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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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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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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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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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.