U.S. Wheat Associates (USW) China Country Director Shirley Lu and Technical Specialist Ting Liu recently led a team of managers and buyers from  China Oil and Foodstuffs Corporation (COFCO) on a visit to the Pacific Northwest to explore new wheat food products. The USW China End Product Collaborative toured Loren Berhman’s wheat farm in Cornelius, Oregon, and retail bakeries in the Portland area. The team also participated in a workshop hosted by the Wheat Marketing Center. The workshop offered opportunities for team members to make and evaluate end products such as muffins, biscuits, bagels, bread, sponge cake, and pancakes using different classes of U.S. wheat.

“They were here really to identify new products and new ways to use U.S. wheat,” USW Vice President and West Coast Office Director Steve Wirsching said. “The great thing is that we were able to share with the team a lot of different new ideas for products, and also provide them some good information on all classes of U.S. wheat. At the same time, we were able to learn a lot about their needs and what they are looking for when it comes to buying wheat.”

See scenes from the visit and learn more about the USW-sponsored team in this short video.

U.S. Wheat Associates (USW) Regional Vice President Jeff Coey addresses faculty, returning students and professionals from the baking industry during the 40th anniversary of the Sino-American Baking School .

U.S. Wheat Associates (USW) Regional Vice President Jeff Coey addresses faculty, former students and professionals from the baking industry during the 40th anniversary of the Sino-American Baking School.

An investment made by U.S. wheat growers four decades ago continues to develop into a partnership that benefits both the American wheat industry and the Chinese baking industry. The Sino-American Baking School (SABS), formed in 1984 by U.S. Wheat Associates (USW) and a local grain bureau in China, is playing a key role in the growth of the Chinese baking market.

Its mission is to provide baking vocational training to students from Guangdong Province.

“My predecessors and the predecessor boards saw the potential of the market and invested in the school,” said USW Regional Vice President Jeff Coey. “It was a very wise decision and over the years the partnership between USW and the school has been something wheat farmers in the U.S. can really be proud of.”

U.S. Wheat Farmers Help Celebrate

A team of U.S. wheat farmers was able to attend the recent 40th anniversary celebration in Guangzhou. The school recognized members of the USW Vietnam-China Board Team.

“The growers present were able to witness both the gratitude and sincere appreciation of the instructors and former students and have person-to-person contact with them,” said Coey, who spoke at the anniversary celebration. “The U.S. Wheat Board Team reaffirmed the support of U.S. growers to the ongoing training work of the school and awarded a gift to the school’s leadership for furthering the cause of wheat flour education in China.”

North Dakota farmer and USW Secretary-Treasurer Jim Pellman, who was part of the Board Team, made the presentation.

“As a wheat farmer, we know how important educating bakers and future bakers around the world is to our efforts to export U.S. wheat,” said Pellman. “It was good to meet both the teachers and the students, and to see how interested they are in the wheat they use to make baked goods in the market. It is a valuable partnership we have.”

Along with Pellman, the USW Board Team included Minnesota wheat farmer Mark Jossund, Maryland wheat farmer Jennie Schmidt and Luke Muller, Assistant Director of the USW West Coast Office in Portland. While in the Guangzhou market, the team was able to visit local bakeries to learn about end products that are favored by consumers.

This photo shows attendees of the 40th anniversary of the Sino-American Baking School (SABS), which has played a key role in the growth of the Chinese baking market.

This photo shows attendees of the 40th anniversary of the Sino-American Baking School (SABS), which has played a key role in the growth of the Chinese baking market.

Students, Bakers Return to School

At the SABO celebration, the team rubbed elbows with U.S. government officials in China, leaders of the country’s milling and baking industry, and friends of the school.

Philip Zhou, a USW Senior Advisor and former director of the school, coordinated an effort to bring the school’s alumni together and to meet the USW Board Team at a gala dinner. At least 30 former students returned from all corners of China to praise the school and give testimonials about how it helped their professional development and careers.



As a wheat farmer and dietician from Maryland, Jennie Schmidt found exploring flour mills and bakeries in Asia to be an intriguing adventure that came with plenty of “ah-ha” moments.

There is lots to be learned from meeting and talking to the people who buy and use U.S. wheat.

“It was nice to be able to see your product going into products both in Vietnam and in China,” Schmidt, who represented Maryland Grain Producers on the recent U.S. Wheat Associates (USW) Vietnam-China Board Team mission. “To see how wheat grown on our farms in the U.S. ends up as food for domestic consumption or for regional export markets helps paint the picture and show the value of international trade. It was also obvious they really like producing food products with U.S. wheat.”

Schmidt joined USW Secretary-Treasurer Jim Pellman of McClusky, North Dakota, and Mark Jossund of Moorhead, Minnesota, on the Board Team, which was led by USW West Coast Office Assistant Director Luke Muller.

Scenes from the group’s stops in both Vietnam and China can be seen in this brief video . . .

The 2024 USW Vietnam-China Board Team (left to right): USW Secretary-Treasurer Jim Pellman (North Dakota), Jennifer Schmidt (Maryland), Mark Jossund (Minnesota) and USW West Coast Office Assistant Director Luke Muller.

The 2024 USW Vietnam-China Board Team returned to the U.S. on March 30. Pictured (left to right): USW Secretary-Treasurer Jim Pellman (North Dakota), Jennifer Schmidt (Maryland), Mark Jossund (Minnesota) and USW West Coast Office Assistant Director Luke Muller.

Wheat farmers from Maryland, Minnesota and North Dakota toured flour mills and bakeries in Vietnam, getting a close look at how U.S. Wheat Associates (USW) works with customers to promote U.S. wheat. The group also traveled to Guangzhou, China, where it met with grain traders and attended the 40th anniversary of the Sino American Baking School (SABO).

Many Important Stops for Farmers

A lot of ground was covered on the week-long mission – literally and figuratively.

“Vietnam and China are two very distinct markets. The team saw the different ways different classes of U.S. wheat are being used by our customers. The farmers were also able to witness the strong relationships USW has built with key industry leaders in both places,” said USW West Coast Office Assistant Director Luke Muller. Muller led the USW 2024 Vietnam and China Board Team.

Working close with the millers and bakers allows USW to strengthen those relationships even more, Muller explained.

“There is a lot of interaction,” Muller said. “The farmers were able to pick up on that.”

Maryland, Minnesota and North Dakota

Making up the team were farmers representing various classes of U.S. wheat. USW Secretary-Treasurer Jim Pellman of McClusky, North Dakota; Jennifer Schmidt of Sudlersville, Maryland; and Mark Jossund of Moorhead, Minnesota, began the journey by meeting at the USW office in Portland. They then attended a Federal Grain Inspection Service (FGIS) briefing on grain grading. Before departing for Vietnam, the team toured the United Grain export elevator in Vancouver, Washington.

More details of specific activities the team participated in while in Vietnam and China – including special attention to the Sino-American Baking School (SABS) anniversary event – will follow in upcoming editions of the Wheat Letter. A video of the trip will also be shared.

The team toured flour mills and bakeries in Vietnam and China. The trip allowed wheat farmers to meet and interact with their customers in both countries.

The team toured flour mills and bakeries in Vietnam and China. The trip allowed wheat farmers to meet and interact with their customers in both countries.

Mills, Bakeries and Customers

Meanwhile, some highlights of the trip:

  • The team visited Vimaflour. It was the first mill opened in northern Vietnam and one of the largest in the country. The team also visited Vietnam Flour Mill, which is part of Wilmar, the largest regional miller in Southeast Asia and China.
  • Team members were able to explore a small, family-owned Bahn Mi bakery in Hanoi, Vietnam. “Bread loaves have a very short shelf life and can only serve the population in close proximity to them,” Muller explained. “These independent bakeries have benefited from the technical servicing USW offers. USW and local millers have shown how blending in up to 30% U.S. dark northern spring (DNS) wheat can help with loaf strength for the overnight fermentation process they utilize.”
  • The team learned how USW Baking Consultant Roy Chung has worked with Libra Biscuit Factory. The business has grown quickly and now exports its cookies and biscuits to more than 20 countries. Some of the cookies sold by Libra are made with 100% U.S. soft white (SW) wheat. Among other things, Chung has helped the company’s bakers develop products and is currently helping them formulate a new soda cracker.
  • In China, the team met with Huaren Trading Company, where conversation was focused on U.S. wheat farmers and the U.S. supply chain compared to competitors.
  • The team also toured Philip’s moon cake factory, which produces over 600,000 moon cakes a day during its peak production.

Stay tuned for more stories from the trip in upcoming editions of the Wheat Letter.


The purchase by China of 1.12 million metric tons (MMT) of U.S. soft red winter (SRW) wheat for delivery in 2023/24 between Dec. 4 and 8 is a significant and, in terms of its volume, somewhat unexpected factor in the current market. The buyers clearly took advantage of a price opportunity, yet there are other influencing factors behind this buying surge to consider.

Already in the Market

China is in a wheat-buying phase driven in part by reported damage to its 2023 crop from rain at harvest. USDA expects China to exceed its WTO-agreed 9.6 MMT tariff rate quota again in 2023/24. By late November, China had already purchased a total of 1.01 MMT of four U.S. wheat classes, including 789,000 MT of SRW in 2023/24.

The U.S. Wheat Associates (USW) Price Report on Nov. 22 estimated SRW FOB export price out of the Gulf at $250 per MT, and on Nov. 30 at $258 per MT, a very competitive price relative to other wheat origins.

After the recent deals through Dec. 8, total 2023/24 SRW commercial sales to China to date now exceed 1.9 MMT. As a result, USDA raised its Dec. 8 estimate of total SRW sales in 2023/24 by about 817,000 MT to 4.76 MMT. If realized, that would be the largest volume of SRW exports since 2013/14.

A Trusted Source

Portrait of USW Regional Vice President Jeff Coey.

Jeff Coey

Why so much SRW? USW Regional Vice President Jeff Coey suggests that China’s buyers and flour millers are very familiar with this soft wheat class grown in the eastern third of the United States.

“It is a story that goes back decades,” said Coey. “First, our SRW is closest to the wheat grown in China. And the investment U.S. wheat growers have made in USW’s trade and technical service over many years has given Chinese buyers the confidence to import SRW, and other classes, when the opportunity arises.”

Coey said maintaining that education process was the goal behind USW’s investment of Agricultural Trade Promotion (ATP) program funds to bring a team of Chinese buyers to the United States in early November 2023. The visit included in-depth time with Federal Grain Inspection Service inspectors at an export elevator in Houston, Tex., as well as time with a SRW farmer and officials at USDA’s Agricultural Research Service (ARS) Soft Wheat Quality Lab (photo above) in Ohio.

“Those visits in particular were instructive,” said Coey. “Understanding the third-party inspection and certification process and the testing demonstrated at the ARS lab gave the buyers a sense of the design behind the quality data we share with them.”

Three people examine cookies at the USDA-ARS Wheat Quality Lab in Wooster, Ohio, in Nov. 2023.

Quality testing at the USDA-ARS Wheat Quality Lab in Wooster, Ohio, includes cookie spread testing, demonstrated during a November visit for a Chinese wheat buying team.

On the Ground Input

Ohio farmer and USW director Ray Van Horn was in the middle of his corn harvest when the Chinese buyers visited his farm.

“Ray and representatives of our member state wheat commission Ohio Corn and Wheat hosted the team on a crisp, clear afternoon in one of Ray’s fields with a beautiful, new stand of soft red winter wheat. It was a perfect place to share information about the wheat production decisions he makes and how that may affect buyers,” Coey said.

Ohio farmer Ray Van Horn talks with Chinese wheat buyers in his field planted with soft red winter wheat.

In a field seeded with a 2024 soft red winter wheat crop, Ohio farmer Ray Van Horn (right) discusses how he makes decisions and manages his crops with members of a Chinese wheat buying trade team sponsored by USW and hosted by Ohio Corn & Wheat in early November.

Adding value to this buying opportunity is the fact that U.S. farmers produced two large SRW crops with excellent quality in 2022 and 2023.

“Together all these factors helped build the confidence that these buyers can select U.S. soft red winter this year and have a deep supply of consistent quality with a ready domestic market,” Coey concluded.

By USW Vice President of Communications Steve Mercer


The People’s Republic of China is the United States’ largest food and agricultural product export market with sales that reached a record $41 billion in calendar 2022. Under suspension of import duties agreed to in the Phase One trade accord, China has imported more than 827,000 metric tons of U.S. wheat with an estimated value of more than $270 million as of early February in marketing year 2022/23. That pace is down from the previous two marketing years, but still significant.

USDA’s Foreign Agricultural Service (FAS) and U.S. Wheat Associates (USW) are reporting that as China pulls back from zero-COVID policies, there is “great optimism about the economy” in general and specifically the dynamic Chinese baking industry.

Return to Personal Contact

After a resumption of normal public activity, USW Beijing colleagues are finally enjoying a return to interactions with milling and baking customers and visiting retail and restaurant venues throughout the country. USW Regional Vice President Jeff Coey said restrictions have been totally lifted, allowing the team to conduct an informal survey of four bakery companies both in north and south China, namely Toly, Fujian Fumao, Guangdong Chuandao, and Dongguan Food.

Three of the four stated that sales volume had recovered to pre-COVID levels, and the same ratio predicted further increases in 2023. Both innovative product development and exploring new sales channels are cited as avenues for growth in China’s baking market. The photo at the top of this page confirms it was busy recently at a Baker & Spice store, a popular chain of over 60 coffee and snack shops in Beijing and other cities in China.

Investing for Growth

The largest of the group, Toly Bread Company Ltd., expected to raise investment and increase staff in 2023. The company hopes for a higher value mix of offerings allowing them to increase unit price. They expect cake products will take the lead in the company’s product matrix.

A busy China retail bakery.On Feb. 17, 2023, USDA FAS Agricultural Attaché Alan Hallman and colleagues published a Global Agricultural Information Network (GAIN) report on China’s “Post-COVID Food and Agricultural Situation” that provides insight into relevant aspects of end-use wheat demand in this important swing market for U.S. wheat.

While there were closures early in the pandemic, “some bakeries were able to turn the crisis into an opportunity for growth,” the report stated. “Community bakeries increased sales due to strong demand for convenience foods and third party delivery services. Bakeries with strength in group-buying and sales to institutions also benefited. Many businesses and other organizations gave bakery shopping benefits to their employees. Bakeries with brick- and-mortar stores, online order platforms, and delivery services generally remained strong and grew their business during the pandemic.”

Increased Hiring

Mr. Guo Jiguang, chairman of Fujian Fumao, told USW the company is actively opening more stores and hiring more employees in Southeast China to expand its business in 2023. Bread, cakes and desserts remain the main products with fastest growing sales. Mr. Guo added that even if cake and pastry products are becoming more popular among young generations, consumer preferences are changing and both opportunities and threats coexist in the future bakery market.

Photo of busy retail Fujian Fumao bakery in China

A bakery operated by Fujian Fumao in China remains busy and the company plans to open more stores in Southeast China as the country recovers from zero-COVID policies.

Mr. Philip Zhou, chairman of Guangdong Chuandao, is also bullish on baked goods.

“For us, Chinese pastry and western style bread are the two main product categories showing the greatest sales momentum,” he said. “Our company’s plan is to explore new distribution channels and cover more supermarkets and distributors to realize reasonable sales growth goals.”

Optimism with Constraints

Concluding its report, the China FAS team repeated the optimism that recreation, travel and tourism in the country are expected to grow as zero-COVID policies end. “Some businesses have become stronger, and companies have an opportunity to rebuild…” Yet consumer spending will remain somewhat constrained.

USW and dozens of other non-profit organizations in the United States are partners with FAS in agricultural export market development. Through the support of U.S. wheat farmers and FAS programs, USW conducts wheat export market development activities in China through offices in Beijing and Hong Kong.


In 2021, the U.S. Wheat Associates (USW) team in Beijing asked then-Chairman and Oregon wheat farmer Darren Padget to record a video message to Chinese milling and trading managers participating in a USW-sponsored “Contracting for Wheat Value” seminar.

The USW team wanted to show customers the important things U.S. farmers do every day to produce more and better wheat with less impact on the environment. Chairman Padget took the challenge to heart and spent an entire spring day walking the Chinese team through his operation to tell his farm’s sustainability story.

USW is sharing that story here with a wider audience that is increasing interested in learning more about sustainable food production.

Better Soil 

Joined by his son Logan and his father Dale — partners in Padget Ranches — Darren talked in his video presentation about the effort to improve the soil in which they grow high quality soft white wheat.

“From when my father came to farm … things have changed quite drastically,” Darren said. “Taking care of the land and making sure it is sustainable is very important  to us as we move forward. We used to till the soil heavily with a moldboard plow … it took a lot of time, a lot of fuel, and a lot of resources. Now, we do ‘direct seeding,’ which means the stubble in the field stays intact, which builds our soil organic matter and is less susceptible to erosion. It has been a big change. We have adopted the technology, and it seems to be the best answer to make sure this farm is here for many generations to come.”

Image shows Darren Padget bending down to drink from a garden hose on his farm

Clean Drinking Water. In the “A Visit to Padget Ranches in Oregon” Darren Padget said his family’s drinking water comes from a well on the farm, a personal reason why they are very cautious about crop protection applications.

Logan Padget is the fifth generation of his family to farm in this dry north-central Oregon region just south of the Columbia River. He has embraced precision agricultural technology. In the video, he talks about the efficiency of the farm’s crop protection product application equipment.

Precision Applications

“This machine is almost as late and great as you can get on technology,” Logan said. “It is GPS-controlled. Once I make the first pass on a field, the GPS can perfectly mimic that line across the field with just one-third of a meter of overlap. That is better than anybody could drive by hand. There’s also section control through the GPS, so if you’re coming across at an angle, each section will shut off to avoid double spraying, which saves us money. It also means fewer chemicals applied to the crop. It’s just a win-win all the way around.”

Better Quality Wheat

Darren also described how farmers are reaching beyond their own fields to help improve the functional quality of the milling wheat they grow for overseas and domestic consumption. He showed a “Preferred Variety List” that ranks public and commercial wheat varieties by desirability of quality characteristics based on three years of data. The list is developed by the state wheat commissions in Oregon, Washington and Idaho, which are directed by farmers who fund commission activities (including membership in USW).

Image shows the front and back of the 2021 Preferred Variety List for PNW wheat

Ranked by Quality. The Pacific Northwest Preferred Variety List encourages functional quality improvement for overseas and domestic millers and food processors. The description of the list states: “When making a decision between varieties with similar agronomic characteristics and grain yield potential, choose the variety with the higher quality ranking. This will help to increase the overall quality and desirability of Pacific Northwest (PNW) wheat.”

We invite you to view the entire video below.

Image shows the opening scene from a video featuring Darren Padget



Recent news and highlights from around the U.S. wheat industry.

Speaking of Wheat

The retaliatory tariffs led to a significant reduction in U.S. agricultural exports to retaliating partners. Nationally, direct U.S. agricultural export losses due to retaliatory tariffs totaled more than $27 billion during 2018 through the end of 2019. Across retaliatory partners, China accounted for approximately 95 percent of the losses ($25.7 billion) …” — From “The Economic Impacts of Retaliatory Tariffs on U.S. Agriculture,” a study by the USDA Economic Research Service.

Market Outlook Webinar

The Northern Crops Institute (NCI) Market Update webinar series will feature Jeffrey McPike with WASEDA Commodities Inc. for its next webinar, Feb. 16, 2022. McPike will review the 2022 market outlook for wheat, corn and soybeans. Register for the webinar here. Previous NCI Market Update webinars are posted online, including a look at durum markets on Feb. 2 by Jim Peterson, Policy and Marketing Director, North Dakota Wheat Commission.

Wheat in the Spotlight

Wheat is back in the national and international news these days. Reporters have asked U.S. Wheat Associates (USW) to comment on how a Russian invasion of Ukraine would affect wheat prices (about which we do not speculate). The Wall Street Journal and Forbes reported on that topic. wrote about higher costs for Lunar New Year treats like sponge cakes and pineapple tarts based on smaller U.S. soft white wheat supplies. Bloomberg published a similar article.

Sufficient Moisture

Kansas wheat farmers reported last week during a board meeting of the Kansas Association of Wheat Growers that wheat fields across Kansas were generally planted into sufficient moisture conditions and went into winter with decent stands. But more moisture will be needed over the winter and into the spring to kickstart a crop emerging from dormancy and maintain growth. Read more here.

2022 Northern Crops Institute Courses

The Northern Crops Institute (NCI) in Fargo, N.D., has available courses in 2022 for online and in-person instruction. Available courses include a Pasta Production and Technology course in April. Learn more about NCI courses and how to register here.

2022 IGP Institute Flour Milling Course Schedule

The IGP Institute in Manhattan, Kan., has several upcoming flour milling and grain processing courses available in 2022. Courses in this curriculum area cover aspects of managing the flour milling process, from grain selection to finished products. Learn more about IGP Institute courses and how to register here.

Subscribe to USW Reports

USW publishes various reports and content that are available to subscribe to, including a bi-weekly newsletter highlighting recent Wheat Letter blog posts and wheat industry news, the weekly Price Report and the weekly Harvest Report (available May to October). Subscribe here.

Follow USW Online

Visit our Facebook page for the latest updates, photos and discussions of what is going on in the world of wheat. Also, find breaking news on Twitter, video stories on Vimeo and more on LinkedIn.


China’s latest customs numbers are in, and the news is significant. After clearing 933,500 metric tons of wheat through customs in December, China in calendar year 2021 exceeded its 9.636 million metric ton (MMT) annual wheat TRQ (tariff rate quota) established in its World Trade Organization (WTO) membership. The official tally was 9.718 MMT of imported wheat.

According to customs, Australian wheat and U.S. wheat at more than 2.7 MMT each were China’s largest suppliers in 2021. The difference between them is a mere 9,000 metric tons. That is about the volume that fits into one hold on a bulk freight vessel.

Customs data showed China exceeded its annual wheat TRQ in part by importing 2.544 MMT of Canadian wheat and 1.412 MMT of French wheat in 2021. The volume China imported from those four wheat suppliers indicates to U.S. Wheat Associates (USW) that buying from deep and transparent markets with good ocean shipping infrastructure is still attractive to China’s buyers. The remaining 3% of its total 2021 imports arrived from Kazakhstan and Russia.

Image of U.S. HRW wheat and list of functional benefits included to show how China exceeded its annual wheat TRQ with help from USW.

Introducing HRW Wheat. China imported a significant amount of U.S. hard red winter (HRW) wheat in 2021. So in September, USW used presentations (above) and technical demonstrations to help Chinese millers and grain buyers understand the functional benefits of HRW.

U.S. Wheat Demand

In December, a private buyer purchased a small container-load of U.S. wheat. That helped lift China’s total U.S. imports in the second half of calendar year 2021 t0 848,000 metric tons. The obvious, recent slow-down in U.S.-origin wheat arrivals is disappointing. But it is not surprising. In fact, U.S. export wheat prices are now above domestic Chinese prices on a Cost and Freight basis.

China’s private milling and wheat food manufacturers serve an increasingly sophisticated consumer market. Their demand for four classes of high-quality U.S. wheat remains strong. That is why our experienced, professional USW China team members continue to educate industry customers about U.S. wheat value and functionality. We are pleased that COFCO, China’s state trading company, welcomes our activities that, we believe, helped China exceed its annual wheat TRQ.

Practical Guidance

A good example from 2021 was a three-day “Contracting for Wheat Value” seminar in July for 32 participants representing 11 non-state and state Chinese trading companies and mills. The goal of the seminar was to help the participants become better-prepared buyers. USW provided practical guidance on writing contract specifications that take advantage of U.S. wheat crop and market situations and much more. According to input from the meeting participants, our goal was achieved.

Chinese wheat buyers participated in a USW Contracting for Wheat Value seminar in 2021, part of effort to help China exceed its annual wheat TRQ in 2021.

Contracting for Wheat Value. USW combined an in-person meeting in Guangzhou, China (above), with video and virtual presentations in July 2021 to help Chinese wheat buyers better understand the U.S. wheat export system.

Policy Plays Its Role

We also respectfully look for help from policymakers on both sides. Since the Phase One agreement, U.S. wheat sales to China are far above USW’s pre-trade war average. As USW Vice President of Policy Dalton Henry noted one year ago, policymakers “would do well … to pick up where Phase One left off and continue to build on the tremendous export potential for China.”

It is true that some uncertainty will remain in U.S.-China trade relations. It is also true that opportunities will emerge to do business in China. USW has support from our farmers and USDA Foreign Agricultural Service export market development programs. And USW will stay engaged in keeping our Chinese customers informed about the quality, variety and value of U.S. wheat. So hopefully, next January, we will see that China has once more exceeded its annual wheat TRQ.

Finally, we wish all our customers and friends peace and good health in the Year of the Tiger!

By Jeff Coey, USW Regional Vice President, China, Hong Kong and Taiwan


By Ben Conner, Partner, DTB AgriTrade

Over the last several years, U.S. Wheat Associates (USW) and other industry groups have demonstrated how the policies of a few advanced developing countries are distorting world wheat trade and hurting farmers in the United States and other wheat exporting countries. Chinese government grain policy attracted special attention, leading to two dispute cases at the World Trade Organization (WTO), one on excessive subsidies and one on China’s administration of a tariff rate quota on wheat, corn, and rice. By April 2018, WTO dispute panels had sided with the United States in both cases.

Today, the official settlement process for one of those cases has entered the next phase. On July 26, 2021, the United States asked the WTO Dispute Settlement Body (DSB) for authorization to raise tariffs on imports from China due to its failure to comply with the DSB recommendations on its tariff-rate quota (TRQ) administration. China blocked the request, which puts the matter before an arbitration panel. Simultaneously, China made its own request for another panel to review whether it has brought its policies into compliance.

Very close observers of WTO processes might experience deja vu because this is exactly what happened with the case on China’s subsidies for the same commodities last summer.

The next step is for the WTO to form two panels to review the requests of both China and the United States. The compliance panel will look at whether China’s TRQ administration is now functioning on a “transparent, predictable, and fair basis … using clearly specified administrative procedures,” as required by the DSB recommendations. An arbitration panel will review the U.S. request to raise tariffs and decide whether its methodology is appropriate.

Two Reasons for the Challenge

Why is the U.S. government taking this step forward on this case? After all, China has been importing record amounts of wheat and corn since the signing of the Phase One deal (rice is notably lagging) that included implementation of the WTO recommendations on TRQs and subsidies. There are two main reasons.

Procedurally, the U.S. government had to continue extending the window for China to comply (they had already agreed to seven extensions), allow that window to expire with no further action and forfeit its right to suspend concessions, or request that right within 20 days after the window expired. It chose the third option.

Even though China has allowed higher imports, there is still little clarity on how TRQ shares are allocated and reallocated.

If the process remains opaque and unpredictable, China will not be in compliance with its TRQ obligations, which could prevent imported wheat with qualities supplementing Chinese domestic wheat from reaching the Chinese wheat millers who could use it most effectively. It is encouraging that the U.S. and Chinese governments are continuing this case as it will help resolve disagreements over whether China is in compliance with its TRQ commitments and exert pressure to fix problems with Chinese government grain policy permanently.