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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

https://vimeo.com/578611568

 

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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. Fortune.com 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.

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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

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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.

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By Dalton Henry, USW Vice President of Policy

Just over a year ago, on Jan. 15, 2020, the U.S.-China “Phase One” agreement was signed, leading to the eventual waiver of China’s retaliatory tariffs against U.S. agricultural products. Those actions opened the door again to the largest wheat consumer in the world after nearly two years in which U.S. wheat producers were all but shut out.

While the final results of the Phase One agreement will not be written for several months, early returns show the agreement paid off in a big way for U.S. wheat producers and their Chinese customers.

The Phase One agreement contained both specific purchase targets for agricultural commodities, and structural changes to China’s import systems. To date, much of the celebration and criticism has centered on the purchase targets — with very little attention paid to the structural changes that in some instances resolved disputes decades in the making.

One dispute of relevance to wheat had been at the center of a WTO case dating back to 2015 on China’s administration of their grain tariff rate quotas (TRQ). In a case the U.S. won in mid-2019, the WTO panel found that China had not administered the quota in such as way as to be “transparent, fair or predictable.” With the WTO case entering compliance at roughly the same time as Phase One agreement was being negotiated, U.S. negotiators included additional language in the agreement to build on the WTO case win and ensure eventual Chinese compliance. That language included stipulations making clear that Chinese “State Trading Enterprises” are subject to the same rules as private companies and specific transparency requirements to make it possible to evaluate Chinese compliance with the allocation and reallocation provisions that are so important to the proper functioning of their TRQ.

With those new rules in place, China is projected to import 9 million metric tons (MMT) of wheat this marketing year — a 25-year high, and almost double their previously highest TRQ purchases. China turned to U.S. wheat producers for a significant portion of that higher import volume. Since the signing of the Phase One agreement, U.S. wheat sales to China have totaled more than 2.8 MMT — nearly 90% above USW’s long-term pre-trade war average. Those imports have come from four different classes of U.S. wheat and helped meet the demand for U.S. wheat from China’s private flour millers. This import volume is likely to make China the fourth largest export market for U.S. producers in marketing year 2020/21, which ends May 31.

Chinese wheat buyers and flour milling managers visited the Wheat Marketing Center in Portland, Ore., in May 2019.

Chinese wheat buyers and flour milling managers visited the Wheat Marketing Center in Portland, Ore., in May 2019 during a Contracting for Wheat Value seminar sponsored by USW. USW/Beijing Country Director Shirley Lu (second from right) translates as Wheat Marketing Center Technical Director Dr. Jayne Bock (third from left) and a colleague demonstrated falling number analysis.

There are likely to be substantial trade negotiations between China and the United States in the coming months — something wheat producers should welcome. The Phase One agreement was never supposed to be an “end-all agreement” — in fact, when it was announced, plans were already in place to start on “Phase Two,” which were eventually scrapped after COVID-19 turned the world on its head.

With a new U.S. administration taking office this week, many in agriculture are watching closely to see which way the political winds will blow those discussions with China. While there may be a desire by some for a “fresh start” in the China relationship, the Biden administration would do well for U.S. agriculture to pick up where Phase One left off and continue to build on the tremendous export potential for China. President-elect Biden’s early statements and plans to keep tariffs in place on Chinese goods until they can be reviewed are an important first step in the right direction.

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Chinese trading concern COFCO, as part of a commitment to purchase U.S. farm products, for the first time in recent history purchased hard red winter (HRW) wheat in marketing years 2019/20 and 2020/21. COFCO has purchased about 672,000 metric tons (MT) of HRW for immediate sale to Chinese flour mills.

On behalf of the farmers we represent, U.S. Wheat Associates (USW) helps buyers and end users make the best use possible of U.S. wheat. Because HRW has not been commonly used in China, the USW team in China decided to sample and test the wheat purchased to demonstrate the usefulness of this versatile class.

A representative sample of HRW for the study came directly from a COFCO shipment taken at a port in southern China’s Guangdong Province.

Thoughtful Test Design

USW Technical Specialist Dr. Ting Liu thoughtfully designed the study. After referring to some customer inquiries and previous studies done on HRW for various regional markets, Dr. Liu and USW Country Director Shirley Lu selected several end use applications to test using different flour blends with HRW that could be measured for performance against locally produced control flours.

The USW team worked closely with local flour mills and the Sino-American Baking School (SABS) in Guangzhou to mill the HRW sample on a Buhler laboratory mill. They analysed the characteristics of single HRW flour and blends with flour from U.S. hard red spring (HRS) and soft white (SW) wheat. Nine end products were produced and tested, including pan and sweet breads, sweet rolls, hamburger buns, baguettes, croissants, pizza dough, noodles and steamed breads.

“After some very intensive work in the test bakery, the hard red winter single flour and blends cooperated so well our team decided to run some tests twice to confirm the stellar results they observed,” said USW Regional Vice President for China and Taiwan Jeff Coey.

Sharing Results

On Aug. 14, 2020, USW conducted an online presentation to share the test results with an estimated 200 contacts from China’s mills and wheat trading organizations. The presentation focused on measured HRW wheat and flour quality, along with results of the baking tests. USW also shared typical HRW quality data from the 2019/20 crop and initial information on conditions of the 2020/21 crop.

In opening remarks to the participants, Coey said “in terms of end use quality, I want to advise you to consider U.S. hard red winter a very reliable medium- to high-gluten strength wheat that should perform well for you in a variety of your most demanding applications.”

Sharing photos and data from end products produced with single and blended flours, USW Beijing colleagues informed Chinese customers about the excellent performance of U.S. HRW in an Aug. 14 webinar.

The USW Beijing team greatly appreciates the cooperation of: COFCO for the chance to sample an actual HRW shipment; the Wheat Marketing Center, Portland, Ore., for data from their previous work on pizza dough and noodle results; the SABS staff who helped USW conduct its tests before its regular course schedule started; and several Chinese flour mills who allowed USW to use their instrumentation to help complete the testing.

Additional specific results or the tests are available from the USW Beijing office and the regional USW office in Hong Kong.

 

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Name: Ting Liu, Ph.D

Title: Technical Specialist

Office: USW China, Hong Kong Region, Beijing Office

Providing Service to: People’s Republic of China


Where and who we come from makes so much difference in each life. For Dr. Ting Liu, the skills she observed in her family as an only child in southeastern China’s Zhejiang province led directly to a doctorate in food science and her position as Technical Specialist with U.S. Wheat Associates (USW).

“I grew up with parents who produced and sold all kinds of furniture in our town, so they showed me how to stay in harmony with customers,” Dr. Liu said. “My love of food started as I watched my grandmother form dough for the many different Chinese wheat foods she made and sometimes helped me make.”

Ting as a child with her grandmother.

Filled with the traditions of her grandmother’s baking and a focus on schoolwork, Dr. Liu earned a spot in the Food Science and Engineering program at Zhejiang Gongshang University. Learning professional skills and participating in efforts to develop new products, including nutritious drinks and snacks, as she earned her bachelor’s degree, helped convince her that she should focus on food research and development.

“In order to build more food knowledge, improve my competitiveness and broaden my horizons, I decided to do graduate study in food science abroad,” Dr. Liu said.

U.S. Connections

She chose the University of Minnesota, Twin Cities, because it served a large agricultural state home to the headquarters of many large-sized food companies, such as Cargill and General Mills. Ultimately, her connections there helped lay the foundation of her work today representing U.S. wheat farmers in China.

“I decided to do my post-graduate research on whole wheat products because of my childhood memories and my understanding of the health benefits of whole grains,” Dr. Liu recalled. “That is how I met a very important advisor in my life, whose name is Dr. Len Marquart. Under his guidance during my doctoral study, I improved my English writing and communication skills, my ability to think independently, solve problems, and how to develop professional networks of influential people. He also made it possible for me to do my research as a visiting scholar at the Wheat Marketing Center (WMC) in Portland, Oregon, from June 2014 to January 2016.”

Ting (Third from the right, first row) with Wheat Marketing Center (WMC) Staff and USW China End Product Collaborative Team in 2015 at WMC.

Dr. Liu’s work at WMC was productive and transformative. Working with Dr. Marquart and former WMC Technical Director Dr. Gary Hou, she completed three research projects on improving the quality of whole wheat tortillas using different particle sizes of flour milled from U.S. hard red winter (HRW), hard red spring (HRS), and hard white wheat, sprouted whole wheat flour and a chemical leavening system. Through this research, Dr. Liu published six peer-reviewed technical papers and one book chapter in English on whole wheat products. She presented research results at the annual meetings of the American Association of Cereal Chemists (AACC) International and the Institute of Food Technologists. She was also actively involved in the AACC International Milling & Baking Division.

Dr. Liu said working at WMC exposed her to flour milling and wheat and flour quality analysis. She also helped prepare short courses and workshops on wheat products, prepared a range of wheat food products, and completed a research project on pan bread with added whey permeate. Much of that work was done under WMC’s educational partnership with USW.

Understanding the Mission

“One of my favorite things about working at WMC was helping host teams of wheat growers and students from all over the United States, as well as U.S. wheat customers from all over the world,” Dr. Liu said. “In 2015, I had the chance to meet the people working with USW in China when they brought three teams to WMC for different programs. This helped me better understand the USW mission and ignited my interest in joining the USW team in China.”

Ting graduated and obtained a Ph.D. in Food Science from the University of Minnesota in 2016.

Fortunately, as Dr. Liu completed her doctorate program in August 2016, a technical position was available in the USW Beijing office.

“Dr. Marquart believed I would be well-suited to a job serving as a liaison between U.S. farmers, their wheat, and the milling and wheat food industries in China,” Dr. Liu recalled. “During my job interview, USW Regional Vice President Jeff Coey told me the greatest asset of USW lies in its people who are truly good at what they do, are eager to share their knowledge with their teammates and customers, and tend to devote many years to the organization. I took the job as Technical Specialist without hesitation.”

“Ting already had a keen understanding of our mission from her work at the Wheat Marketing Center, and it was apparent right away that she would bring a tremendous value to our team and to our customers in China,” Coey said.

The need for additional wheat classes in China was increasing as Dr. Liu settled into her new position with USW in September 2016. According to IBIS World Industry Report, China’s bread and bakery product manufacturing industry grew rapidly at an annualized rate of 6.6 percent between 2013 and 2018. And until the government implemented retaliatory tariffs in March 2018, China was importing an annual average of 1.6 million metric tons of U.S. HRS, soft white, and HRW.

With that growth comes an opportunity for USW and Dr. Liu. USW continues to have a strong working relationship with the leaders and faculty at the Sino-American Baking School in Guangzhou and baking consultants to help China’s flour millers and wheat food processors better understand how to best utilize the characteristics of U.S. wheat classes to help grow their businesses. Under the guidance of Coey, USW Country Director Shirley Lu, Dr. Liu has taken on more and more of those responsibilities.

Ting conducted a Frozen Dough short course at Sino-American Baking School in 2019.

“Our team has great confidence in providing technical service that customers need to meet new consumer demand using U.S. wheat,” Lu said. “Ting has the expertise, language ability, nice personality, and high sense of responsibility that fit perfectly in the organization and our unique markets.”

It is clear that customers in China consider Dr. Liu a valued addition to USW’s service. They appreciate her undeniable professional credentials and achievements, but above all, they enjoy her sincere, friendly personality.

“Dr. Liu is very keen to use her professional expertise to solve practical problems in our technology research and development,” said one general manager of a flour mill in Guangdong province. “We want to express our heartfelt thanks to her and to U.S. Wheat Associates.”

Dr. Liu made a strong impression on the research and development manager at a very influential wheat buying and flour milling organization in China. She noted that Dr. Liu “takes the initiative to determine the technical needs of our company and provides cutting-edge information to solve problems and help the company. She always teaches complex knowledge with concise language and a sweet voice.”

Continuing Education

In her own generous way, Dr. Liu said USW has made it possible for her to get the best training and exposure to real-world milling and baking challenges as part of her work.

In 2018, USW sent Dr. Liu to a Baking Science and Technology course at AIB International in Manhattan, Kan., an intensive, 16-week program combining science, hands-on lab work, and baking tradition. She represented herself and USW with distinction, earning top student honors and an “Excellence in Laboratory Leadership” award for her participation in the course.

Ting completed the Baking Science and Technology (BST) Course at AIB International in Manhattan, Kansas, in 2018.

“I was also able to assist in the USW Baking Science and Technology, Cookie & Cracker, Frozen Dough, and Advanced Prepared Mix courses developed by our Bakery Consultant Roy Chung at the UFM Baking School in Bangkok, Thailand,” Dr. Liu said. “There is no doubt Mr. Roy is a master of baking and teaching and is very nice to share his technical service expertise and experience with me. Moreover, our Regional Technical Director, Mr. Peter Lloyd, has also provided tremendously valuable guidelines on troubleshooting and solving challenges in flour mills.”

Ting (First from the left, first row) assisted in Mr. Roy Chung’s Advanced Prepared Mix Technology Course in 2019.

Her enthusiastic accounting of the training she has received, and the wide range of technical support she provides make it clear Dr. Liu loves the work she does on behalf of U.S. wheat farmers.

“By visiting and providing technical services to customers, we can better understand customer needs and reflect these requirements to U.S. wheat farmers,” she noted. “At the same time, we can enhance our customers’ effective processing of U.S. wheat flour and how its functional attributes perform for the baker.

“In addition, the seminars and short courses I have conducted can help current and potential customers further understand the characteristics of U.S. wheat and flour, the flour milling process, testing methods, and ways to adjust formulas and processes according to flour specifications. This is of direct benefit to U.S. wheat growers by promoting their wheat to customers in international markets.”

Ting and her bread while attending a BST course at AIB International in 2018.

An Excellent Bridge

In fact, after one recent USW Crop Quality Seminar and a special technical session attended by top Chinese flour mills and food processors, a food company executive commended Dr. Liu’s professional analysis and insight on the supply, quality, and application of U.S. wheat classes.

“She was clear and confident in her presentations and is a knowledgeable expert. I believe she will be an excellent bridge between U.S. Wheat Associates and customers.”

Even in the face of challenging political realities and complex commercial dynamics, private and public customers in China continue to seek information and advice from USW.

“No customer is compelled to work with USW,” Jeff Coey said. “The fact that they choose to accept our service and the products we promote is a testament to everyone on our team,” Jeff Coey said. “Ting complements our ability to earn that trust, understand the constraints, and grasp the opportunities in this market for U.S. wheat. She has a naturally winning way of opening doors for us wherever she goes.”


By Steve Mercer, USW Vice President of Communications

Editor’s Note: This is the seventh in a series of posts profiling U.S. Wheat Associates (USW) technical experts in flour milling and wheat foods production. USW Vice President of Global Technical Services Mark Fowler says technical support to overseas customers is an essential part of export market development for U.S. wheat. “Technical support adds differential value to the reliable supply of U.S. wheat,” Fowler says. “Our customers must constantly improve their products in an increasingly competitive environment. We can help them compete by demonstrating the advantages of using the right U.S. wheat class or blend of classes to produce the wide variety of wheat-based foods the world’s consumers demand.”

Header Photo Caption: Ting presented “International Whole Grain Development” at the 2017 Sino-Foreign Whole Grains Industry Development Experts Forum.


Meet the other USW Technical Experts in this blog series:

Shin Hak “David” Oh – Expertise Fermented in Korean Food Culture
Tarik Gahi – ‘For a Piece of Bread, Son’
Gerry Mendoza – Born to Teach and Share His Love for Baking
Marcelo Mitre – A Love of Food and Technology that Bakes in Value and Loyalty
Peter Lloyd – International Man of Milling
Ivan Goh – An Energetic Individual Born to the Food Industry
 Adrian Redondo – Inspired to Help by Hard Work and a Hero
Andrés Saturno – A Family Legacy of Milling Innovation
Wei-lin Chou – Finding Harmony in the Wheat Industry

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By Dalton Henry, USW Vice President of Policy

Each year, the Office of the U.S. Trade Representative (USTR) compiles and publishes the National Trade Estimates (NTE) report — a comprehensive report detailing barriers that U.S. exporters, including wheat farmers, face in markets around the world.

The first step in compiling the massive report (last year’s came in at 537 pages), is to collect feedback from the export stakeholders. U.S. Wheat Associates (USW) participates in this process each year by consulting with our offices overseas, talking to customers and researching trade barriers. That work culminated last week when USW submitted to USTR its compiled information, covering barriers in a dozen wheat importing countries.

Each year, many of the challenges highlighted in USW’s submission are issues that remain unresolved. This year, however, USW’s reports about on-going concerns with China and India were substantially changed.

The new report on barriers in China reflect the progress made since last year to bring China’s wheat import tariff rate quota (TRQ) and wheat subsidy policies into compliance with the government’s WTO commitments. This year’s report reflects the progress made in those areas as a result of the two WTO cases the United States won last spring, and China’s initial policy proposals to address those WTO rulings.

While the report shows some progress in the China section, it highlights a growing area of concern in India. India runs subsidy programs very similar to China, including minimum purchase prices and input subsidies. USW and USTR have demonstrated previously that India is well outside of its WTO limits in the level of government subsidies. Those subsidies have spurred excess production and subsequent wheat stocks that, once at a critical mass, India must subsidize to dump onto the world market. USDA projects that Indian wheat ending stocks will exceed 20 million metric tons (MMT) for 2019/20 — a level that historical data shows will likely result in India resuming wheat exports in the near future.

USW’s most recent NTE report can be found online here. It provides an overview of the key issues that USW works on every year and supplies USTR with up-to-date information on ongoing problems in wheat trade. In doing so, it fills a vital role in the enforcement of trade rules, something that U.S. farmers and their customers overseas want to see more than ever.

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By Dalton Henry, USW Vice President of Policy

While the trade policy headlines from the month of October have mostly been written about a possible “phase one” trade deal between the United States and China, much less has been said about the recently revised and published China Tariff Rate Quota (TRQ) rules for importing wheat and other agricultural products – though their impact could be nearly as significant for the affected commodities.

China’s TRQ rules were expected to be changed because of the World Trade Organization (WTO) ruling last April that found China had not complied with the terms they agreed to upon joining the WTO in 2001. TRQ’s govern the import of specified levels of products at a specific tariff rate that is lower than the global or Most Favored Nation (MFN) rate. Without TRQ, Chinese importers cannot profitably access the world market for wheat, as China’s MFN tariff is 65%. Restricted fill rates on TRQ over the past decades have proven to be the biggest constraint to growing market share for imported wheat in China. Today, imported wheat rarely exceeds 5% of mill use.

Upon accession to the WTO, China established a 9.64 million metric ton (MMT) TRQ for wheat, but that annual TRQ has never fully filled, despite world wheat prices and market conditions conducive to doing just that. When the United States filed the case at the WTO in 2016, they alleged that China had used a series of policies in administering the TRQ that were not “transparent, predictable or fair” and by doing so they, “…limited opportunities for U.S. farmers to export competitively priced, high-quality grains to customers in China.”

That limitation has had effects beyond the impacts on U.S. farmers though, as it also severely limits Chinese millers’ access to high quality wheat grown outside of China. In especially short supply in the domestic market are both soft wheats – often used for pastries and cakes as well at higher protein spring wheats, which are necessary for pizza crusts and hamburger buns.

When the United States won the WTO case, China agreed not to appeal and that they would come into compliance with the ruling by December 2019. That put the case on a relatively fast track to be completed, spanning just under three years since it was filed, much to the joy of U.S. wheat farmers who had long pushed for U.S. government action to force change in the TRQ administration.

U.S. Wheat Associates (USW) has been reviewing the new measures along with the U.S. government and Chinese flour millers. USW Regional Vice President for China and Taiwan, Jeff Coey, has found several of the new rules promising, especially the announcement’s stated goal for both the state and non-state portions of the TRQ to be fully utilized so long as market conditions allow it. Full utilization of both segments of the TRQ hasn’t previously been stated as a goal, leading to significant optimism about access to wheat supplies in 2020. Other positive changes include the allowance for more state-owned entities to apply for TRQ allocations and for non-state-owned entities to apply for the portion of the TRQ that was previously reserved for the state – essentially giving both groups the potential ability to import for the first time.

The TRQ changes and the need for quality wheat supplies may make China a significant wheat importer in 2020. If the changes are in fact implemented, and Chinese millers can respond to market signals, most of the 9.36 MMT TRQ should be used. The net result of that would be China becoming a top world wheat importer, even as they have adequate domestic wheat stocks on hand. From a quality supplier point of view, this opens many opportunities for the United States to provide technical expertise and assistance to our Chinese customers. While allowing those customers access to lower costs and wheat with specialized end-use applications that distinguishes U.S. wheat from domestic supplies.

As with so many issues in trade policy, only time will tell how effective these announced changes will be in allowing Chinese millers to source imported wheat. Both the U.S. government and U.S. Wheat Associates will be closely monitoring the changes to ensure compliance with the WTO ruling, but for now 2020 looks likely to start off on a better foot for U.S. producers and their Chinese customers.

 

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On Oct. 3, USDA announced that private exporting companies reported export sales of 130,000 metric tons (MT) of U.S. “white wheat” to China. That is welcome news for U.S. wheat farmers.

Chinese imports of U.S. soft white (SW), hard red spring (HRS) and hard red winter (HRW) wheat classes to China were trending up but abruptly ended when China implemented retaliatory tariffs on U.S. wheat and other agricultural commodities in March 2018. Private purchases of approximately 32,000 MT of HRS and 8,000 MT of SW have been the only sale since then.

“We are glad for this purchase ahead of the latest round of trade discussions between the U.S. and China,” said Doug Goyings, USW Chairman and a wheat farmer from Paulding, Ohio. “It remains to be seen if this is the start of a return to steady purchases by China. In the long run, that is what our farmers need along with good progress toward an agreement and continued support for the rules-based trading system that has given them access to more markets.”

USW Chairman Doug Goyings.

“Even though China has huge domestic wheat stocks, they were buying more U.S. wheat because they need it to meet the growing demand there for higher quality wheat foods, until their government retaliated against U.S. tariffs on Chinese goods,” said Vince Peterson, President of U.S. Wheat Associates (USW), the organization funded by farmers and the U.S. government to promote wheat exports. “So, we hope the new purchases signal a potential turn-around.”

USW President Vince Peterson.

Predictable access to markets is key for USW and their customers. Beyond the retaliatory tariffs that China has applied to U.S. commodities, China has been a challenging wheat importer historically. In recent dispute settlement cases at the WTO, the Office of the U.S. Trade Representative (USTR) demonstrated that, with respect to wheat, China’s government has consistently violated the trade rules it agreed to when it joined the WTO. The country’s domestic support for wheat substantially exceeds its WTO limits and it has never fully met its tariff rate quota for imported wheat. Those two policies have serious effects on farm gate wheat prices and trade. Going forward, USW is optimistic that China will eventually comply with the WTO rulings to facilitate more open trade in wheat.

Read more: U.S. Wheat Farmers Have Not Abandoned Customer Service in China