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With funding from the Market Access Program (MAP), U.S. Wheat Associates (USW) educated some top U.S. wheat customers in the Caribbean Region about the methods and mechanics of grain purchasing and trading. Hosted at the Northern Crops Institute in North Dakota, the customized procurement course attracted milling companies from the Dominican Republic, Haiti, Mexico, Panama and Trinidad &Tobago.

Home to nearly 30 million people, the Caribbean’s proximity to the U.S. provides competitive advantage for U.S. wheat exports. USW considers the region a growth market for U.S. wheat and targets islands that have flour mills and sizeable end-product manufacturing. Giving millers updated tools to make purchasing decisions is seen as a solid business decision for the U.S. wheat industry.

Helping Customers See More Value

USW’s Grain Purchasing Short Course took place in June 2022 with a focus on U.S. wheat supply, global demand and grain merchandising.  The course also included a “Getting the Wheat Value You Want” presentation by USW and an opportunity to practice futures trading at North Dakota State University. Visits to the Port of Duluth-Superior, the CHS export facility in Duluth and meetings with the area grain trade were also part of the experience.

During follow-ups to the course, A Dominican Republic mill purchased an additional 3,000 metric tons (MT) of U.S. soft red winter (SRW) wheat and an additional 2,000 MT of hard red winter (HRW) wheat valued at approximately $1.9 million. A Haitian mill reported that, because of what it learned in the course, it was able to request and evaluate basis offers, FOB offers and CIF offers. Savings realized using these methods increased satisfaction with U.S. wheat. The company reported purchases of 36,000 MT of U.S. HRW from July 2022 through February 2023 valued at approximately $14.6 million.

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

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

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

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

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

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

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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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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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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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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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The West African nation of Angola is making good progress in its desire to improve food security for a rapidly growing population, currently estimated at 24.5 million people. The Angolan government believes that building its own food processing capacity is a crucial part of that effort to help reduce the cost of importing food, while creating jobs for the Angolan people and preserving foreign exchange. Angola currently imports an estimated 800,000 MT of processed wheat flour from various origins to produce popular baguettes and Portuguese style bread, but the country was not always dependent on flour imports.

USDA Foreign Agricultural Service cooperator U.S. Wheat Associates (USW) introduced hard red winter (HRW) wheat to Angolan milling companies in 1993 through the USDA PL 480 Title 1 monetization program. The industry processed a significant volume of HRW and Angolan bakers very much liked the quality of the HRW flour to make baguettes and Portuguese-style bread. When the Title 1 program ended in 2001, donated supplies of U.S. HRW were no longer available, and the Angolan government turned to subsidizing imported flour.

Recently improved economic prospects and the government’s new focus created an opportunity to begin increasing flour milling capacity. To build on its legacy of success, USW invested funds from the Market Access Program (MAP) for a part-time consultant to provide timely and accurate information about U.S. HRW to Angolan flour millers, bakers, grain traders and government officials.

In 2016, USW met with representatives of an Angolan flour mill that plans to expand its capacity beginning in 2017 and another mill that planned to re-open a mill that had been closed for 10 years. Wiese proposed using the Quality Samples Program (QSP) to demonstrate the value and utility of U.S. HRW to the mills’ staff and customers. Under QSP, USW coordinated the shipping of two separate HRW milling wheat samples from Kansas through an export terminal in Norfolk, Va., to the Angolan flour mills in late January 2017. After milling, analysis of the flour showed the HRW wheat met industry standards and produced good quality baked products, including the flour produced by the re-opened mill. With competitive prices and expanded storage, those mill managers say HRW will be strongly considered for import.

In a separate QSP activity, USW’s local representatives and staff from its West Coast Office in Portland, OR, worked through the North American Millers’ Association (NAMA) to purchase and mill HRW wheat and ship the flour to an Angola food processing company to demonstrate its use in pasta production. The U.S. Ambassador to Angola, Helena M. La Lime, and representatives from USW and NAMA celebrated the arrival of this shipment in a ceremony at the processing company on Feb. 28, 2017. Amb. La Lime highlighted the great potential U.S. wheat has in supporting Angola’s milling and food industries and said the United States “supports Angola’s efforts to diversify the economy through industrialization and increased local production of consumer goods.”

U.S. wheat farmers are pleased that their wheat has the potential to help improve economic conditions in Angola. Through trade service, technical support and training funded by wheat farmers and USDA, our organization tries to build lasting relationships with our valued customers around the world. And, assuming prices remain competitive in the changing world wheat trade, we hope that our support will lead to increased demand for HRW to produce great bread, pasta and other wheat food products for the Angolan people.

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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.

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In the early 1960s, U.S. wheat farmers reached out through Western Wheat Associates (WWA) to build new partnerships with Taiwan. After many visits, WWA opened an office in Taipei in 1966. With cooperation, forward-thinking and much success over the years and with support from U.S. wheat farmers and USDA Foreign Agricultural Service export market development programs, USW has served Taiwan’s flour milling, technical education and wheat foods organizations for 50 years.

The Taiwan Flour Mills Association (TFMA) and USW forged a uniquely productive relationship. U.S. wheat farmers helped TFMA create the Taiwan Wheat Food Promotion Council, which established a baking school in Taipei. As U.S. wheat farmers continued to provide the highest quality wheat, USW continued to provide service and support that helped TFMA promote wholesome, nutritious wheat foods to Taiwan’s consumers. This trusted relationship still allows TFMA to confidently import almost all its wheat from the United States. Taiwan is on average the sixth largest market for U.S. wheat. In each of the past three marketing years, Taiwan’s flour millers purchased about 1.0 million metric tons of U.S. hard red spring (HRS), hard red winter (HRW) and soft white (SW) wheat currently valued at about $250 million.

The early spirit of cooperation with millers extended to building a vital wheat foods industry. Training at the baking school set the standards for an industry that wanted to produce the finest quality wheat food in the world. When millers and bakers raised the money to expand in 1984, the school became the China Wheat (now Grains) Products Research and Development Institute with an added focus on developing new wheat foods and demand continued to grow.

Members of the Taipei Bakery Association (TBA) and bakers across the country have always produced consumer goods of the highest quality. With a permanent office in Taipei, U.S. wheat farmers quickly reached out to TBA to join TFMA and educational leaders in developing and promoting healthy bakery products. Together they sponsored baking courses and contests, consumer outreach, school lunch programs, supported by trade service and technical support from USW.

The ultimate reward for so many years of hard work can now be measured on an international scale. Taiwan’s industry took the world by surprise by sending a team for the first time to the prestigious World Bakery Cup in 2008 that earned a bronze medal. Another bronze followed in 2012 and in 2016, Taiwan’s baking team won a silver medal. On a more practical level, consumption of wheat foods in Taiwan has now surpassed that of rice, a remarkable achievement reflecting the power of cooperation.

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With the advantage of proximity to U.S. Gulf ports, Venezuela has been a relatively stable buyer of U.S. wheat for many years. In fact, USDA Foreign Agricultural Service (FAS) cooperator U.S. Wheat Associates (USW) helped establish ESLAMO, The Latin American Flour Milling School, in 1994 in Venezuela, which demonstrates USW’s longstanding commitment to building relationships with millers. In recent years, the deteriorating political climate and economy and the resulting challenges of providing trade service and technical support have eroded U.S. wheat’s share of Venezuela’s market. Yet the customers there still represent a good market with potential to grow should the country stabilize. The pivotal question became how to stay engaged with them.

USW put its funding from the Market Access Program (MAP) and the Foreign Market Development (FMD) program to use meeting with Venezuelan millers at regional meetings such as the annual Latin American Millers Association (ALIM) conference. Still the situation forced USW to forfeit an annual U.S. wheat crop quality seminar that is critical to help millers stay interested in U.S. wheat and understand how to get the best value from their imports.

In response, USW turned to online technology and its past relationships to hold its first crop quality “webinar” with Venezuelan customers. USW’s regional staff based in Mexico City worked with staff at ESLAMO in Puerto Cabello to set up the conference and invite customers. In October 2015, 29 customers representing seven of the largest milling companies in Venezuela participated in the webinar at ESLAMO. The out-of-pockets cost to hold the webinar, funded by MAP, was less than $1,700.

USW also leveraged partnerships with its members and experts from the United States to develop the webinar. Presenting via the internet from the USW Mexico City office, Dr. Rebecca Regan, Director of the Wheat Quality Laboratory at Kansas State University, covered quality information for Hard Red Winter (HRW) and Soft Red Winter (SRW) classes. Claudia Carter, Executive Director of the California Wheat Commission, presented quality information for Hard Red Spring (HRS) and Durum classes.  Dr. Andrew Ross from Oregon State University presented quality information for Soft White (SW) for the Venezuelan webinar.

Feedback from the participating millers was quite positive and USW plans to hold a second webinar for Venezuela in November 2016. With the potential to import as much as one million metric tons of U.S. wheat, continuing to invest judiciously in this nearby market is a smart choice. Though relatively high U.S. wheat export prices and an unfavorable exchange rate continued to pressure U.S. exports to Venezuela in 2015/16, one of the largest buyers did import U.S. soft white and hard white wheat for the first time. Venezuela’s average annual U.S. wheat imports of nearly 543,000 metric tons over the past five years have returned substantial revenue to farmers and employers in the U.S. wheat supply system.