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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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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.

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Vietnam’s flour millers annually import a total of more than 1.8 million metric tons (MMT) of milling wheat and wheat consumption is projected to grow by 4 percent to 6 percent per year. Rapidly expanding demand there for cookies, crackers and cakes is an ideal target market for low-protein soft white (SW) wheat grown in Washington, Oregon and Idaho.

With funding from the Foreign Market Development (FMD) and Market Access Program (MAP), U.S. Wheat Associates (USW) has demonstrated the advantages of SW flour by introducing solvent retention capacity (SRC) analysis to Vietnam’s millers and manufacturers. Even though Vietnam imposes a 5 percent tariff on imported milling wheat and competing Australian wheat enters duty free, U.S. SW annual imports increased from about 39,000 metric tons (MT) in marketing year 2013/14 (June to May) to almost 93,000 MT in 2015/16.

That import pace continued into early 2016/17, but after discovering minor insect presence in some U.S. wheat and DDGS cargoes, the Vietnamese government on Dec. 1, 2016, required all U.S. shipments be fumigated with the insecticide methyl bromide. This effectively blocked U.S. wheat exports because methyl bromide is banned for most uses here and is impractical for bulk grain treatment.

USW Headquarters and Southeast Asia office staff immediately began working with the U.S. Animal and Plant Health Inspection Service (APHIS) to address this issue. USW provided some of the information APHIS used in an official response to Vietnam, which opened the door to negotiations. APHIS and shippers ultimately established specific insect control requirements that were acceptable to Vietnam’s Plant Protection Department. The restriction ended Aug. 31, 2017, a notably fast resolution to such a significant Sanitary/Phytosanitary trade barrier.

Soft white exports to Vietnam dipped to about 58,000 MT in 2016/17. Yet USW kept providing trade service and technical support visits to Vietnamese flour mills and bakeries. Although millers could not import U.S. wheat for the first three months of 2017/18, SW sales for the year rebounded to more than 93,500 MT, valued at almost $19 million. Total U.S. wheat exports to Vietnam, including hard red spring and hard red winter wheat, in 2017/18 reached almost 186,000 MT.

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Because no two crops are alike, the world’s flour millers, bakers and wheat food processors must have some assurance that the wheat they buy will meet their needs. That is why USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) and its partner organizations collect and analyze samples of all six classes of U.S. wheat, compile results and share that data around the world every year.

Legacy organizations to USW first identified the need to quickly gather and share new crop data in 1960. Since then, wheat farmer checkoff dollars and Market Access Program (MAP) funding have been invested to publish a complete picture of each year’s harvest. This commitment to transparency offers confidence in the data that, together with the trade service and technical support also funded by MAP and the Foreign Market Development (FMD) program, help differentiate U.S. wheat exportable supplies from competing supplies from Russia, Ukraine, Europe, Canada, Australia and Argentina.

USW works with several wheat quality organizations, including the Federal Grain Inspection Service and the USDA/ARS Hard Winter Wheat Quality Laboratory, to collect, grade and analyze thousands of wheat samples from local elevators and sub-lot samples from export elevators. Sampling begins with early winter wheat harvest and continues until the U.S. hard red spring (HRS) and durum harvests are complete, usually by early October. The data is compiled by class and by production region. By late October, class reports and a complete USW Crop Quality Report are published on USW’s website and the Crop Quality Report is printed as a booklet in English, Spanish, French, Arabic and Mandarin.

USW then sends teams of farmers, wheat quality experts and representatives out to present that year’s data to its buyers. By mid-December, USW has presented current characteristics on grade factors, protein levels, flour extraction rates, dough stability, baking loaf volume, noodle color and texture and more for all six U.S. wheat classes to hundreds of buyers, millers and processors in more than 25 countries. Buying decisions are made because of this effort; some are acted upon quickly. For example, with information they learned at USW’s 2015 Crop Quality Seminar, millers in Portugal imported 36,500 metric tons of HRS for the first time in 3 years.

U.S. wheat crop quality data forms the basis for our farmers’ ability to compete in the global wheat market. Without funding from MAP and the support of federally-funded inspection and quality analysis labs, this essential service to overseas customers would not be possible. It provides crucial support to annual U.S. wheat export sales averaging more than 26 million metric tons per year.

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Bakers around the world consider flour produced from U.S. wheat to be consistently high quality and versatile. That reputation is earned largely because wheat farmers grow excellent crops and invest in export market development through U.S. Wheat Associates (USW). In turn, USW marketing and technical experts work hard to leverage funding from the USDA Foreign Agricultural Service Market Access Program (MAP) and the Foreign Market Development (FMD) program to serve the world’s wheat buyers and wheat food processors.

One of those experts is Bakery Consultant Roy Chung who, from a base in Singapore, has represented U.S. wheat for more than 40 years. He has consistently added value to U.S. wheat imports by introducing quality bread processing to the milling and baking industry across South Asia in conjunction with his USW colleagues and training program collaborators.

The association of such expertise and service with U.S. wheat’s reputation overseas is so well regarded that in 2016, Lesaffre, a leading French yeast and fermentation products company, asked Chung and USW to collaborate on an innovative publication called “Sandwich Bread in Words. A Glossary of Sensory Terms” for bakers.

Lasaffre describes the January 2017 book as a tool “to formalize a common vocabulary about sandwich bread, drawing on different cultures and incorporating a repeatable assessment method … to create a bridge to connect experts with consumers.”

Lasaffre’s baking ingredients and flour produced from U.S. hard red spring (HRS) and hard red winter (HRW) wheat classes, are ideally suited for the high quality “sponge and dough” system bread products that Chung describes in the book: “The internal characteristics, like flavor, grain, texture, taste, mouthfeel … will determine if the customer returns for another loaf. The vested interest of the baker is to make the best possible looking and tasting product with the best ingredients available.”

It may be difficult to correlate specific export sales changes with the respected knowledge Chung and other USW colleagues demonstrate. Over the long-term, however, it is an ideal example of the power of farmer support and MAP and FMD funding to help create sustained demand for high quality U.S. wheat in more than 100 overseas markets, even when that wheat is higher priced.

Total annual U.S. wheat exports to South Asian countries stood at nearly 3 million metric tons (MMT) in marketing year 2008/09, but has steadily increased since then. In marketing year 2016/17, U.S. wheat exports to the region reached 5.5 MMT.

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A Latin American and Caribbean Buyers Conference June 2016 in Portland, OR, sponsored by USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) with Market Access Program (MAP) funding and support from 9 state wheat commissions, set the stage for incremental wheat exports by 75 flour millers and buyers from 16 countries.

The increasingly competitive global wheat market puts a premium on in-person trade service and technical support to differentiate wheat supplies. The 2016 Buyers Conference created a collegial opportunity for wheat buyers to meet with farmers, U.S. based grain traders and technical experts on local supply chain visits, in seminar sessions and social activities. USW arranged for speakers on a range of relevant topics including U.S. wheat quality trends, logistics management, plant breeding methods and other key wheat price drivers that address specific constraints on U.S. wheat sales to these growing markets.

By increasing the basic knowledge of how to purchase U.S. wheat, for example, a flour miller in Haiti bought their first two shipments ever of U.S. hard red winter (HRW) after the conference, with plans to import more HRW. The miller noted that meeting with traders and millers at the conference opened talks about possible joint purchases. Two participants from a new flour mill in Honduras said they now have better information to consider additional U.S. wheat purchases from Pacific Northwest ports. An experienced Colombian buyer said seeing the whole process from varietal development to the farm and supply system was “amazing” and definitely increased his confidence in U.S. wheat quality and reliability.

To help overcome regional preferences for Canadian wheat, master baker Didier Rosada presented (in Spanish) evidence that blending two or more U.S. wheat classes can be less expensive and improve end-product quality. With this information and discussions at the conference, a large Costa Rican miller and food processor indicated it would likely increase U.S. soft white (SW) wheat imports for blending.

While it is not possible to quantify all additional U.S. wheat exports directly related to the 2016 conference, 2016/17 sales to Mexico, Central America and the Caribbean of 6.3 million metric tons (MMT) are up 23 percent over 2015/16. Sales of 3.5 MMT of U.S. wheat to South American markets represent a 70 percent increase in 2016/17 over the prior year.

Overall, the effort to identify how world market dynamics made U.S. wheat an attractive choice was a timely message for Latin American buyers. To help meet the growing demand for new and better wheat food products in the region they increasingly buy based on the kind of quality characteristics U.S. wheat classes offer. A survey of buyers at the 2016 conference showed that 64 percent believed the experience will help them compare U.S. wheat quality, while 70 percent said it would help them compare U.S wheat value, to competing origins. These are key objectives for USW in its trade service and technical support activities funded by the MAP and Foreign Market Development (FMD) program.

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Euromonitor International has predicted that sales of baked goods in the People’s Republic of China will increase 22.5% by 2021. Domestic wheat is less than optimal in flour production and quality for these baked goods, so imports are needed. USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) is using Market Access Program (MAP) and Foreign Market Development (FMD) program funds to meet that demand by helping the Chinese baking industry tackle technical challenges to produce world class baked goods using imported U.S. wheat.

USW applied FMD funds to hire Dr. Ting Liu in September 2016 as Technical Specialist to bolster USW’s technical ability to demonstrate U.S. wheat performance qualities for new baked goods. One of Dr. Liu’s first projects, supported by MAP funds, was to help the Sino American Baking School (SABS) in Guangdong Province offer consultation to baking companies that have some experience using flour made from U.S. wheat. The long-term goal is to help them expand new specialty items such as sourdough, frozen dough and whole grain products. In marketing year 2016/17, three Chinese companies requested the technical assistance from senior specialists currently teaching at, or recently retired from, SABS. USW and SABS are strongly associated with excellent instruction and product development, so USW’s support is also helping build stronger reputations for both the school and for U.S. wheat.

Growing demand for baked goods and interest in healthy, whole grain products represents good opportunity to increase Chinese demand specifically for high-protein U.S. hard red spring (HRS) wheat. In May 2017, Dr. Liu represented USW at the 2017 Sino-Foreign Whole Grain Industry Development Experts Forum in Shanghai. Joining 22 experts in food processing, nutrition and health, financial investment, policy and marketing, Dr. Liu actively participated in the forum as one of 10 industry guest speakers. Drawing from USW’s activities in several other countries, Dr. Liu’s presentation focused “International Whole Grain Development,” which provided guidelines and references to the development of whole grains products in China.

China’s U.S. wheat imports can swing up or down with government policy decisions. However, total U.S. import volume doubled in 2016/17 to more than 1.6 million metric tons (MMT) compared to almost 880,000 MT in 2015/16. A closer look shows China’s annual import of HRS wheat grown in Minnesota, North Dakota, Montana and South Dakota has steadily increased the past five years from 475,000 MT in 2012/13 to more than 1.1 MMT in 2016/17. That is the second highest volume of HRS imports in the world that year.

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To help Colombian wheat buyers find ways to import more U.S. wheat, USDA Foreign Agricultural Service cooperator U.S. Wheat Associates worked closely with USDA and state wheat commissions to organize a visit to observe the quality and logistical advantages of the U.S. wheat supply chain.

Colombia is the largest wheat buyer in the growing South American market. There are several smaller flour mills there that find it difficult and price restrictive to try to purchase U.S. wheat from on their own. USW’s South America regional office saw an opportunity to overcome this constraint by bringing newer members of the purchasing and milling industries together to consider joint purchasing. They organized a trade team of high level executives from five major flour, cookie and pasta companies in Colombia, all traveling for the first time to see the U.S. wheat supply system. In June 2016, the team traveled to North Dakota, Montana and Louisiana to visit country and port elevators, to meet with wheat producers, U.S. pasta and cookie manufacturers and government agencies including the Federal Grain Inspection Service.

This trade service effort, funded by the Market Access Program (MAP), generated several positive results. One of the participants representing Colombia’s largest wheat buyer after observing how the Montana State Grain Laboratory tested feed and grain for the presence of vomitoxin (deoxynivalenol or DON), recommended that the company install the testing equipment at its mill. Now the testing is helping the mill make crucial judgements about the variability in wheat quality. In addition, the participant reports that the visit helped the company get more value from its purchases because its managers now better understand their options in U.S. wheat supply logistics.

Following the trade team visit, four of the companies established a wheat purchasing pool for the first time. Within six months, the pool purchased 220,000 MT of hard red winter (HRW) and soft red winter (SRW). U.S. wheat purchases by these companies increased 19 percent compared to the same period in 2015. One of the companies that attended the trade mission informed USW that it plans to purchase 13 percent more U.S. wheat in 2016/17 and 2017/18, valued at $3.0 million because of the advantages from pool buying. That miller also said it will change its formula for bread flour by blending more imported U.S. HRW in place of Canadian spring wheat because the ratio of quality to price is greater because it can pool buy U.S. wheat.

In 2016/17, total U.S. wheat exports to Colombia for marketing year 2016/17 exceeded 858,000 metric tons, which is more than 27 percent more than in 2015/16. That represents sales benefitting farmers in the southern and central Plains and the U.S. wheat supply chain in the Gulf of Mexico and Pacific Northwest.

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Just as the 2016 wheat harvest was starting, a farmer in Washington state discovered and reported rogue wheat plants genetically modified to be “Roundup Ready” in a fallow field on his farm. Yet U.S. Wheat Associates (USW) helped avert a potentially devastating market disruption by taking quick steps to work with the USDA Foreign Agricultural Service and other USDA agencies, overseas wheat buyers and state wheat commissions.

U.S. wheat imports by Japan, Korea and Taiwan represent an annual average of about 20 percent of total U.S. wheat exports, valued at more than $1 billion even with very low prices. Most consumers in those countries oppose food produced from genetically modified crops, so the stakes could hardly be higher.

Once informed of the situation, USW began working on the issue closely with all the stakeholders involved, including its in-country offices and FAS posts, the Animal and Plant Health Inspection Service (APHIS), the U.S. grain trade and Monsanto. APHIS took prompt and thorough action to identify the regulated wheat event in the suspect plants and kept our organizations, as well as government officials in several key overseas markets, informed as it worked to find the facts. In turn, USW shared information about the situation with the domestic grain trade and downstream customer organizations, as well as overseas grain trade and buyers in Japan, Korea and Taiwan.

Out of an abundance of caution, Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) suspended new purchases of U.S. western white wheat (soft white and 20 percent club wheat) from the Pacific Northwest (PNW) and Korea’s Ministry of Food and Drug Safety (MFDS) suspended all new U.S. wheat imports until their officials could validate and start using a customized version of a new detection assay provided quickly by Monsanto and APHIS.

Testing ultimately confirmed that U.S. wheat remained safe and reliable, adding confidence that nothing had changed the U.S. wheat supply chain’s ability to deliver wheat that matches every customer’s specifications. Because USW and state wheat commissions also had a bank of trust with customers in Japan, Korea and Taiwan, and because Monsanto and APHIS acted so quickly and calmly, both countries reopened their markets to all U.S. wheat imports within eight weeks.

Without the goodwill earned over decades from USW trade and technical service and business relationships funded by the Market Access Program (MAP) and the Foreign Market Development (FMD) program, wheat farmers in Washington, Oregon, Idaho and other states would be isolated in their ability to work through such a market disruption. Instead of export losses, total sales to the North Asian countries in marketing year 2016/17 increased 12 percent compared to 2015/16 with a total value of $1.2 billion.

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U.S. Wheat Associates (USW) represents the interests of U.S. wheat farmers in international markets. As it does with all U.S. wheat importing customers, USW focuses on helping Mexico’s buyers, millers and food processors solve problems or increase their business opportunities with U.S. wheat classes. This effort, supported by wheat farmers and the partnership with the Market Access Program (MAP) and Foreign Market Development (FMD) program, has fostered a productive relationship that has endured for decades through many challenges. More than 22 years of duty free access to the Mexican market under the North American Free Trade Agreement (NAFTA) certainly helped build the relationship.

Mexico is one of the largest U.S. wheat buyers in the world, importing just under 3.0 million metric tons (MMT) on average going back many years.  Not in marketing year 2016/17, however. As of May 18, 2017, Mexico’s flour millers had imported more than 3.3 MMT of U.S. wheat, which is more than any other country. That volume is up 39 percent over last year at the same time.

Breaking down their purchases by class, flour millers in Mexico generate strong demand for U.S. hard red winter (HRW) wheat. In 2015/16, they were the leading HRW importers and are taking advantage of the favorable prices and high quality of the 2016/17 HRW crop. At a current volume of about 2.0 MMT, they have imported 79 percent more HRW this year and again lead buyers of that class. The association representing Mexican flour millers says a rising number of industrial bakeries, along with traditional artisanal bakeries, account for about 70 percent of the country’s wheat consumption. That puts HRW producers in a good position to meet that demand. Being closer to HRW production and having a highly functioning ability to import a large share of HRW directly via rail and duty free from the Plains states is an advantage for Mexico’s buyers.

In addition, Mexico is home to Bimbo, the world’s largest baked goods company, and an increasing number of cookie and cracker companies. The functional properties of U.S. soft red winter wheat (SRW) is well suited to the production of cookies, crackers and pastries, and serves as an excellent blending wheat. Millers supplying this growing market imported an average of 1.2 MMT of SRW between 2011/12 and 2015/16. With imports from the Gulf of more than 1.0 MMT of SRW in 2016/17, Mexico was the top buyer of SRW again. USW and state wheat commissions from the PNW are also helping demonstrate how millers and bakers can reduce input costs by using U.S. soft white (SW) as a blending wheat for specialty flour products.

The successful story of how U.S. wheat farmers and their customers in Mexico have worked together in a mutually beneficial way and, for now, U.S. wheat continues to flow to our customers in Mexico.