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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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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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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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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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.

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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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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It is certainly true that the trade relations between the United States and China have been and remain in a difficult place. However, USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) is confident that this trade confrontation will one day be resolved. After many years investing funding from the Market Access Program (MAP) and Foreign Market Development (FMD) program, USW remains engaged in keeping our once and future wheat importing customers in China informed about the quality, variety and value of U.S. wheat in anticipation of future opportunities.

USW maintains a presence in Beijing but did not replace a retired colleague to help hold the line on FMD investment. Trade service visits in the first six months of 2019 confirm that private flour millers want to continue importing U.S. hard red spring (HRS) and soft white (SW) when the tariff conflict is resolved. The only flour miller who purchased any U.S. wheat in marketing year 2018/19 was willing to pay the 25% punitive tariff and took delivery of 43,000 metric tons of HRS in April. He expressed an abiding interest in the functionality, flavor and good milling characteristic of U.S. wheat, and holds high hopes for not just a “normal” trading relationship, but one that allow mills like his to run much more of it.

USW representatives also conducted trade service visits with customers attending Bakery China Shanghai 2019. They participated in a U.S. agricultural product showcase sponsored by the USDA/FAS Agricultural Trade Officer posted in Shanghai to highlight the differential advantages of U.S. HRS and other classes of wheat. USW Regional Vice President Jeff Coey reported that every customer was eager to regain access to the high-quality U.S. wheat they learned about through export development programs and experience over the years.

Officials with China’s state-sponsored grain buying agencies also welcome USW trade servicing, technical training and relationship management activities. Even with the tariffs in place, in May 2019 Coey and USW/Beijing Country Director Shirley Lu were invited to speak at a conference in Xiamen to several millers who gained new information about the functional value of U.S. wheat classes. Bakery training classes conducted by USW’s technical specialist in 2019 also expanded awareness of U.S. wheat’s superior functional benefits.

In addition, officials were happy to hear that USW’s commitment to the China market remains unchanged.  In fact, USW told the officials it intends to increase its activities in partnership with FAS in part with funding from the Agricultural Trade Promotion (ATP) program to keep U.S. wheat top of mind among users and policy makers in China. Under ATP, for example, USW plans to hold a series of “Contracting for Wheat Value” courses in the United States for commercial and state wheat buyers over the next three years. Participants will be managers with direct wheat trade contacts that influence wheat purchasing in their organizations. After the courses, participants will get the chance to observe wheat breeding, farms, transportation, quality control and Federal Grain Inspection Service processes.

Given that China imported 1.6 million metric tons of U.S. HRS, SW and soft red winter (SRW) wheat in marketing year 2016/17 and more than 800,000 metric tons of U.S. wheat in 2017/18 before the retaliatory tariffs were implemented, potential demand will benefit farmers in the Pacific Northwest and Northern Plains. And, with funding from MAP, FMD and ATP, USW’s commitment to service in China will continue long after this trade conflict has ended.

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Fully disclosing the quality of new wheat crops is an effective trade service activity for USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) to help its overseas customers prepare to purchase U.S. milling wheat. In South Asia, Crop Quality Seminars funded in part by the Market Access Program (MAP) directly stimulated sales of U.S. hard red spring (HRS) and soft white (SW) in 2018.

USW hosted three Crop Quality Seminars in the Philippines, Thailand and Indonesia in November 2018. Nearly 200 milling and baking companies participates in these seminars, including representatives from Vietnam, Malaysia and Burma (Myanmar) at the Bangkok Seminar.

The seminars present a wide range of data on the grade, protein, soundness, milling and baking quality of all six U.S. wheat classes. USW gathers this data throughout harvest from private and USDA partner organizations also funded by MAP. The final USW Crop Quality Report is printed and shipped to seminar locations. The teams that represent U.S. wheat include USW representatives from the United States and the organization’s South Asia Region, who come from offices in Singapore and Manila supported by Foreign Market Development (FMD) funds.

U.S. farmers and invited consultants also travel with the Crop Quality Teams. In 2018, for example, Dr. Art Bettge, retired Director of the USDA-ARS Western Wheat Quality Laboratory in Pullman, WA, presented information on the SW quality and breeding programs helping to meet growing demand for more and improved SW wheat from Asian markets. Dr. Senay Simsek, professor and head of Wheat Quality & Carbohydrate Research at North Dakota State University discussed HRS data and related U.S. food processing innovation related to “clean label” bread products.

U.S. grain merchandisers representing Pacific Northwest exporters and their regional affiliates joined the seminars in all three locations. They introduced the logistics, movement and other factors affecting wheat export prices. Their direct participation helped foster convenient connections between these private sellers and customers attending the seminars.

Participant surveys indicated the buyers rated the value of the content and speakers very highly. And the grain merchandisers reported booking export sales of more than 200,000 metric tons of U.S. HRS and SW with an approximate value of $50 million as a direct result of the seminars. The estimated investment in the three South Asian seminars from MAP funds and in-kind contributions from state wheat commissions is $130,000. Total accumulated export sales of HRS, SW and hard red winter (HRW) for marketing year 2018/19 to the countries represented at these three seminars reached a record level of almost 5.6 million metric tons, benefiting farmers and U.S. wheat supply industries in Washington, Oregon, Idaho, Montana, North Dakota, South Dakota, Wyoming and Minnesota.

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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.