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Image shows grain rail cars by a country elevator to illustrate USW comments to the Surface Transportation Board.
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ATP Program Brings Mexican Buyer to U.S. for Rail Shipping Observation

U.S. Wheat Associates (USW) recognizes that direct rail shipments of U.S. wheat to millers in Mexico provides a significant advantage over competing wheat exporting countries. USW has been increasing its efforts to facilitate these types of sales by educating Mexican buyers about the rail shipping process and efficiencies.

In June 2022, USW’s Mexico City Office used Agricultural Trade Promotion Program (ATP) funds to organize and lead a trade team from a Mexican company that is a major buyer of U.S. wheat to meet with U.S. farmers, grain cooperatives and grain elevators in Ohio and Kansas that have direct rail shipment capabilities. The trade team included the company’s wheat purchasing manager and production manager.

Improved Infrastructure

Expansion of U.S. exports to the market via rail has been made possible by significant investments and dramatic improvements in the Mexican rail infrastructure over the last 15 years. Today, there are 46 shuttle train facilities, including 9 new facilities that were inaugurated in 2020-2022, and 12 milling companies have the capacity to receive shuttle trains.

Along with demonstrating the capabilities of shipping U.S. wheat directly to mills in Mexico, the trade team led by USW was educated on the quality and supply of U.S. soft red winter (SRW) wheat and hard red winter wheat (HRW).

As a result of discussions with the trade team – both during and after the visits to Ohio and Kansas – the company bought SRW for the first time in more than three years. The estimated total for the 44,160 metric tons (MT) of SRW purchases that resulted from the trade team was $15.7 million.

 

 

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Image of people around a stainless steel industrial table discussing technical support topics related to serving global wheat importing customers.
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ATP Helps USW Build and Share Valuable Milling and Baking Technical Support

Adding value to U.S. wheat export supplies requires strong technical support and broad knowledge of the milling, baking, and processing needed to produce hundreds of unique food products. With 11 professional flour millers and bakers on staff, U.S. Wheat Associates (USW) uses technical support to add value and create a differential advantage for U.S. wheat classes over competing supplies that often cost less.

With additional funding through the Agricultural Trade Promotion (ATP) program, and help from its educational partners, USW created and implemented a multi-year activity to improve its already strong technical support. In February 2022 and in March 2023, USW held “Core Competency Training” sessions for technical and marketing staff from all its overseas offices. The objective was to help USW become more competent to help milling and baking customers grow their businesses using imported U.S. wheat.

Image shows people in an industrial baking lab discussing production and quality of baguette bread made with U.S. wheat as part of a technical support training program.

At the Wheat Marketing Center in Portland, Ore., in 2022, USW technical and marketing staff gathered to “learn so they can teach” overseas customers.

Building Core Competency

The in-depth sessions and discussions give newer USW technical and marketing specialists the chance to learn from USW’s senior experts working in distant regions. Exchanging information and techniques about different flour and wheat food products creates the chance to develop new product opportunities in new markets. In addition, the Core Competency Training workshops have given USW the shared knowledge to help solve problems and develop more successful training and technical support for customers.

“A clear knowledge of the customer’s business is vitally important to opening the door to U.S. wheat farmers as valued suppliers,” said Peter Lloyd, one of USW’s senior technical managers and a recognized global flour milling expert. “I believe the Core Competency Training has improved our ability to bring the greatest value where it makes the most difference – on the bottom-line profit for a supply chain manager, miller, or baker.”

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Team of bakers showing their test production.
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Technical Baking Seminar in Mexico Leads to Increased Use of U.S Wheat Flour

Mexico is the world’s largest market for U.S. hard red winter (HRW) wheat and soft red winter (SRW) wheat, and the third largest market for U.S. hard red spring (HRS) wheat. U.S. Wheat Associates (USW) works to maintain and grow market share of all three classes by providing technical training to bakers in Mexico that demonstrates ways to improve products made with U.S. wheat.

In December 2022, USW’s Mexico City Office used Market Access Program (MAP) funds to present a technical baking seminar for one of the top baking companies in Mexico. The seminar focused on improving current end-products by reinforcing the use of sponge and dough methods, with an emphasis on the production of bolillos, baguettes and ciabattas. Thirty-five participants attended the USW course, including 29 bakers and managers from several different store locations.

Within two months after the seminar’s conclusion, the baking company reported that, due to information it received at the USW seminar, it implemented the sponge and dough methods in 70% of its production centers. It also set a goal of reaching 100% adaptation of the methods by March of 2023. Additionally, the company reported a 4.7% increase in sales resulting in a corresponding increase in U.S. wheat flour usage valued at an estimated $584,000 per year.

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ATP Funds, FGIS to Help Train Importers to Recognize Wheat Grade Factors

U.S. Wheat Associates (USW) frequently uses the unique U.S. grain inspection system to demonstrate a competitive advantage to the world’s wheat buyers. Now, with additional funding from the Agricultural Trade Program (ATP), USW is expanding its effort to demonstrate the integrity of the U.S. wheat supply chain in cooperation with the Federal Grain Inspection Service (FGIS).

The international affairs office of FGIS provides educational training programs to overseas buyers explaining the mission of the agency to certify the physical and contractual integrity of U.S. wheat and other grains. In July 2019 in Peru, a country the imports a total of 2.0 million metric tons (MMT) of wheat each year, USW worked with FGIS agent José Robinson to conduct half-day seminars for 53 quality control managers from the country’s five largest wheat importing companies. The participants also shared their processes with Robinson, showing examples of the wheat they inspected in plant. As a result, the managers were able to test their abilities to conduct similar inspections with guidance from directly from FGIS.

Under ATP, the USW South American regional representatives based in Santiago, Chile, plan to repeat this training activity in four other South American countries over the next two years.

USW believes this service for wheat importing customers gives them a deeper understanding of and increased trust and confidence in the FGIS inspection and certification process. The changes implemented in the mills following the training sessions should result in fewer discrepancies between the FGIS grade and the results of local, in-plant inspections, leading to increased satisfaction with U.S. wheat.

In addition, USW has earmarked ATP funds to conduct a similar FGIS Grain Inspection and Certification training session at the African Milling School in Nairobi, Kenya, in 2019. This session will be in part a “train the trainer” session for faculty members from the African Milling School and from the IFIM flour milling school in Casablanca, Morocco. Technical officials from the Office of Cereals in Algeria, the agency that plans and purchases the country’s wheat imports, and other participants from selected organizations in Sub-Saharan Africa will also participate.

Working with these schools extends knowledge of U.S. wheat value to flour millers throughout North and East Africa, as well as the Middle East. That is increasingly important in these competitive markets, especially in educating millers and processors in the growing cake and confection markets that need the specific information about the differential performance of U.S. soft red winter (SRW) and soft white (SW) wheat classes.

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ATP Funding Bridges Technical Service Gap in Southeast Asian Wheat Export Markets

U.S. Wheat Associates (USW) is applying funds from the Agricultural Trade Promotion (ATP) program to expand its ability to conduct technical support to wheat buyers and end users in rapidly growing South Asian markets.

USW has had a long-term effort to help customers improve their products and processes through technical support, funded in part by the Market Access Program (MAP) and Foreign Market Development (FMD) program. There is a strong connection between increased imports of U.S. wheat and the investment in milling and food production support. Looking at the highly sophisticated wheat food industries in Japan, Korea and others, USW’s long-term investment has benefited consumers in those countries while establishing strong and consistent export markets for U.S. wheat producers.

In such markets as Vietnam, Malaysia, Myanmar, Thailand and Indonesia, the imported wheat customer base is expanding, and USW saw a need to increase its technical capabilities to match the growth. At the same time, USW knew that some senior technical staff were planning retirements.

The addition of ATP funding gave USW the opportunity to add a new Bakery Technician position to work with customers across the South Asian region. Adrian Redondo, an experienced food technologist and account manager, joined USW in June 2019. He will train with his experienced colleagues and build customer contacts through 2021 when the current USW bakery consultant based in the Philippines plans to retire. Without additional ATP funding, USW would have had to fund a new technician position from a limited pool of FMD funds that would, in effect, cut its ability to fund customer activities.

South Asian imports of U.S. hard red spring (HRS), soft white (SW) and hard red winter (HRW) wheat from family farms in the Pacific Northwest to the Northern Plains have grown from an average of about 3.0 million metric tons (MMT) per year 10 years ago to about 5.0 MMT in 2018/19. Future demand for wheat foods is expected to keep growing in the region. ATP funding provides a wide range of additional opportunities to continue differentiating U.S. wheat in markets like those in South Asia, with no local wheat production and where increasing incomes and urbanization are driving a rapid expansion of wheat food demand.

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Cereal Chemistry Training in Emerging South Asian Markets

U.S. Wheat Associates (USW) is applying Agricultural Trade Promotion (ATP) program funding to hold five “Cereal Chemistry Seminars” in 2019 and 2020 for the milling industries in Southeast Asia. USW believes that with a more complete understanding of the functional value of wheat proteins, carbohydrates and other properties, flour milling quality control managers will become more receptive to the high-quality characteristics of U.S. wheat compared to competing supplies.

In Malaysia, Indonesia, Vietnam, Thailand and Myanmar (Burma), the flour milling industry is expanding to meet the fast-growing demand for wheat food. However, many new managers lack the experience with U.S. wheat to evaluate its differential characteristics relative to its premium price, which puts a constraint on upside U.S. wheat export potential.

To provide the knowledge that will help fully understand the true value of U.S. wheat supplies, USW is developing a comprehensive seminar that will be conducted over the next two years. Seminars targeting about 50 technical staff from the milling and allied industries in each of the five markets will include such topics as Wheat Chemistry and Structure; Wheat Protein Analysis and Functionality; and Wheat Carbohydrate Chemistry and Functionality.

USW anticipates that after the seminars, participants will have enhanced skills to assist co-workers, suppliers and customers in developing new formulations requiring more specific flours and increased volumes of U.S. wheat classes. Participants will gain expertise in flour analysis and the importance of specifications required in large production bakeries. And quality control staff will have enough technical capabilities to defend the functional value of high-quality flour from U.S. wheat.

South Asian imports of U.S. hard red spring (HRS), soft white (SW) and hard red winter (HRW) wheat from family farms in the Pacific Northwest to the Northern Plains have grown from an average of about 3.0 million metric tons (MMT) per year 10 years ago to about 5.0 MMT in 2018/19. Future demand for wheat foods is expected to keep growing in the region. By funding opportunities like Cereal Chemistry Seminars, ATP is helping USW continue to give flour milling and baking managers the information they need to build a preference for U.S. wheat supplies.

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Chilean Milling Group Returns to U.S. Wheat

The marketing year 2018/19 hard red winter (HRW) and hard red spring (HRS) wheat crops offered excellent milling and baking quality, and therefore more value, than in previous years. U.S. Wheat Associates (USW) representatives in South America invited two representatives of an influential buying group in Chile to participate in a trade team visit to the United States in June 2018. This group had not purchased U.S. wheat, relying instead on Canadian spring wheat, so USW was pleased that the trade team included two executives from the buying group who had never participated in such a visit to observe the U.S. wheat production and supply system.

In Portland, OR, the participants made contacts with new Pacific Northwest grain traders and observed the FGIS grain inspection process. In Nebraska, hosted by the Nebraska Wheat Board, the team saw public wheat breeding research at the University of Nebraska, Lincoln, and in North Dakota they learned about new crop U.S HRS quality.

As the tour progressed, USW saw more and more interest from the participants. They learned that lower moisture U.S. wheat offers good value in their milling processes. They saw how they could use inspection data to get maximum return from their wheat import contracts. They talked to farmers and elevator operators who showed how quality is maintained throughout the supply chain.

In September 2018, the buying group told USW it was considering purchasing a full cargo of U.S. wheat and requested additional crop quality data to support and facilitate the decision. USW shared the quality data from the new harvest and past years and discussed the excellent buying opportunities. In April 2019, the buyer purchased 30,000 metric tons (MT) of U.S. HRW to mill into bread flour and soft red winter (SRW) to mill into cookie and pastry flour. The mill manager who traveled to the United States also expressed interest in purchasing soft white (SW) from the Pacific Northwest. With funding from the USDA Foreign Agricultural Service Market Access Program (MAP), USW provided trade and technical service to open that opportunity. And to continue the long-term process to build sales to the buyinggroup, USW invested Agricultural Trade Program (ATP) funds to send the same manager to participate in the Hard Red Spring Wheat Quality Tour in North Dakota in July 2019.

With a more sustained effort focused on replacing Canadian supplies and funded by MAP, ATP and the Foreign Market Development program, USW anticipates continued growth from this influential buying pool and throughout South America.

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Investment in Japan Helped Build Good Will Needed for Market Access

Implementation of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) created a potentially devastating disadvantage for U.S. wheat exports to Japan. Yet many years of investment by U.S. Wheat Associates (USW), its partnership with USDA’s Foreign Agricultural Service and wheat farmers have built such good will that Japanese flour millers could publicly express their support for closing this looming breach. Finally in late 2019, a new U.S.-Japan agreement put U.S. wheat exports back on equal footing with competitors in the CPTPP.

The CPTPP agreement was gradually discounting effective tariffs that Japanese flour millers pay for imported Australian and Canadian milling wheat over 9 years from about $150 to about $85 per metric ton (MT). Imported U.S. wheat effective tariffs would have remained at about $150 per MT. The disadvantage for U.S. wheat had already exceeded about $20 per MT in 2019. Without a resolution of this situation, more than 60 years of investment in developing Japan into the top buyer of U.S. wheat was at risk.

In 2018, the Japan Flour Milling Association (JFMA) invited representatives of USW and several state wheat commission organizations to be guests at the organization’s 70th anniversary in Tokyo, an indication of the strong relationship with the U.S. industry. At the event, sources within the Japanese milling industry expressed real concern that the tariff disadvantage under CPTPP could force them to find alternatives to average total imports of 3.1 million metric tons (MMT) of U.S. Western White, dark northern spring (DNS) and hard red winter (HRW) wheat. Eventually, the millers suggested, U.S. wheat annual imports could have fallen to as little as 1.35 MMT per year or a potential loss of as much as $500 million per year even at relatively low U.S. wheat export prices.

USW used this concern in public statements, published fact sheets and in testimony to and personal interaction with the U.S. Trade Representative on trade negotiations with Japan.

In April 2019, USW used Market Access Program (MAP) funds to host a trade team of senior Japanese flour millers in the United States. During that visit, the new executive director of JFMA said: “It is important to maintain and develop the good relationship Japan has had with the U.S. wheat industry for more than 60 years.” Ultimately, the U.S.-Japan agreement was signed and will go into effect in 2020.

USW believes the ability to share specific risks expressed by our Japanese customers was a very crucial point that added intensity to negotiations between the two countries. USW was also very encouraged that the USTR and other officials in the Trump Administration take this situation very seriously and worked hard to come to an agreement. A large portion of wheat farm family incomes in Washington, Oregon, Idaho, Montana, Wyoming, North Dakota, South Dakota, Minnesota and other Plains states depended on it.

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USW Reaches Across Regions to Help Build Wheat Exports to The Philippines

USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) is using Foreign Market Development (FMD) program and the Market Access Program (MAP) funds to help expand demand for U.S. wheat in the Republic of the Philippines in part by introducing new products from North Asian countries.

Over the years, USW has built a team of very effective end-product technical experts in Korea and Taiwan. These are very sophisticated but somewhat mature U.S. wheat markets. The still growing Philippines market is hungry for new product ideas. USW decided to share its product and technical knowledge across regions in several ways.

In March 2018, for example, USW worked with a large flour mill in Cebu, Philippines, to plan a customer appreciation learning visit to observe innovations in the Korean baking industry. USW’s representatives in Seoul set up meetings for the team of 19 customers at sophisticated Korean bakeries where they saw new products and formulations, made with flour from U.S. hard red spring (HRS) and hard red winter (HRW) wheat, baking methods and processes.

USW chose that milling customer for this activity knowing that Bakery World 2018, the first bakery trade show in Cebu was scheduled for October 2018 where the organization would be very visible on behalf of U.S. wheat farmers. At the show with more than 6,000 bakers and allied industry representatives, USW Korea Country Director CY Kang presented a look at bakery trends in Korea. USW Korea Food and Bakery Technologist David Oh demonstrated production methods for five different types of breads currently popular in the Korean market. USW Manila Bakery Consultant Gerry Mendoza made a presentation on bakery operations.

With additional support from three state wheat commissions, USW also hosted 30 Philippine managers at a noodle production workshop presented by USW  in Taiwan. USW demonstrated how milling U.S. soft white (SW) wheat yields both high quality cake flour and higher protein “clear” flour that is ideal for bright white noodles.

Using Agricultural Trade Promotion (ATP) funding, USW’s Manila and Seoul offices collaborated on a Korean Bakery Workshop held in Seoul, South Korea from June 16 to 22, 2019. USW designed the workshop as a service to 30 additional Philippine bakers and millers to familiarize them with Korean products, formulations and production methods.

The return to U.S. farmers from the long-term, diverse activities in the Philippines is increasing. From a volume of about 2.0 million metric tons (MMT) in marketing year 2011/12, U.S. wheat imports reached more than 3.0 MMT in 2018/19 and the Philippines imported more U.S. SW and HRS than any other country that year.

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Renewing a Partnership of Affection and Action with Mexican Flour Millers

USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) held its 2019 Mexico Wheat Trade Conference June 2 to 4, 2019, which was perfectly timed to address trade policy concerns face to face with Mexican customers.

USW President Vince Peterson noted that the conference showed USW and its Mexican customers that shared challenges could bring them closer together to help navigate the policy issues and increase the efficiency and value of Mexico’s U.S. wheat purchases.

In marketing year 2017/18, U.S. wheat share of Mexico’s record total wheat imports declined. Representatives of Mexico’s milling association stated that new political rhetoric and trade policies prompted them to increased Russian and Canadian wheat imports and for the first time some wheat from Argentina. USW shared several public statements about the U.S. trade policies that helped reassure the buyers of the on-going commitment to service supported by the Market Access Program (MAP) and Foreign Market Development (FMD) program. In fact, USW has reason to believe this effort helped keep U.S. wheat off Mexico’s retaliatory tariff list related to U.S. steel and aluminum tariffs.

However, USW remained concerned that the relationship with Mexico’s millers remained precarious. In addition, approval of the new United States-Mexico-Canada Agreement (USMCA) on Trade was also uncertain. To help overcome these potential constraints, USW planned the Mexico Wheat Trade Conference that included many farmers and administrators representing state wheat commissions. The conference speakers covered a wide range of wheat quality, purchasing and logistical topics over two full days.

With so many logistical options for delivering wheat to Mexico, USW Regional Vice President Mitch Skalicky and his colleagues based in Mexico City who planned the conference emphasized commercial rail issues and opportunities in the program.

The flour millers that attended the conference in Cancún represented about 80% of the total 2018/19 U.S. wheat commercial sales to Mexico reported by USDA. José Luis Fuente is president of the millers’ national association and offered an inspired appeal to work together to tell officials in both countries that export opportunities must be improved, not restricted. He said his members know that U.S. wheat farmers, USW and USDA have done many things to tell that story. He added that this is a partnership based on affection that is backed by actions, but actions are more needed now in this unusual trade environment.

In marketing year 2018/19, Mexican flour millers did import 3.3 million metric tons (MMT) of U.S. wheat, more than any other country. Mexican millers continue purchasing U.S. hard red winter (HRW), soft red winter (SRW), hard red spring (HRS) and hard white (HW) at a fast pace in 2019/20.

Video reports from the USW Mexico Wheat Trade Conference are posted on YouTube at https://www.youtube.com/user/USWheatAssociates.

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