports CWRS prices from both Vancouver and St. Lawrence show an increase of 24 percent year over year. Meanwhile, lower protein wheat producers, such as Argentina, have seen prices fall 4 percent year over year due to the large supply of lower protein wheat.

Here is a table summarizing USW’s estimate of the big cut in global high protein wheat supplies in 2017/18 compared to an average, or “typical” year.

                                    Average Export Supply            2017/18 Estimated Supply

U.S. HRS                        6.0 MMT                                   4.5 MMT

CWRS                          11.0 MMT                                    8.0 MMT

Black Sea                       7.0 MMT                                   3.0 MMT

APH/AH                          3.0 MMT                                   1.5 MMT

Total                            27.0 MMT                                  17.0 MMT

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Glimmer of Hope in the EU on Plant Breeding Innovations

By Elizabeth Westendorf, USW Assistant Director of Policy

Last week, the European Court of Justice (ECJ) published a legal opinion from its Advocate General that gene editing techniques like CRISPR-Cas9 should not be included in the EU’s regulation of genetically modified organisms (GMOs). While the ECJ is not required to follow this legal opinion, in practice they often do. The ECJ will rule on the issue in the coming months.

This news is important because when the regulatory status of plant breeding innovations that are different from biotechnology is uncertain, scientists have trouble moving forward with new trait development. While transgenic biotechnology (GM or GMO) involves inserting foreign DNA into the target plant, these new techniques allow for gene deletion or modification without the presence of foreign DNA.

Innovation is an important evolution in the plant breeding process in that it involves precise changes in a plant’s genome in a controlled manner. Over-regulation of these technologies could stifle scientific advancements that the agricultural community needs to continually improve food supply in a sustainable way. If these advanced breeding methods were automatically regulated as GMOs, this would make it nearly impossible for non-commercial researchers and small companies to use them to develop new varieties for the market.

For wheat, the effect of not having commercialized advanced breeding traits can be seen in the concerning decline in both planted area compared to other crops and in research funding. Wheat yields have not increased at the same rate as other crops, and the potential for quality improvements has not been realized.

Additionally, these new breeding innovations would allow scientists to develop traits that are consumer-facing, with the potential to improve everything from milling quality to nutrition and health benefits that would be good for the entire supply chain.

Plant breeding innovations like gene editing have the potential to create new varieties of wheat that meet pressing needs both for farmers and customers, so it is important that any regulation of these new technologies be science-based.

To read more, visit https://seedinginnovation.org/.

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Wheat Food Trending in the Right Direction

The New Year always brings out trade and consumer media coverage of best products and trends from the previous year and the year ahead. As 2018 dawned, some pundits put wheat foods in a prominent place.

The media company Bloomberg, for example, named bread as its “Dish of the Year for 2017.”

“Restaurants and bakeries have shown what can truly be done to make bread a culinary wonder,” they wrote.

Freshly ground, whole wheat flour gets a lot of credit for the trend (obviously a narrow slice of the U.S. market), but Bloomberg took a longer view, also.

“One of the biggest cookbooks in 2017 had bread as its focus. ‘Modernist Bread,’ a sprawling, five-volume work, provides a revolutionary new understanding of one of the most important staples of the human diet, bread,” Bloomberg noted. “The collection offers comprehensive information on the subject of bread, from its history, to its science and physics, to techniques and recipes that will astound bread enthusiasts.”

The U.S.-based National Restaurant Association raised the humble doughnut to celebrity status in its “What’s Hot – 2018 Culinary Forecast,” a survey of 700 professional chefs on “hot trends on restaurant menus in the year ahead.”

Specifically, the list suggests restaurants will make more doughnuts with “non-traditional” fillings.

“When we think of doughnuts, we tend to conjure up images of glazed treats filled with vanilla cream,” the association noted. “But in 2018, more creative options abound. How does a cheesecake-stuffed doughnut, topped with raspberry jam, sound? … that’s what we’re talking about.”

“Fortune” magazine’s food trends for 2018 suggested an “era of permissibility” is afoot with a fusion of different foods including sushi croissants to pasta donuts.

“The salmon roll wrapped inside croissant dough, sometimes called the “croissushi,” debuted this year at Mr. Holmes Bakehouse in Los Angeles,” editors exclaimed. “The spaghetti donut hails from the East Coast, made from pasta, eggs, and cheese fried into a donut shape for hand-held ease.”

We suspect the farmers USW represents, flour millers and wheat food companies around the world like the direction this is headed.

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“EatWheat” Campaign to Help U.S. Consumers Better Understand Farming and Wheat Foods

By Marsha Boswell, Director of Communications, Kansas Wheat Commission

In an effort to increase consumer trust in the domestic wheat industry, U.S. wheat farmers have created a consumer-minded marketing campaign called “EatWheat” to increase awareness of farming and production practices as well as the practical benefits of wheat in the United States.

This campaign will allow the U.S. wheat industry to speak with one voice in an effort to reclaim the national conversation on wheat and share one primary message among numerous influencers while dismantling the false promises of diets without wheat.

Wheat foods are eaten all over the world and U.S. wheat is exported to all parts of the globe. Food is an expression of cultural identity and many favorite family memories from celebrations and holidays are often associated with wheat foods. Food is also a great unifier across cultures. And “to break bread together” is symbolic for bonding relationships.

The EatWheat campaign provides an opportunity to share the story of food culture and customs and helps foster a connection between people, including U.S. wheat and their customers. There are many popular wheat foods around the world made with U.S. wheat. Pan de muerto is a type of sweet roll traditionally baked in Mexico as part of the Dia de los Muertos observance. Agege bread is one of the most popular Nigerian breads, known for its soft, stretchy and chewy texture. In Japan, U.S. wheat is used in ramen or udon noodles, and in China it is used for Chinese wheat noodles and steamed buns. Pancit or noodles is probably one of the most well-known Filipino dishes. In Filipino vernacular, pancit simply refers to noodles. When Brazilians ask for “o pão nosso de cada dia” (our daily bread) most think of a roll with a crisp brown crust and a light-as-air crumb that fits neatly in the palm of a hand, known as pão francês. In Indonesia, traditional breads might include Bagelen bread, crocodile bread or gambang bread.

All too often, when urban consumers in the United States look down at their plate, they may not know how that food came from the farm to their table. While it may not be top of mind, many are wondering about the farmers who produce the food they consume and the processes used to grow it.

The website aims to create awareness of farm and production practices through the lens of food as an identity. And the food that we think can connect best is, of course, made with basic, simple and versatile wheat flour. And it does not matter if it is homemade for hours, or picked up at the supermarket ready-to-go — wheat food is a natural way to connect to others and yourself. EatWheat.org launched in November 2017, just in time for the holiday season.

On the site, consumers can find answers to their questions about wheat production practices, share their values with wheat farmers and engage.

Kansas wheat farmers are the driving force behind the EatWheat.org campaign and want to share the farmers’ side of the story through the website, Facebook, Instagram and Pinterest. The site features stories of family farmers including Justin Knopf, who farms with his dad, Jerry, and his brother, Jeff.

“Our farm today looks much different than when I was a kid,” said Justin, a fifth-generation farmer focused on a sustainable future. “We are farming more acres because now, instead of just one family, there are three families to support. The machinery we use is different. Just like anyone’s life or job, we are using technology so we can better understand the biology and soils. All those things point to continual improvement which is important. We’re thinking critically about how we produce, where it comes from…”

Jerry Knopf is proud of how far their family farm has come.

“I just farmed because it was what I needed to do,” said Jerry. “I thought it was pretty cool they were willing to go to college but then come back and farm, because now they knew the new way to do things and are way smarter than I ever was.”

To watch the video of Justin’s story, visit https://eatwheat.org/stories/justin-knopf/.

Finally, the site features quick and easy recipes geared toward moms on the go, using ready-to-eat wheat foods like tortillas, bread and buns, and short-cuts including refrigerated dough and pasta. The “Learn” section tackles questions such as, ‘what is gluten,’ ‘what are the different types of flour’ and ‘what are some of the tools farmers use.’ Consumers can also “Get Inspired” with family activities like salt dough handprint ornaments, gingerbread houses and wheat décor.

Please visit EatWheat.org to learn more and help amplify these messages by sharing social media posts at facebook.com/eatwheat.org, instagram.com/eatwheat/ and pinterest.com/eatwheatorg/.

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Sustained Demand for U.S. Wheat in a New Price Environment

By Stephanie Bryant-Erdmann, USW Market Analyst

Six months into marketing year 2017/18 (June to May), total U.S. export sales of 19.5 million metric tons (MMT) are 8 percent behind last year’s pace according to USDA Export Sales data through Jan. 4. However, the estimated total value of U.S. wheat export sales is 4 percent greater than last year on the same date at $4.72 billion, due to slightly higher export prices according to USDA Export Sales data and USW Price Report data.

A deeper analysis of USDA data shows total sales to six of the top 10 U.S. export markets in 2016/17 are ahead of last year’s pace, demonstrating strong demand for U.S. wheat. Sales of soft red winter (SRW) and soft white (SW) are both ahead of last year’s pace. USDA projects total 2017/18 exports will fall slightly to 26.5 MMT, which, if realized, would be 8 percent below 2016/17 but 1 percent above the 5-year average pace.

USDA reported hard red winter (HRW) year-to-date exports at 7.79 MMT, down 10 percent from the prior year. Still, 2017/18 export sales are 10 percent ahead of the 5-year average due to competitive prices for medium protein HRW and the good, overall quality of this year’s crop. The estimated value of year-to-date HRW export sales is 6 percent above 2016/17 due to a 14 percent increase in the average U.S. HRW free-on-board (FOB) price that is supported by the increased premiums for HRW with higher protein. Mexico is currently the number one HRW purchaser. As of Jan. 4, HRW sales to Mexico totaled 1.58 MMT, up 28 percent from last year’s pace. Sales to Indonesia are also up 28 percent year over year at 430,000 metric tons (MT). HRW purchases by Algeria total 456,000 MT, more than double last year’s sales on this date. To date, HRW sales to Venezuela totaling 120,000 MT are nearly four times great than the 2016/17 pace.

Both export sales volume and value of SRW for 2017/18 are up due to the excellent quality of this year’s crop and relatively competitive pricing. Export sales are up 7 percent year over year at 2.02 MMT, boosting estimated export sales value to $400 million, or 12 percent more so far this year. As of Jan. 4, total sales to 11 of the top 20 U.S. SRW export markets from 2016/17 are higher than last year. Sales to Colombia are 12 percent ahead of 2016/17 at 198,000 MT. Nigerian SRW purchases total 234,000 MT, up 12 percent from last year. Sales to other Central and South American countries, including Brazil, Peru, Panama, Venezuela and El Salvador, are also ahead of the 2016/17 pace.

Hard red spring (HRS) sales of 5.15 MMT are down 25 percent year over year and 7 percent below the 5-year average. Higher prices due to smaller 2017/18 production have slowed HRS exports thus far in 2017/18, but global demand for HRS is strong. Year-to-date in 2017/18, the average FOB price of HRS is $293 per metric ton ($7.97 per bushel), compared to $241 per metric ton ($6.55/bu) in 2016/17, according to USW Price Report data. As of Jan. 4, buyers in Japan purchased 878,000 MT, up 20 percent from 2016/17. Sales to Taiwan of 518,000 MT are up 17 percent from last year’s sales on the same date. The Philippines continues to import the largest volume of HRS, though at a 6 percent slower pace so far.

As of Jan. 4, exports of soft white (SW) wheat are up 22 percent year over year at 4.30 MMT. That is 28 percent greater than the 5-year average. Sales to the top 10 SW customers are ahead of last year’s pace, supporting an estimated export value of $896 million, up 25 percent from the prior year. Philippine millers purchased 946,000 MT, up 16 percent compared to last year’s sales on the same date. South Korean sales are up 43 percent at 674,000 MT. U.S. SW sales to China, Thailand and Indonesia are also up. Year-to-date, Indonesia has purchased 515,000 MT, compared to total 2016/17 purchases of 270,000 MT. Thailand sales are up 18 percent year over year at 217,000 MT. Chinese purchases of 306,000 MT are already greater than 2016/17 total SW sales.

Year to date durum exports total 272,000 MT, down 32 percent from the same time last year, and below the 5-year average, with tighter supplies and resulting higher prices. The average export price for U.S. durum is up 5 percent over last year at this time according to USW Price Report data. To date, Nigeria, the European Union (EU), Algeria and Guatemala are the top durum buyers. A significant portion of the first quarter 2017/18 sales is designated as “sales to unknown designations.

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Cold Temperatures in HRW Country Gets Attention; Dry Conditions Could Be Worse

Last week in the United States, the potential effects of severe cold over most of the U.S. hard red winter (HRW) and soft red winter (SRW) crops got the lion’s share of attention in media covering wheat production and markets.

To be sure, bitterly cold temperatures across the United States may have hurt some wheat in parts of the Plains, southern Midwest and Southeast without snow cover. A senior agricultural meteorologist was quoted saying “damage occurred in about a quarter of the hard red winter wheat belt in the Central Plains, with about 5 percent of the soft red wheat belt in the Midwest seeing impacts.”

Agronomists with Kansas State University confirmed that winter kill may be an issue in north central Kansas, where soil temperatures were sustained at potentially damaging levels for the longest time.

“It is difficult to truly assess the extent of the damage at this point,” they reported. “Provided that the crown is not damaged, the wheat will recover from this foliar damage in the spring with possibly little yield loss.”

Winter kill potential and the logistical problems with such cold did spark a brief uptick in KCBT and CBOT futures prices last week. Yet of all the threats to wheat, winter kill is not making the top of the list for farmers. What is keeping more of them up at night now is the lack of moisture.

“I think if we lose wheat, it will be from dry conditions rather than winter kill,” said Don Schieber, a Ponca City wheat farmer and a past chairman of U.S. Wheat Associates (USW). “Some of the wheat that was planted early is big, but some is hurting and turning blue. It is so dry that some farmers have stopped grazing their fields because the cattle are pulling whole wheat plants out of the ground.”

The National Agricultural Statistics Service indicates that drought conditions in Oklahoma, the Texas Panhandle and much of southwestern and central Kansas are very dry, noting that for the month of December 2017, topsoil moisture in Kansas was rated 28 percent very short, 49 short, 23 adequate, with no surplus in the state. In northeastern Colorado, dry conditions increased concerns that cold snaps without the benefit of snow cover may have hurt fall-seeded HRW wheat.

Wheat is a hearty crop and Kansas State agronomists made the point that we will only be able to assess the true extent of any damage at spring green-up. But this continues to be a challenging season for HRW in the Plains.

On Jan. 9, Kansas Wheat Marketing Director Aaron Harries shared photos of a field of stunted wheat in south-central Kansas on Twitter that, he suggested, was “one of the better-looking fields in the area.” It was 65° F when he took the photo and wrote that “48 hours from now: 50 mph north wind and single digit temps with no snow cover – #sad, #drought, #prayforrain, @KansasWheat.

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The Year Ahead in Trade Policy

By Ben Conner, USW Director of Policy

U.S. Wheat Associates (USW) prioritizes trade policies that support reducing the cost of getting wheat from U.S. farmers to their customers around the world. A time-tested method for doing that is through trade negotiations and agreements. USW will be looking for a more forward-looking trade negotiating agenda from the United States in the coming year, while holding our ground when we believe certain actions might raise the costs of wheat trade.

The biggest item on the trade policy agenda remains the negotiations to modernize the North American Free Trade Agreement (NAFTA). There are some notable improvements that can be made to the agreement through a modernization process, but the absolute priority for USW and most of U.S. agriculture is to prevent dissolution of the agreement – a potentially devastating blow to the U.S. farm sector and potentially to their customers in Mexico and Canada.

The agreement with South Korea (KORUS) is also on the agenda, but it is expected that the scope will be much more limited than the NAFTA negotiations. Hopefully the modification process for KORUS will help stave off a concerning push by some to withdraw entirely.

A serious problem to date is the lack of new bilateral trade agreement negotiations with potential trade agreement partners. KORUS was the last completed trade agreement the United States negotiated, and it was first signed in 2007. The United States continues to fall behind in trade negotiations with competitors in the European Union, Canada and elsewhere. Emphasizing this challenge will be an important priority of USW in 2018.

At the World Trade Organization (WTO), there will be continued fallout from the United States’ successful efforts to prevent a severe weakening of WTO rules in agriculture, which had the predictable but unfortunate effect of shutting down virtually all positive negotiations in this forum. In our view, this was a necessary development if the WTO can ever return to being a dynamic forum for trade negotiations. There will also be progress on the dispute settlement cases against some of China’s policies restricting wheat trade.

If nothing else, 2018 is shaping up to be another roller coaster year for trade policy. In addition to weighing in on the high-profile negotiations discussed above, USW will continue to work on a number of issues with individual markets on behalf of wheat farmers and buyers.

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Let’s Level the Playing Field for Wheat

By Gordon Stoner, President of the National Association of Wheat Growers (NAWG) and a wheat farmer from Outlook, Mont. This op-ed first appeared in “The Hill.”

The United States is known for producing the highest quality wheat in the world, yet when U.S. farmers market their wheat at a Canadian elevator, it is automatically labeled as “foreign wheat” and given the lowest possible grade (a way to measure grain quality). Cross-border wheat faces major hurdles in Canadian marketing channels, primarily due to the country’s grain grading system. Conversely, Canadian wheat has full access to the U.S. bulk grain handling system. U.S. wheat farmers should be treated the same when delivering to Canadian grain elevators as their neighbors to the north are when delivering to U.S. elevators. The modernization of the North American Free Trade Agreement (NAFTA) is a ripe opportunity to level the playing field.

I grow hard amber durum wheat primarily used in pasta production. This high-quality wheat class is valued for its premium protein and gluten strength, within 10 miles of the Canadian border. When prices are higher in Canada, it would not be difficult for me to take advantage of those price premiums and drive across the border to deliver my wheat. But until this grading issue is resolved, that is not an option. My neighbors just on the other side of the border do not have this problem; if prices are higher at a U.S. elevator, they can easily drive south to deliver their wheat. This kind of disparity is frustrating for farmers in Northern Tier states, especially given declining wheat prices and thin profit margins in recent years.

Canada’s grain policies require all wheat not grown domestically to be segregated and classified as “foreign grain” and therefore automatically demoted to “general purpose” or feed wheat. Canada’s grading system even discriminates against wheat grown in the United States that is identical to varieties of wheat approved for planting in Canada (Canada regulates the varieties of wheat plants that can be graded, unlike the United States, where we only grade based on the intrinsic properties of the grain). Such classification results in a substantial price discount regardless of the quality of the wheat, and segregation costs provide little incentive for elevators to handle U.S. wheat of equal or better quality.

An updated NAFTA should remove Canada’s discriminatory grading treatment. All U.S. wheat moving into Canada should be evaluated on quality parameters without regard to country of origin. Canada’s policies are clearly national treatment issues, which Canada has a current obligation to resolve under its World Trade Organization commitments. However, NAFTA can also be the vehicle to fix the grading issue. Canada’s grain policies deprive U.S. wheat farmers near the border of significant marketing opportunities, while millions of bushels of Canadian wheat stream uninterrupted across the border.

Trade agreements have the potential to create a level playing field where individuals, families and companies can make their own decisions about what to buy and sell. The role of trade agreements is to provide that opportunity, and that benefits both U.S. wheat buyers and wheat producers. Industry groups on both side of the border agree that this is an issue that needs to be resolved.

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