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A Tale of Two Regions: EU Trade Team Examines Northern Durum and Desert Durum® Crops
June 13, 2011
ARLINGTON, Virginia -- A group of millers, traders and representatives of pasta manufacturing companies from the European Union (EU) will travel to North Dakota, Montana, California and Arizona June 13 to 18 to familiarize themselves with the marketing system for U.S. durum — from field to storage to milling and pasta manufacturing. U.S. Wheat Associates (USW) organized the team in conjunction with the North Dakota Wheat Commission, Montana Wheat and Barley Committee, California Wheat Commission and Arizona Grain Promotion Council. Team members will meet with researchers, traders and others in the wheat industry.

Members of the team are from Germany, Belgium, Italy and Spain and represent some of the largest durum mills, pasta plants and trading companies in the region. The milling companies represented grind more than 40 million bushels of durum each year. The four countries combined import about 13 million bushels of U.S. durum each year.

“Arizona's durum industry is part of a unique, identity-preserved high quality durum development and production niche in the southwestern United States,” said Al Simons, executive director of the Arizona Grain Research and Promotion Council. "Arizona's Desert Durum® breeders, growers and handlers are looking forward to demonstrating the value of our crop.”

"Europe is a strong market for our high quality Desert Durum® and, with another good harvest just concluding, we look forward to discussing ways to expand our business relationships,” said Brawley, CA, durum producer Roy Motter, who is vice chairman of the California Wheat Commission.

While the focus of the visit is on education and gaining important contacts in the industry, the group will also be very interested in the progress of the 2011 crop. Wheat farmers in California and Arizona are currently harvesting their Desert Durum® crop. But in North Dakota and Montana, excessive rains has delayed northern durum planting and likely will reduce planted acres.

"While we are aware there could be significant challenges with this year's crop and supplies may be limited, our focus will be on educating the team about the U.S. durum system and our efforts to provide them with the best quality durum for their products,” Erica Olson, marketing specialist with the North Dakota Wheat Commission, said. “Developing and sustaining export markets is a long-term effort. So trade teams, combined with the work done overseas by USW, are essential to providing service to our customers."

USW is the industry’s market development organization working in more than 100 countries on behalf of America's wheat producers. The activities of USW are made possible by producer checkoff dollars managed by 19 state wheat commissions and through cost-share funding provided by USDA’s Foreign Agricultural Service. For more information, visit www.uswheat.org or contact your state wheat commission.

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2011 European Union Durum Team — Team Members

Mr. Francesco Divella
Manager and Owner, F. Divella S.p.A., Italy
Mr. Francesco Divella is the manager and an owner of Divella, which has been producing durum wheat pasta for 120 years and is currently the second largest pasta producer in Italy. Divella mills about 300,000 MT of durum wheat and 130,000 MT of common wheat per year. Divella also produces 275,000 MT of dry pasta, 25,000 MT of fresh pasta and 15,000 MT of biscuits each year.

Mr. Jaume Mas
Technical Director, Productos Alimenticios Gallo S.A., Spain
Mr. Jaume Mas is the technical director at Gallo, the largest pasta producer in Spain. With an annual milling volume of 275,000 MT of durum wheat and annual production of 200,000 MT of pasta and, Gallo ranks among the top five of European pasta producers. Gallo operates three semolina mills and three pasta plants in Spain.

Mr. Wim van Onderbergen
Milling Business Unit Manager, N.V. Etabl. Joseph Soubry S.A., Belgium
Mr. Wim van Onderbergen is responsible for sales of milling and pasta production by-products at Soubry, the largest pasta producer in the Benelux (Belgium, Netherlands and Luxemburg). The market leader in bread mixes for the retail market in Belgium, Soubry mills about 210,000 MT of wheat each year, including 150,000 MT of durum.

Mr. Frank Plüschke
Chief Executive Officer, Mühle Rüningen, Werhahn Mühlen, Germany
Mr. Frank Plüschke is the CEO of Mühle Rüningen, part of Werhahn Mills, which operates seven mills throughout Germany. Mühle Rüningen mills about 300,000 MT of wheat per year, including 30,000 MT of durum and an unknown quantity of rye.

Mr. Giuseppe Rocco.
General Director, Roberto e Giuseppe Rocco Srl., Italy
Mr. Giuseppe Rocco is a leading durum and common wheat trader with Roberto e Giuseppe Rocco Srl., which has traded grain in the southern Italian market for more than 100 years. The company owns 140,000 MT of port grain storage capacity in the Naples area. The Rocco company has been regular importers of large volumes of U.S. durum and hard red spring wheat.

Mr. Sandro Zanirato
Research and Development Manager, Grandi Molini Italiani S.p.A., Italy
Mr. Sandro Zanirato is the research and development manager at GMI, Italy’s biggest milling group. GMI operates five mills that mill about 1 MMT of wheat each year —700,000 MT of common wheat and 300,000 MT of durum wheat. Apart from milling semolina for pasta production, GMI also mills “re-milled semolina” for bread, such as the traditional Altamura bread from southern Italy.

U.S. Durum Wheat in the European Union

The European Union (EU) is the top destination for U.S. durum wheat. Historically, the EU imports durum wheat to fill the shortfall between domestic production and consumption levels. Additionally, U.S. durum wheat can improve the quality of locally produced durum by adding a richer yellow color, higher protein and stronger gluten. Durum wheat sales to the European Union peaked in the 2007/08 marketing year with 530,100 metric tons of imports.

The United States and Canada are the main origins that reliably compete over time for EU durum sales. Demand for durum wheat has a wide range — from lower quality, lower priced durum for blending into low-end products to high quality, premium durum used for more lucrative consumer and commercial products. To meet high quality standards that emphasis gluten strength, U.S. durum wheat breeders have helped develop varieties with higher gluten index values. Desert Durum® varieties, in general, have higher gluten index values.

Overall, durum consumption in the European Union remains steady, with a slight upward trend.
Italy accounts for around 60 percent of pasta consumption in the European Union, at a per capita consumption rate of nearly 12 pounds per person. From year to year, Italy is either the number one or number two importer of durum wheat.

One barrier to entry into the EU is the established floor price for all wheat included in the Common Agricultural Policy. If wheat entering the EU is not at a price above the EU’s intervention price, then it is charged an import levy.

In 2010, USW discovered that the EU was using incorrect ocean freight numbers and incorrect Duluth FOB prices for their calculations. As a result, they incorrectly applied a $25 tariff. USW’s Rotterdam and Arlington, VA, Headquarters staff coordinated with various European agencies to convince EU officials to adjust their calculations. As a result, the tariff was dropped, U.S. durum stayed in the market and USW prevented an estimated $3 million in additional cost to committed sales.

U.S. Wheat Sales to the European Union
Crop Year
(June - May)
HRW
HRS
SRW
SW
Durum
HW
Total
2011
0
32
0
0
0
0
32
2010
8
815
100
0
512
0
1,435
2009
0
266
0
0
396
0
662
2008
0
567
60
0
288
0
915
2007
0
1,341
122
0
547
6
2,017
2006
0
482
71
0
273
2
828
2005
0
1,097
0
0
335
0
1,432
2004
0
1,326
0
0
224
0
1,551
2003
557
1,504
209
0
394
0
2,664
2002
0
1,027
0
0
330
5
1,362
Data current through June 6, 2011
NOTE: The Imports from U.S. by Class table is a summary of all wheat inspected for export by the Federal Grain Inspection Service.

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