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USW Bringing Filipino Flour Millers to See U.S. Wheat Crop and Supply Chain
August 05, 2014
ARLINGTON, Virginia — The growing demand for wheat foods in the Republic of the Philippines is good news for U.S. wheat farmers, who have more than 90 percent market share of imports there. With that growth, however, comes a need to expand the knowledge of new flour milling managers about the quality, value and reliability of U.S. wheat and its supply chain.

That is why U.S. Wheat Associates (USW) is bringing five milling industry customers from the Philippines to soft white (SW), hard red spring (HRS) and hard red winter (HRW) production regions Aug. 6 to 16, 2014. These managers have a diverse range of responsibilities and experience, said Manila-based Joe Sowers, USW assistant regional director for South Asia, who is travelling with the team.

“U.S. wheat has been a big part of the Filipino milling and baking industry for more than 50 years,” Sowers said. “Coming to the United States helps these new customers understand the work farmers, grain handlers and USDA put in to produce and deliver high-quality wheat and services that can help them grow their businesses.”

With support from participating state wheat commissions, educational partners and the Federal Grain Inspection Service (FGIS), the team will get a field-to-vessel look at the U.S. wheat supply system. In visits to Portland, OR, eastern Washington, North Dakota and Kansas, the team will learn about wheat breeding, production, transportation, inspection and certification services and innovative uses.

The Philippines is fifth largest market for U.S. wheat, based on the five-year average. That success is based on strong relationships with industry leaders maintained since 1961. Imports that year were 200,000 metric tons (7.35 million bushels) and have steadily grown to nearly 2.2 million metric tons (80.8 million bushels) in marketing year 2013/14 (June to May), including the largest amounts for both SW and HRS for the marketing year. That is the most U.S. wheat sales since 1999/00 and the second highest on record. U.S. wheat market share exceeded 93 percent of total Philippine milling wheat imports in 2013/14, the fourth consecutive year exceeding 90 percent.

USW collaborated with the Oregon Wheat Commission, Washington Grain Commission, North Dakota Wheat Commission and Kansas Wheat Commission to organize this team.

USW is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW activities are made possible through producer checkoff dollars managed by 19 state wheat commissions and cost-share funding provided by FAS.

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2014 Philippines Trade Team Members

Antonina (Tonette) Sio
Quality Assurance Manager, San Miguel Mills

Livia (Ivy) Ante
Business Development Manager, Universal Robina Corporation

Emmie Onita
Purchasing Manager, Republic Flour Mills

Joy Villegas
Personnel Manager, Liberty Flour Mills

Lolita Arreza
Marketing Manager, Philippine Flour Mills

Joe Sowers
Assistant Regional Director, South Asia, U.S. Wheat Associates

U.S. Wheat and the Philippines: A Legacy of Success

In 1961, Western Wheat Associates, one of the two organizations that later united to form USW, established an office in Manila. Since then, with the support of checkoff funding from state wheat commissions and export market development funding from USDA’s Foreign Agricultural Service, USW has maintained close, long-term relationships with industry leaders in the Philippines. USW staff has provided technical assistance, such as introducing new products and innovative baking methods that supports use of U.S. wheat and has maintained a strong industry preference for U.S. wheat quality, service, and reliability. USW provides more marketing training than any competitor, with a resulting literacy of the U.S. system that increases buyer satisfaction and helps support the dominant U.S. market share. USW’s investment in activities to increase wheat flour consumption, including wheat foods education and marketing campaigns, is further evidence of the USW’s commitment to the Filipino industry.

The Philippines is the fifth largest market for all classes of U.S. wheat, based on the five-year average, and was the largest importer of both soft white and hard red spring wheat in the 2013/14 marketing year. At nearly 2.2 million metric tons (MMT) in 2013/14, U.S. wheat sales to the Philippines hit their highest level since 1999/00 and the second highest level on record. U.S. wheat achieved a market share exceeding 93 percent of total Philippine milling wheat imports in 2013/14, the fourth consecutive year exceeding 90 percent.

Yet challenges exist in this dynamic market. The Philippine milling industry is undergoing its most substantial transition in more than two decades. After not seeing a new entrant to the commercial flour market since 1990, two new mills entered the Philippine market in 2013/14 and two more are under construction. Established market shares, carved out over decades, are now being contested. At the same time, after years of growth equal to or below population growth, the flour market is expected to grow significantly in the near term.

Most troubling, Philippine millers have been subject to trade distortions caused by the Turkish government’s policies of import tariffs, inward processing system and subsidies that support its wheat producers and flour millers. Turkish millers have been exporting flour to the Philippines at prices below fair market value resulting in a share of more than 10 percent of the Philippine flour market. USW and even the U.S. government have been helping the Philippine milling industry fight to protect it from unfair competition. In June 2014, the milling industry was successful in securing temporary tariff protection from Turkish flour dumping. The government of the Philippines will hold a hearing later this year leading to a decision whether or not to make the tariff protection permanent.

In the face of these opportunities and challenges, USW have selected a diverse group of flour milling customers to participate in the trade team set to visit the United States soon. This activity will illustrate the many ways the U.S. wheat production and marketing system benefits the Filipino industry. At the same time, it provides the team participants a chance to become familiar with the mechanics of the U.S. grain industry and the many resources they can draw on to help their businesses grow in this market environment.

U.S. Wheat Sales to Philippines
1,000 Metric Tons

Crop Year
(June - May)
HRW
SRW
HRS
White
Durum
Total
2014/15
9.0
71.0
382.6
251.5
0.0
714.1
2013/14
31.2
1.5
1,266.0
864.5
0.0
2,163.3
2012/13
30.8
0.0
1,122.1
804.3
0.0
1,957.2
2011/12
49.9
0.0
1,218.2
821.1
0.0
2,089.2
2010/11
15.6
0.0
983.0
872.6
0.0
1,871.2
2009/10
31.4
0.0
792.1
747.1
0.0
1,570.5
2008/09
32.9
19.3
832.7
647.3
0.0
1,532.2
2007/08
12.4
6.0
885.4
768.5
0.0
1,672.2
2006/07
11.1
8.9
964.6
781.9
0.0
1,766.5
2005/06
13.9
0.0
987.5
722.1
0.0
1,723.6
Data current through July 31, 2014

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