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Ecuador’s per capita consumption of wheat foods has rapidly increased in recent years, supported in part by governmental regulations limiting imports of finished products. Over the years, USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) has focused on demonstrating how using flour from U.S. hard red winter (HRW) can improve bread quality while reducing variable costs to build U.S. wheat share of Ecuador’s growing bread flour market.

The main constraint in this segment is a long-held reliance on higher protein Canadian wheat. To demonstrate the value of HRW wheat flour, USW used MAP funds in 2017 to conduct a baking seminar with a large commercial operation in Quito that supplies frozen dough and par-baked dough to fast food chains and the largest supermarket in Ecuador. The USW consultant demonstrated how the bakery could modify its processes using flour with a higher proportion of HRW wheat rather than with straight high-protein Canadian wheat flour and additives. This year, the company reported it has developed new products and will produce sliced bread and hamburger buns using HRW blended flour.

In September 2018, USW held seminars with two other bakeries with similar results. The seminars proved that U.S. HRW wheat flour reduced costs and improved the taste and quality of bread products. Both bakeries are changing their processes to product new products from the HRW blended flour. In 2019, USW also established its first contact with the largest commercial bakery in Ecuador that resulted in an agreement with USW to hold in-plant demonstrations of U.S. wheat flour blends.

To ensure HRW flour is available to those bakeries, USW has also conducted trade servicing and technical support for the largest flour miller in Ecuador. In June 2018, USW invited the main buyer from the premium mill to join a trade team to the United States. As a new employee of the mill, the buyer’s mind was more open to new opportunities and immediately after the trip he purchased a shipment of more than 11,000 metric tons of HRW and, in 2018, U.S. HRW and soft red winter (SRW) wheat made up 80% of the mill’s purchase volume. In 2019/20, under the Agricultural Trade Promotion (ATP) program, USW will start to chip away at the Canadian wheat dominance at a large mill in Ecuador by bringing samples of HRW and in-plant technical support to demonstrate the value of the U.S. alternative.

USW has also expanded its activities with medium-sized mills that produce about 30% of Ecuador’s annual flour production. Since 2016, USW has conducted a variety of activities to help them purchase and process U.S. wheat as efficiently as possible. As a result, U.S. wheat is gaining a foothold, growing from 6.3% of the mid-sized mill purchases in 2017/18 to 15.8% in 2018/19.

Ecuador’s average annual purchase of HRW the past three marketing years is 101,000 metric tons, a significant increase over the three-year average of 46,200 metric tons in 2015/16 and SRW purchases of about 224,800 metric tons in 2018/19.

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In 2018/19, U.S. Wheat Associates (USW) earned back a portion of its business in Nigeria through activities supported by funding from USDA/Foreign Agricultural Service Foreign Market Development (FMD) program and Market Access Program (MAP).

In September 2018, U.S. wheat farmers from Kansas, Oklahoma and Arizona traveled to Lagos, Nigeria, as part of a USW Board Team funded in part through FMD. Meetings were held at several flour mills where most managers said the shift will likely continue even though they know by experience that HRW offers consistent performance and usually higher quality milling characteristics than Black Sea wheat.

Taking advantage of the personal visits and with support from USW local and regional representatives at the meetings, the farmers review the advantages of HRW and other U.S. classes and how USW is supporting the industry’s efforts to continue improving HRW milling, baking and processing characteristics. News the farmers shared about exportable supplies of U.S. hard white (HW) wheat grown in Kansas, Colorado and Nebraska sparked much interest from the flour millers.

The benefits of HW include higher flour extraction, whiter color flour and low moisture levels that would help the millers overcome a significant part of the cost differential with Black Sea wheat. Hard white wheat at the time was about the same price as HRW, and the farmers encouraged the millers to consider bidding for some HW. The Team was quick to point out that scaling up HW production to the point at which exportable supplies are consistently available will take a long, sustained effort, but the industry is encouraged by interest in HW and continues to work toward improving milling and processing quality in new varieties.

Flour Mills of Nigeria (FMN), which owns an export elevator in the U.S. Gulf, immediately took advantage of the information shared during the Board Team to purchase U.S. HW. Eventually, FMN imported more than 137,000 MT of HW in marketing year 2018/19. Several other Nigerian mills based on trade servicing activities funded by MAP and more competitive pricing also significantly increased HRW imports by about 311,000 MT in 2018/19 to 1.1 million metric tons. That represents an additional return to farmers in Oklahoma, Kansas, Colorado, Nebraska and Texas.

USW continues to use MAP funding to maintain full time technical marketing consultants to represent U.S. wheat farmers and USW in Nigeria. The consultants recommend market development programs for Nigeria, gather marketing statistics and assist in market development activities and logistical support when necessary.

 

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The competitive situation in Egypt’s large wheat import market for subsidized bread led USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) to reduce its presence in Egypt in 2017. However, USW has identified a niche opportunity for U.S. hard red spring (HRS) and hard red winter (HRW) in Egypt’s growing demand for pasta.

According to Euromonitor, at an annual value of more than $843 million, Egypt is the world’s seventh largest pasta market and ranks ninth largest in consumption. Because it is popular and affordable, pasta consumption will grow by 5 percent in the next five years Euromonitor predicts. Acceptable quality pasta requires higher protein wheat than Black Sea classes can provide alone, so USW targeted industries and companies interested in sourcing higher quality flours and is investing funds from the Market Access Program (MAP) in trade and technical servicing to encourage those companies to demand quality flour from private flour mills.

For example, USW met with the largest Egyptian pasta manufacturer to demonstrate how to adjust their flour specifications to improve their premium products. USW made recommendations that would target flour from HRS for the company’s long goods pasta products. USW also worked closely with specific milling companies to show how blending U.S. HRW or HRS with Black Sea wheat would help improve the quality of and income from their pasta flour products.

An Egyptian trading company serving these millers purchased 50,000 MT of 12.5% (12% moisture basis) protein HRW in 2018/19 specifically as an ingredient for pasta flour. And while the premium pasta maker did purchase flour produced from Australian wheat to hold down its costs, it worked with its flour supplier to import U.S. HRS in December 2018 and signaled its intention to purchase more HRS.

USW also advised Egypt’s government grain purchasing agency, GASC, to issue a specific tender for 12% protein HRW for the government’s subsidized pasta program, another large potential niche market. GASC is currently testing HRW samples sent by USW through the Quality Samples Program to determine if HRW meets their requirements.

In addition to the 50,000 MT of HRW specifically imported for pasta flour, in marketing year 2018/19 Egypt imported 49,500 MT of HRS, benefiting U.S. farmers in Minnesota, North Dakota, South Dakota and Montana, as well as U.S. wheat export supply participants. A trade service visit to Egyptian private sector mills and buyers in April 2019 confirmed they will continue to consider U.S. wheat as an ingredient in their high-quality products, especially pasta.

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The export market development programs administered by USDA’s Foreign Agricultural Service are highly successful partnerships with U.S. farmers, ranchers, dairy producers and small food businesses. U.S. Wheat Associates (USW) and the Washington Grain Commission (WGC) are leveraging that partnership to increase demand for soft white wheat in Guatemala.

Over several years, USW and WGC have worked together to educate decision makers at commercial bakeries and food manufacturers in Latin America about the benefits of low protein soft white (SW) wheat. WGC provides direct funding from its checkoff program and USW uses funding from the Market Access Program (MAP) and Foreign Market Development (FMD) program.

In 2013, USW sent an expert in “premix” consumer bakery products to work with an innovative and growing Guatemalan flour mill and wheat foods company. The consultant helped the company set up a small plant to develop formulations for chocolate and vanilla cake mixes as well as pancake and corn bread mixes using flour from U.S. SW wheat. After extensive quality testing and production refinement, the company has now successfully launched these branded consumer products through a large Guatemalan supermarket chain.

With direct producer funding, USW also worked with WGC to conduct a seminar with the same company designed to show how blending flour from U.S. SW and other wheat classes can improve end-product quality while reducing flour costs compared to competing wheats. Milling consultant Andrea Saturno and USW Technical Specialist Marcelo Mitre demonstrated several different blending proportions and conducted bake tests at the company’s own laboratory. The company continued trials on its own and chose a blend of 50 percent SW and 50 percent U.S. hard red winter (HRW) wheat that it successfully markets as an industrial bread flour.

In addition, the company says its two largest flour customers now purchase SW-based flour to manufacture branded cookie and cracker products. One of the customers recently built a new cookie factory that represents an opportunity for USW to expand its technical assistance.

Such end-user success and growth creates an opportunity to continue expanding annual SW exports to Guatemala of almost 130,000 metric tons per year, valued at more than $25 million, making Guatemala the largest SW volume importer in Latin America. Total U.S. wheat commercial sales to Guatemala in marketing year 2017/18 exceeded 527,000 MT.

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Noodles are the staple product in South Korea that represent more than 50 percent of Korean wheat food consumption. For many years, manufacturers have preferred Australian wheat to produce noodle flour, and specifically “Australian Noodle Wheat” that helps produce an end product with the color favored by consumers. USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) is addressing the competitive advantage and increasing market share by providing technical service funded by the Market Access Program (MAP) and the Foreign Market Development (FMD) program.

Every year since 2015, the USW Seoul Office conducts a Korean Noodle Flour Development short course at the Wheat Market Center (WMC) in Portland, Ore., and a Noodle Flour Blending Seminar in Seoul to demonstrate the advantages of blending with U.S. wheat.

Representatives from one noodle manufacturer and two mills from Korea attended the 2017 course, where they researched flour blends using an increased percentage of U.S. wheat flour in instant noodle products. The participants concluded that using more U.S. wheat still allowed them to maintain the preferred product color and quality while reducing input costs. Blends include varying percentages of flour from U.S. soft white, hard red spring and hard red winter wheat classes.

In December 2017, USW shared the course results and reviewed quality parameters with Korean noodle manufacturers and flour millers. A highly regarded local expert presented information on quality parameters affecting noodle flour functionality. Because of this, one company said that they intend to use HRS for a new end-product line in 2018. Another company reported that they increased U.S. wheat percentage in their noodle formulation from 50 percent in CY15 to 90 percent in CY17, and is also using U.S. wheat flour in their export product portfolio, which increased by 20,000 metric tons (MT) in CY17. And a third company reported that they also increased U.S. wheat in their blends in CY17, absorbing 10,000 MT of additional U.S. wheat flour. All participants reported that the seminar provided a valuable opportunity to share information on improving noodle quality.

Despite lacking a single U.S. wheat class with optimal noodle quality, USW’s efforts — funded by state wheat commissions, MAP and FMD — have helped secure a 20 percent share of the wheat imported for the Korean noodle market. The top four instant noodle manufacturers in South Korea consistently now use more than 45 percent U.S. wheat, up from less than 25 percent in 2009.

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USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) works closely with government agencies, both domestic and foreign, to ensure that free trade agreements (FTA) and tariff rate quotas (TRQ) are carried out and to help maintain a positive trading environment for U.S. wheat producers.

Moroccan wheat imports are subject to a TRQ for hard red winter (HRW), hard red spring (HRS) and durum wheat under a bilateral FTA with the United States. However, its implementation has faced difficulties due a difference in the interpretation of the agreement and corresponding administrative procedures. The TRQ annual amount varies, depending on the size of the local wheat crop. U.S. preference is calculated on a calendar year basis, so Morocco typically tenders for the entire TRQ amount at the beginning of the calendar year when U.S. wheat is usually not price competitive with other sources. This is a problem for U.S. wheat imports, especially when Morocco only typically launches one tender annually. The timing of the tenders often means Morocco meets the basic terms of the FTA but has no or low TRQ utilization for U.S. wheat.

In 2014, Morocco only allocated 9,000 metric tons (MT) of the 400,000 MT TRQ. That was the only year between 2011 and 2015 that our FTA partner purchased U.S. wheat under the TRQ. Morocco’s government buying agency did tender three times in 2016, but the 800,000 MT of U.S. HRW it did import was due to crop failure in Morocco rather than any substantial TRQ policy improvements.

USW staff based in Casablanca, Morocco, and Europe worked closely with trade policy staff at its headquarters in Arlington, Va., to collect all relevant information on historical tenders as well as rules and participation in FTA related activities. USW also outlined a detailed comparison between the U.S. FTA with Morocco and the FTA Morocco has with the European Union (EU), which showed unfair advantages to EU-produced wheat.

USW presented this information to the FAS and the Office of the U.S. Trade Representatives (USTR). USW, together with FAS and USTR, convinced Morocco’s Cereals Office (ONICL) to issue multiple tenders to fairly evaluate U.S. wheat under the TRQ at different periods during the marketing year.

Because of this trade service activity, funded in part by U.S. wheat farmers and with the Market Access Program (MAP) and Foreign Market Development (FMD) program, Morocco imported 360,000 MT of HRW during the first half of marketing year 2017/18 under the Morocco FTA, for only the second time in 11 years, representing the entire TRQ allotment for purchases of common wheat. The TRQ imports returned about $70 million to U.S. wheat farmers in the Southern and Central Plains and wheat export supply participants.

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Cake and pastry consumption in the People’s Republic of China is growing but millers there struggle to produce the best flour for their customers. By leveraging expertise on its staff and working with public and private partners, USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) were increasing exports of soft white wheat to China for farmers in Washington state, Oregon and Idaho prior to the implementation of retaliatory tariffs.

Soft white (SW) wheat mills into excellent cake and pastry flour needed to meet growing Chinese demand. Chinese mills have some influence on what type of wheat may be imported and may import a limited amount of wheat privately. This supports USW using funding from the Market Access Program (MAP) and the Foreign Market Development (FMD) program to promote SW performance and help millers purchase it and mill it.

In June 2017, USW brought six executives from four Chinese flour mills to Portland, OR, to participate in a wheat procurement course and visits to the USDA-ARS Western Wheat Quality Laboratory in Pullman, WA, and SW breeding programs in the Pacific Northwest.

In China, USW arranged technical support meetings at local flour mills. Its Beijing and Hong Kong staff set up local trials with millers to demonstrate SW flour performance in Chinese and Western style baking. USW continued sending consultants to the Sino American Baking School in Guangzhou to teach new bakers the best uses of SW flour in cakes and pastries.

Also in 2017, USW and flour mill manufacturer Buhler teamed up to put on a week-long technical seminar focused on the milling of SW at Buhler’s location in Wuxi, Jiangsu province.  Peter Lloyd and Buhler experts addressed 16 managers from eight Chinese mills who all reported that the seminar addressed some of the unfamiliar challenges of milling SW.

After importing less than 52,000 metric tons (MT) of SW in marketing year 2015/16 (June 1 to May 31), China purchased more than 227,500 MT in 2016/17. In 2017/18, China’s imports of SW stood at 307,000 MT. USW staff notes that much of this volume was imported by trading companies that had to pay out of quota duties on the wheat, in the hope of selling it on to Chinese mills willing to pay a premium over domestic wheat.

That year, prior to the trade conflict with China, total U.S. wheat exports reached 1.6 MMT with returns of more than $330 million 2017/18 to wheat farmers and related industries in Washington, Oregon and Idaho.

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The popularity of non-traditional baked goods like chewy breads, cookies and fluffy cakes is rapidly growing in the People’s Republic of China. To help build a preference for flour from U.S. wheat classes among aspiring Chinese baking companies, USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) has expanded its technical capabilities through staffing and an exceptional training activity.

USW hired Dr. Ting Liu in September 2016 as Technical Specialist to provide support and training to demonstrate the performance of U.S. wheat in the new baked goods as well as traditional Chinese wheat based products. Dr. Liu works from USW’s Beijing office and regularly travels across China to provide baking demonstrations, technical seminars and promote practical application of U.S. wheat performance results. Staff administrative expenses for Dr. Liu and her experienced marketing colleagues in China are supported by the Foreign Market Development (FMD) program with development activities funded by the Market Access Program (MAP).

Because there is intense interest in professional baking expertise, especially in scaling up industrial sized operations, USW decided to invest some of its activities funding to send Dr. Liu to the 192nd Baking Science and Technology course at AIB International in Manhattan, Kan., from January through May 2018. This is an internationally respected, 16-week program combining science, hands-on lab work and baking tradition in its course work. With her expertise in food science and cereal chemistry, Dr. Liu was well prepared for this training — but she far exceeded expectations.

Dr. Liu represented herself, USW and the U.S. wheat farmers she represents with distinction, earning honors as the course’s top student and an “Excellence in Laboratory Leadership” award for her participation in the course. Now she will apply this advanced knowledge to effectively stress that flour which performs its intended functions enables Chinese bakers to produce higher quality, better tasting wheat foods, and that U.S. wheat flours are essential ingredients on which bakers can rely for consistent results.

Though China’s centrally planned food and trade policies create substantial barriers to export growth, the increased ability to train the industrial bakeries that must meet consumer demand is pulling in high protein U.S. hard red spring (HRS) and hard red winter (HRW) wheat for bread products and soft white (SW) for cakes and cookies. In marketing years 2016/17 and 2017/18, China imported an average of 843,000 metric tons (MT) of HRS, 163,000 MT of HRW and 318,000 MT of SW per year, valued at about $324 million per year for farmers and wheat supply participants in the Pacific Northwest and Northern Plains.

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In Taiwan, wheat consumption has steadily grown while rice consumption has declined. The reason, in no small part, is because USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) has provided expertise, guidance and encouragement to accelerate a cultural shift toward consuming more baked goods.

With funding from the Foreign Market Development (FMD) program helping maintain USW staff in Taipei, USW has been a partner to an innovative milling and baking industry for more than 50 years. That has helped USW identify that the public must be enticed by novelty, nutrition and flavor for Taiwanese wheat consumption to continue growing. Higher end baked items from naturally fermented dough, fancier pastries, confections and Japanese style cakes are becoming the focus of ever more sophisticated tastes.

With activity funding from the Market Access Program (MAP), USW has helped its customers in the milling, baking, vocational training, and education sectors to remain competitive by developing novel baked goods that favor the use of flour milled from U.S. hard red spring (HRS), hard red winter (HRW) and soft white (SW) wheat classes.

One example of how USW is helping sustain the growth in wheat foods is a sour dough baking seminar in October 2017, jointly developed and conducted by a Taiwanese flour mill, Chia Nan University and USW, funded in part through MAP. A total of 100 participants from southern Taiwan, including university professors, technology high school teachers, bakers as well as hotel and catering company chefs, attended the day-long seminar. The topics included information about why U.S. HRW and HRS wheat classes provide the correct functional flour performance for sour dough baked goods including white and whole wheat bread, bagels, baguettes, etc. The instructors also showed the advantages of U.S. SW flour in sour dough cream cakes and even cheese corn soup. A survey showed that all participants found value in the seminar and that they would strongly consider developing new sour dough products or incorporate the products into their baking curriculums.

Helping wheat consumption grow is particularly important in a market like Taiwan, which imports about 78 percent of its wheat on average from the United States. Five years ago, in marketing year 2013/14 (June 1 to May 31), Taiwan imported 1.28 million metric tons (MMT), of which 1.05 MMT was U.S. wheat. In 2017/18, Taiwan imported 1.39 MMT, of which 1.14 MMT came from U.S. farmers. U.S. wheat export prices vary by class and from year to year, but in 2017/18, USW invested almost $535,000 in FMD and MAP funding and estimates the total value of our exports to Taiwan in 2017/18 was at least $260 million.

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It can be an uphill battle to convince milling wheat buyers to opt for premium-priced, but better performing, U.S. wheat. Long-term investments funded by wheat farmers through state wheat checkoff programs, the Market Access Program (MAP) and the Foreign Market Development (FMD) program, however, have yielded significant gains.

In the Philippines, USW has helped flour millers and commercial food companies build and maintain a multi-year campaign to increase consumption of wheat-based foods. Over the past five years, annual per capita consumption of wheat in the island nation has increased from 23 to 29 kilograms. That is an annual demand increase of 600,000 metric tons of wheat, with an estimated 97 percent of that wheat coming from the United States.

U.S. wheat enjoys this level of market dominance because the program investments have helped USW stay “on the ground” in the Philippines and other Asian markets for decades, making trade and technical service calls and conducting wheat food production training. USW Regional Vice President Joe Sowers says the producer funds, FMD and MAP are essential to building trust with buyers and end-users who also look to USW for advice.

For example, a large Filipino flour miller had collaborated with USW on several activities and immediately following its participation in the Buhler-KSU Executive Milling Course at IGP Institute in Manhattan, KS, June 12 to 16, 2017, the mill started printing “Guaranteed 100% U.S. Wheat” on its flour bags. This effectively locked the mill’s 90,000 MT of annual wheat purchases into U.S. origin supplies. This change also influenced another flour mill that conducts cooperative shipping with the first mill to purchase only U.S. hard red spring (HRS) wheat even though Canadian spring wheat was offered at an FOB export price of $35 per metric ton less than U.S. HRS.

USW’s work to establish U.S. origin wheat as a quality standard for Philippine flour directly contributed to 175,000 MT of HRS sales in marketing year 2017/18 (June 1 to May 31) with an estimated FOB value of $50 million. Overall, the Philippines purchased more HRS and more U.S. soft white (SW) wheat than any other country in 2017/18.