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A Legacy of Commitment – Great Plains Wheat Focused on Improving Quality and HRW Markets

By Steve Mercer, USW Vice President of Communications

Wheat farmers in post-World War II United States were producing more wheat than ever before. So, to improve marketing opportunities, they organized and reached out to the U.S. Department of Agriculture (USDA) for help. These visionary state wheat leaders ultimately formed two regional organizations to coordinate export market development: Western Wheat Associates and Great Plains Wheat Market Development Association.

In the second of a series on the “Legacy of Commitment,” Wheat Letter offers historical perspective on the founding of Great Plains Wheat and its activities. Additional stories will review how Western Wheat Associates and Great Plains Wheat evolved together into one national export market development organization.

Wheat production on the Great Plains took root in the late-1860s with Mennonite farmers emigrating to the heartland of the United States to escape religious persecution in the Crimea. They planted the hardy, drought-resistant winter wheat seed they carried with them to Kansas and Nebraska, and “Turkey Red” would become the parent for most hard red winter (HRW) wheat varieties well into the 20th Century.

After surviving the infamous “Dust Bowl” of the 1930s, inconsistent quality and yields, and the challenges of a world war, Plains farmers pooled their time, talent and treasure to improve their industry. They established the Western Kansas Development Association in 1947 with a “Farm and Wheat Division” (which later became the Kansas Association of Wheat Growers). Three years later, with knowledge of a similar effort by farmers in Oregon, Nebraska formed the Nebraska Wheat Research Foundation. It was funded by about 300 members who agreed to authorize local elevators to collect one-half of one cent per bushel that would be spent to “help stabilize wheat production.”

Improved agronomics and varieties followed but added to a burdensome wheat surplus in the 1950s. This caught the attention of the U.S. government, which created federally managed grain reserves to help increase cash prices. In 1954, Public Law (PL) 480 was implemented to help expand exports of surplus agricultural products while supporting so-called “friendly” nations as the Cold War intensified.

Yet “there had been no effort to promote wheat exports by growers,” according to Marx Koehnke, author of Kernels and Chaff: A History of Wheat Market Development. The Nebraska Wheat Commission, formed in 1955, changed that as the first Plains state organization to sign an agreement with USDA’s Foreign Agricultural Service (FAS) to co-fund and implement export market development activities. They sponsored two teams of government buyers and milling industry representatives from Italy in 1956 and Greece in 1957, who observed wheat production, handling, milling and baking in Nebraska, Kansas and Oklahoma. The resulting purchases of U.S. wheat encouraged signing of the first regional agreement between Plains farm organizations and FAS to promote U.S. wheat exports in Europe and Latin America.

Photo from “Kernels and Chaff; A History of Wheat Market Development.”

A two-month long survey trip in 1957 to evaluate the market opportunities in Europe by representatives from Nebraska, the newly formed Kansas Wheat Commission and FAS proved to be a pivotal activity. The insight into customer needs gained from that trip formed a basis for export development strategies that U.S. Wheat Associates (USW) still emphasizes more than 60 years later.

In its report, the survey team made these recommendations:

  • Establish a permanent presence in the market (the Nebraska and Kansas wheat commissions opened a U.S. wheat export office in Rotterdam, The Netherlands, in January 1958);
  • Discourage production of “low grade” wheat worldwide;
  • Establish tighter grade specifications for U.S. wheat exports;
  • Make information about the milling and baking quality of wheat in each cargo available to the buyers before arrival.

A survey of South American markets added the recommendation that grower organizations should help wheat buyers, most of whom were government officials, write specifications for U.S. wheat to ensure they receive the best quality at the best value.

Something for Themselves

According to Kernels and Chaff, the Nebraska wheat organizations first discussed a regional organization in 1958. Their contacts at FAS recommended that an organization of Plains states must also promote U.S. hard red spring wheat (HRS). That is why North Dakota farmers were represented at a meeting in Dodge City, Kan., where influential Kansas farmer Herbert Clutter advocated a regional organization so “growers can be in a position to do something for themselves instead of expecting others to do something for them.”

Photo from “Kernels and Chaff; A History of Wheat Market Development.”

With a goal to add more resources from more farmers to export market development, Plains state wheat leaders drafted bylaws and proposed a name for a regional organization. On Dec. 15, 1958, state commissions from Nebraska, Kansas and Colorado made the commitment to form and fund Great Plains Wheat Marketing Development Association, Inc., later shortened to Great Plains Wheat, Inc. (GPW). Over the next 10 years, state commissions from Oklahoma, Texas, North Dakota, South Dakota and Minnesota would join GPW.

The new organization took over already established export promotion offices in Rotterdam and Lima, Peru. A prior agreement with Pacific Northwest (PNW) states Oregon and Washington to promote HRW in Asian markets transferred to Western Wheat Associates (WWA) after it was established in 1959. Garden City, Kan., was selected as the first GPW headquarters office and the organization integrated into a Washington, D.C., office set up by the Nebraska Wheat Growers Association in 1958 to maintain coordinate contact with FAS officials.

The first Chairman of GPW was Lloyd Kontny of Nebraska who led the staff (left) and the first President of GPW was Clifford R. Hope (right), a wheat farmer and former U.S. Congressman from Kansas. In a later restructuring, these titles were switched, and the President was given additional responsibilities for staff and activities. Photo from “Kernels and Chaff; A History of Wheat Market Development.”

Those officials had a big influence on the expansion of GPW’s activities in the early years. With foreign currency funds growing from PL480 sales, FAS strongly encouraged GPW to study broader opportunities in South America, Central America, the Caribbean and in Africa. Of course, the U.S. government wanted to move wheat from reserve stocks into PL480 export markets and that required trade servicing and local support that GPW provided, but FAS also supported GPW’s export development efforts in commercial markets.

Better Quality Needed

No matter where U.S. HRW was being promoted, the issue of quality was a significant constraint. Because U.S. wheat grade standards at the time included much more tolerance for defects, overseas customers had legitimate concerns about imported U.S. supplies. Export supplies often came out of long-term storage and limited oversight of grain inspectors licensed by USDA occasionally created complaints about short sales and out-of-specification cargos.

Based on previous survey work, GPW started collecting samples of U.S. wheat export cargos in Europe and established a wheat and flour testing site in Lima. This yielded information GPW could use to inform grain handlers and government reserve managers about problems. The organization also advocated for expanded storage at U.S. Gulf elevators and for limiting the export of government owned reserve stock wheat to PL480 markets. Progress on such changes was slow, however, and alternative exporters like the Canadian Wheat Board aggressively touted quality relative to U.S. wheat. The general reputation for poor quality persisted. More work needed to be done.

GPW turned to James Doty, one of GPW’s cereal consultants and head of Doty Laboratories in Kansas City, Mo., to start conducting wheat quality analysis on HRW export supplies as the laboratory had been doing for U.S. flour mills. The “Doty Report” on the 1960 HRW crop quality was the first in an annual effort to inform overseas buyers, millers and wheat food processors about each year’s crop, which has expanded to include all six U.S. wheat classes in the annual USW Crop Quality Report.

The first printed promotion of U.S. wheat from 1957. Even before GPW was formed, farmer organizations from Nebraska and Kansas were educating overseas customers about U.S. hard red winter wheat and its benefits. Photo from “Kernels and Chaff; A History of Wheat Market Development.”

The need to build U.S. wheat into a quality supplier grew with market development to Europe, most of Latin America, the Middle East, North Africa, Nigeria and South Africa, and to Asian markets through contracts with WWA. Herbert Hughes, a dedicated wheat leader from Nebraska, who had served as the first Vice President of GPW, was selected to chair a Grain Standards Committee that identified that crucial changes to U.S. wheat grade standards for HRW and HRS were needed to remain competitive in global markets.

According to Kernels and Chaff, Hughes warned the GPW board and staff in 1963 that improving the official standards “is a fight we cannot…and must not lose.”

GPW promoted the changes to country elevators and their farmer customers, farm organizations, local and state officials, and the grain trade, ultimately winning support from Secretary of Agriculture Orville Freeman. USDA held several hearings on the proposed wheat grade standards. With government export subsidies in place at the time, GPW argued that improved standards would allow the government to adjust the subsidy more accurately.

USDA implemented revised standards in 1964 and adjusted the export subsidy based on grade. The results of a GPW cargo sample study and “reactions of many buyers attested to definite improvement in quality of [exported U.S. wheat]. Compliments were taking the place of complaints…” wrote Koehnke in Kernels and Chaff.

Photo from “Kernels and Chaff; A History of Wheat Market Development.”

Organization Expands with Export Sales

GPW programs were supporting significant export sales growth in Latin America with offices now added in Bogota, Colombia; Rio de Janeiro, Brazil; and Panama City, Panama In 1965, for example, GPW developed mobile demonstrations and school lunch programs that introduced pasta made from HRW to Brazilian children and families. GPW supported a new baking school in Caracas, Venezuela, and baking trade schools in Colombia. Even in the face of tight specifications enacted among members of the European Economic Community U.S. HRW and HRS continued flowing to the port of Rotterdam to be offloaded to barges and smaller vessels for delivery to European customers. Trade service and technical assistance to developing markets in Africa from a GPW office in Rome initially. Coverage of the Middle East shifted from an office in Beirut, Lebanon, to Cairo, Egypt.

In addition to its local market development support, GPW invested significant effort in general promotion of U.S. HRW and HRS wheat as well as reports back to the farmers and state organizations who directed and co-funded its activities. Brochures, wheat sample cards and a series of films about U.S. wheat were produced. Printed newsletters translated to local languages kept customers informed about U.S. and global wheat market supply and demand factors and a magazine called The Great Plainsmen informed stakeholders at home about progress.

GPW leaders and staff, like their counterparts at WWA, had to operate within the parameters of active government policies and regulations for most of its existence. For example, they fought through the battle of the “Great Grain Robbery” by the Soviet Union and advocated for more transparency and information from USDA to help farmers and their overseas customers that helped lead to weekly commercial sales reports. Their testimony about the critical need for more oversight of export grain inspection informed the Grain Standards Act of 1977 that established the Federal Grain Inspection Service and independent certification of export specifications.

Tried…and Tried Again

With more than 800 names identified in the Kernels and Chaff book index and hundreds of export market development activities in dozens of countries, a complete survey of Great Plains Wheat, Inc., achievement in this space would be almost impossible. Marx Koehnke summarized the experience well.

“Ideas were tried and rejected, and tried again, before success was achieved…Many problems had to be solved; but with a spirit of compromise…and a determination to succeed, a viable organization was formed. By collaboration with its sister WWA and of course with FAS, many successful projects were accomplished.”

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Sources for this post include:

Read other stories in this series:

Western Wheat Associates Develops Asian Markets
Evolution of a Public-Private Partnership
The U.S. Wheat Export Public-Private Partnership Today
NAWG, USW Lead the Way Through Issues Affecting Wheat Farmers

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U.S. Wheat Farmers and Their Overseas Customers Share Unique Connections

Behind the world’s most reliable supply of wheat are the world’s most dependable people. Those people, from U.S. Wheat Associates staff to the state wheat commissions and U.S. wheat farm families to the many hands along the U.S. supply chain, represent an industry that is always changing. But many of the overseas customers USW works with overseas can also say the same. Despite the different roles or distances between us, all of the people in our story share an unspoken connection, not only through U.S. wheat but through our shared values of growth, hard work and family.

These connections are a part of our story.

RANDY SUESS
Retired Washington Wheat Farmer, 2011/12 USW Chairman

“I had the opportunity of a lifetime to travel with USW to many countries and visit with buyers, millers and bakers. My thanks to those who made us feel so welcome. The millers are most gracious hosts and always showed up in large numbers at USW events. I was very proud to attend the 50th anniversary of U.S. wheat market development organizations in the Philippines. After one event, Norman Uy and his family honored me by hosting dinner. His son Stevie visited my farm the following year and is now taking over the mill.”

STEVIE UY
AVP & SBU Head, Flour Division, RFM Corporation, Republic of the Philippines

“RFM Corporation pioneered the regional flour milling industry in 1958. Today, it is one of the biggest food and beverage companies in the Philippines. I am in the 4th generation managing part of the company. I have been to the United States with USW twice. In Washington, Randy Suess took us to a plateau overlooking fields of golden soft white wheat in every direction. U.S. farmers are all proud of their production and heritage. These visits helped me appreciate where our raw materials come from and how much work and risk the farmer must take every year.”

 

DON SCHIEBER
Oklahoma Wheat Farmer, 2010/11 USW Chairman

“In 2014 a USW trade team visited my farm. I had a great time giving the team members rides in my combine. Anna-Mart Rust with Pioneer Foods in South Africa really enjoyed it and we talked about the differences between our lives. This memorable experience came full circle in September 2018 when I met Anna-Mart again, this time in South Africa on a USW Board Team visit and she took me to a farm equipment dealer and farm show, and hosted me in her home. That kind of connection is so important.”

ANNA-MART RUST
Procurement Manager, Pioneer Foods, South Africa

“It was wonderful to reconnect with Don Schieber when Pioneer Foods hosted a USW group in 2018 in South Africa. I took Don to a John Deere retailer, to a big agricultural show and to our Stellenbosch Winelands. This day is memorable as I could show Don how farmers and other South Africans live compared with American farmers, as he did when I visited his farm in 2014. We shared our differences but we found we had the same goal — to produce the best wheat and food possible!”

Discover more stories about the connection between U.S. wheat farmers and their customers.

 

View video on Vimeo.

 

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Transitions for USW Colleagues

In the United States, the fourth Thursday in November is officially set aside as the country’s Thanksgiving holiday. As the holiday approaches, U.S. Wheat Associates (USW) wants to express its sincere thanks to several colleagues who are moving on to new life paths by the end of 2019.

Three of our colleagues are retiring from full time positions with USW this year.

Ms. Linda de Hoog recently retired from her position as Regional Program and Administrative Manager for USW’s European Region in Rotterdam, The Netherlands. Linda held the distinct honor of being USW’s longest serving colleague, having joined what was then Great Plains Wheat in June 1971. She has been a faithful and diligent worker on behalf of U.S. wheat farmers and says representing them and being part of the USW family was the best career decision she ever made. For her long service and fond friendship, all of us offer Linda our special thanks and best wishes.

Linda de Hoog

Mr. Gerald Theus is retiring from his current position as Regional Director for Sub-Saharan Africa in Cape Town, South Africa, on Dec. 31, 2019. A U.S. citizen, Gerald first worked in Africa representing the music industry, then joined Pioneer Hi-Bred Seeds International as a representative in the Republic of Côte d’Ivoire (Ivory Coast). He joined USW in 1992 and served for many years as Assistant Regional Director before being named Director in 2017. Thank you, Gerald, for your dedicated work over the years.

Gerald Theus

Ms. Mina El Hachimi is now serving a part-time role as Senior Administrative Consultant for the Middle East and North Africa (MENA) region based in Casablanca, Morocco. Mina joined USW in 1985 as executive assistant and held several positions in managing responsibilities throughout the years. She will continue to support both office management and export market development activities in the region.

Mina El Hachimi

In addition, Ms. Casey Chumrau is leaving her position as USW Marketing Manager for the South American Region in Santiago, Chile, to join the Idaho Wheat Commission in Boise, Idaho, as Communications Director and Associate Administrator. A Montana native, Casey joined USW in 2011 as Market Analyst in the Arlington, Va., Headquarters Office to monitor, analyze and report on U.S. and global wheat market trends. After four years in that position, Casey joined the experienced team representing U.S. wheat farmers in the growing South American region. We wish Casey all the best in her new position and are very glad she will remain a part of our industry.

Casey Chumrau

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Expanded Trade Delegation Effort Connects Buyers, Farmers and U.S. Wheat Organizations

By Catherine Miller, USW Program and Planning Coordinator

One of the most important types of activities U.S. Wheat Associates (USW) overseas representatives conduct is trade service. In other words, they help their customers understand how to get the most value as possible from their U.S. wheat purchases. A crucial part of trade service is giving many of those customers the chance to experience the U.S. wheat supply system first hand.

Each year, USW brings several delegations of international wheat buyers and end-product processors to the United States. These trade delegations help forge a direct connection for customers with farmers, state wheat leaders and industry organizations. In many ways, these visits represent the legacy of commitment from farmers, state wheat commissions, USDA’s Foreign Agricultural Service of USDA and USW to demonstrate the dependability of the people who produce and handle the reliable supply of U.S. wheat.

In 2019, the number of USW hosted trade delegates doubled from the previous year, with a total of 18 delegations. Almost 100 customers from around the world visited 14 states.

One delegation from Brazil, for example, was the first trade team from South America to focus exclusively on the technical staff from major mills. The participants were chosen because they have significant input on buying decisions and wheat classes used by their respective mills. They visited farmers and industry representatives in Ohio and Kansas, reflecting their interest in soft red winter (SRW) and hard red winter (HRW). The photo at the top of this page was taken as the delegation visited the Stover Farm in Shelby, Ohio. The timing of the delegation in June was ideal because in March, Brazil’s government had announced it would work toward opening a tariff rate quota to allow a significant volume of wheat to be imported from outside the South American Mercosur trade agreement.

U.S. wheat farmers benefit directly from USW helping customers around the world succeed in growing the profitability and consumer appeal of their flour and wheat foods products. That starts with activities like trade delegations demonstrating that, despite obvious differences, the people who grow, move and sell U.S. wheat share values of growth, hard work and family with the people who import, mill and process it.

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U.S. Commercial Export Sales Pace Ahead of 2018/19

Three and a half months into marketing year 2019/20, total U.S. export sales* as of Oct. 15 of 13.8 million metric tons (MMT), 14 percent ahead of last year’s pace. Sales to four of the top 10 U.S. wheat customers are ahead of last year’s pace. Export sales to Mexico, the top U.S. customer over a five-year period, are up 50 percent year-over-year at 2.09 MMT. Sales to Nigeria total 936,000 metric tons (MT), up sharply from the 569,000 MT sold this time last year. All U.S. wheat classes except hard red spring (HRS) and white wheat are ahead of last year’s pace. USDA projects 2019/20 U.S. wheat exports will rise to 25.9 MMT. If realized, this would be 1 percent higher than 2018/19.

HRW. USDA reported hard red winter (HRW) year-to-date exports at 5.13 MMT, 52 percent ahead of the 2018/19 HRW sales pace on the same date. Mexico is currently the number one HRW purchaser and HRW sales to Mexico are 54 percent ahead of last year’s pace. As of Oct. 10, HRW sales to Mexico totaled 1.27 MMT. Sales to Nigeria are more than double last year’s pace at 567,000 MT. Japanese HRW purchases total 488,000 MT, up 7 percent from 2018/19.

SRW. 2019/20 soft red winter (SRW) sales are up 14 percent year-over-year at 1.72 MMT. Sales to 4 out of 5 of the top buyers of U.S. SRW are ahead of last year’s pace. Year-to-date, Mexico has purchased 550,000 MT, 15 percent more than last year. Nigerian SRW purchases total 142,000 MT, 50 percent ahead of last year’s pace. Sales to other Latin American countries, including Trinidad and Tobago and Panama are also ahead of 2018/19 exports.

HRS sales of 3.77 MMT are only 1 percent behind the last year’s pace. As of Oct. 10, buyers in Taiwan purchased 353,000 MT, up 5 percent from 2018/19. Taiwan is the third-largest buyer of HRS. Sales to South Korea, the fourth-largest buyer of HRS, are up 10 percent from last year at 294,000 MT. Year-to-date sales to Southeast Asian countries, including the Philippines, Bangladesh, Thailand and Malaysia, are behind last year’s pace. This time last year, there were no HRS sales to China. So far in 2019/20, the U.S. has sold 63,000 MT of HRS to China.

White. As of Oct. 11, exports of all white wheat (including soft white and hard white) are down 14 percent year-over-year at 2.62 MMT. Sales to 4 out of the top 5 customers of U.S. white wheat are down from last year. Sales to the Philippines, the largest customer of soft white (SW) wheat, are down 6 percent from 2018/19 at 660,000 MT.  SW food aid donations to Yemen are up 79 percent from this time last year at 231,000 MT. Minimal access to the Chinese market is also impacting SW sales. In 2017/18, China had purchased 271,000 MT of SW by this date.

It should be noted that the white sales to Nigeria of 123,000 MT are hard white (HW). USDA does not differentiate between the 2 classes on the Export Sales Report. HW sales to Nigeria in 2019/20 are 9 percent ahead of last year’s pace.

Durum. Year-to-date durum exports total 497,000 MT, up 59 percent from the same time last year. To date, the European Union (EU), Algeria and Nigeria are the top durum buyers. Year-to-date sales to the EU total 269,000 MT (9.88 million bushels), more than double last year’s pace. Italy is the top durum buyer in the EU. U.S. durum sales to Italy are up 165 percent from last year at 248,000 MT. Increased sales to the EU more than offset decreased sales to Algeria and Nigeria. Algerian durum sales are down 30 percent from last year at 45,000 MT and Nigerian durum sales are down 58 percent from 2018/19 at 28,000 MT. There is also a significant portion of these 2019/20 durum sales currently designated as “sales to unknown destinations.”

*U.S. Wheat Associates (USW) publishes a new Commercial Sales report every Thursday documenting wheat export sales-to-date by country and class for the current marketing year compared to the previous marketing year on the same date. The report also includes a 10-year commercial sales history by class and country. Data is sourced from the USDA Foreign Agricultural Service Weekly Export Sales Report.

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Trade Service Helps Tip the Scales to U.S. Wheat in South America

U.S. Wheat Associates (USW) works directly with overseas buyers to answer questions and resolve issues in purchasing, shipping or processing U.S. wheat through technical support and trade service including trade delegations to the United States, regular crop and market condition updates, quality surveys and other activities.

Two examples in South America confirm that USW’s face-to-face interaction with customers has a direct influence on purchase decisions. For an large flour miller buying group in Chile, processing a sample of U.S. wheat and personally observing the U.S. supply system convinced the group to purchase U.S. wheat again. And for a large miller and wheat foods producer in Ecuador, consistent trade service led to a first-time U.S. wheat purchase.

Seeing is Believing.

Chile’s Grupo 9 (G9) purchases about 30% of Chile’s imported wheat but had for several years been importing Canadian spring wheat that was priced aggressively against U.S. hard red spring (HRS) and hard red winter (HRW) wheat. Through USDA Foreign Agricultural Service programs, USW provided a sample of U.S. hard red winter (HRW) and sponsored two G9 millers to participate in a 2017 visit to the United States. Based on the positive reaction to these activities, USW’s representatives in South America invited another influential G9 representative to join another trade team to the United States in June 2018.

In Portland, Ore., the participants made contacts with new Pacific Northwest grain traders and observed the FGIS grain inspection process. In Nebraska, hosted by the Nebraska Wheat Board, the team saw public HRW breeding research at the University of Nebraska, Lincoln, and in North Dakota they learned about the quality of the 2018/19 hard red spring (HRS) crop from the North Dakota Wheat Commission and Northern Crops Institute.

2018 Chile-Ecuador Trade Team in North Dakota at the Northern Crops Institute.

As the tour progressed, USW saw more and more interest from the participants. They learned that lower moisture U.S. wheat offers good value in their milling processes. They saw how they could use inspection data to get maximum return from their wheat import contracts. They also talked to farmers and elevator operators who showed how quality is maintained throughout the supply chain.

In September 2018, the G9 buyer told USW it was considering purchasing a full cargo of U.S. wheat. USW shared the quality data from the new harvest and past years and discussed the excellent buying opportunities. In April 2019, the buyer purchased U.S. HRW to mill into bread flour and soft red winter (SRW) to mill into cookie and pastry flour. And to continue the long-term commitment to serving the buyers group, USW sponsored the same manager to participate in the “Hard Red Spring Wheat Quality Tour” in North Dakota in July 2019.

2018 Chile-Ecuador Trade Team in North Dakota.

G9’s return to buying U.S. wheat helped significantly increase export sales to Chile in 2018/19. It is a trend that has continued into 2019/20. With a sustained effort focused on replacing Canadian supplies, USW can report that after only the first three months of the marketing year, the country’s HRW imports are already twice what they were in 2018/19 at this same time.

Constant Support

Sucesores of Jacobo Paredes M. S.A, is the largest pasta producer in Ecuador and is a major bread product producer. Its purchases represent about 10% of Ecuador’s total wheat imports for food. Mr. Xavier Sanchez is the owner of the company and is responsible for its wheat purchases. Mr. Sanchez and his team have attended virtually all the activities that USW has carried out in Ecuador. However, by tradition and experience, the company has milled only Canadian spring wheat to produce both pasta and bread flour.

USW has focused its technical support on demonstrating how the company can lower its costs and improve its bread quality by replacing at least some Canadian spring wheat with U.S. HRW. In July 2019, Mr. Sanchez participated in a USW “Wheat Purchasing Seminar,” in Quito, Ecuador. He told USW representatives based in Santiago, Chile, that USW’s constant support, along with the information he received at the seminar, had convinced him to make their first purchase of U.S. wheat. Initially, Jacobo Paredes bought 3,000 metric tons (MT) of HRW min 12% pro from the Gulf of Mexico to arrive in October 2019. Recently, the company made a second purchase of 1,500 MT of HRW to arrive in December. Mr. Sanchez said he counts on USW support, which finally made the difference in the company’s purchase decision.

2019 Wheat Purchasing Seminar in Ecuador.

Now, USW’s technical support will be applied to ensure that the U.S. wheat experience will provide the best possible value. USW will visit the mill when the first HRW wheat shipment arrives to help Jacobo Paredes with sampling, conditioning and milling, in addition to helping the company formulate the best flour blend for their bakery.

For more information about USW’s exceptional trade service and technical support, please contact your local USW office.

 

Header Photo Caption: 2017 Chile Trade Team in Washington.

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Demonstrating Value in U.S. Wheat to Change Baking Preferences in Colombia

Colombia’s flour milling industry depends on imported wheat and is separated into regional clusters by the location of Colombian ports. Wheat arriving in Buenaventura on the Pacific coast is trucked to flour mills in Cali and Bogotá to serve the country’s largest regional baking industry. Much of the wheat unloaded at Buenaventura, however, is Canadian Western Red Spring (CWRS). That is because the price and discounting tactics of the now defunct Canadian Wheat Board helped built a traditional preference for CWRS. Bakers in Cali and Bogotá, in turn, learned to mellow this strong flour with additives; logistics kept them from seeing an alternative in U.S. hard red winter (HRW).

USW’s representatives in South America saw an opportunity to change that, at first by showing a large, influential bakery in Bogotá the value of using flour from excellent quality HRW. Through the second half of 2018, USW Regional Director for South America Miguel Galdos made in-person trade servicing calls to the bakery. In early 2019, the bakery agreed to USW’s proposal to bring in a baking consultant to demonstrate an alternative baking method, sponge and dough, using flour milled from HRW.

The consultant compared the alternate method to the bakery’s standard method using flour milled from Canadian spring wheat with additives. The results in the most popular Colombian bread products and new products (functional breads, sweet breads) were very good using flour blended from at least 40% HRW and 60% CWRS with no additives. The HRW flour blend improved mixing and fermentation, dough characteristics and machine processing without hurting finished product volume and appearance. The bakery’s management decided to adapt the HRW blended flour immediately.

Galdos reported that because there was no HRW blended flour available from their Bogotá suppliers, the bakery contacted a flour mill in Cartagena because U.S. HRW and other classes were moving into Colombia through its northern Caribbean ports. The mill’s representative flew to Bogotá and Galdos reports that the mill now has a new customer purchasing flour milled exclusively from U.S. HRW.

USW recently demonstrated a similar comparison at another bakery in Medellin, Colombia, to help build a larger data base of performance benefits with HRW flour. Looking ahead, USW is sharing the benefits of the HRW blend alternative with flour mills in Cali and Bogotá and their bakery customers. The long-term goal is to increase demand for U.S. HRW to be imported through Pacific ports. USW believes this will also help create new opportunities in the Bogotá market for U.S. soft white (SW) for blending and pastry flour, and hard red spring (HRS) delivered to Colombia’s Pacific ports now dominated by Canadian spring wheat.

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Federal Grain Inspection Service Gives U.S. Wheat a Differential Advantage in the Marketplace

By Casey Chumrau, USW Marketing Manager, Santiago Office

The Federal Grain Inspection Service (FGIS) may be somewhat unfamiliar to most farmers but serves as a major competitive advantage for U.S. grains on the international market. Based on two congressional acts establishing a standardized inspection process, all wheat exported from the United States is inspected and given a grade as it is loaded onto the export vessel, whether it be a train or ship. This independent process sets the United States apart by providing a form of certainty and protection for buyers.

An official FGIS grade certificate is sent to buyers before the vessel arrives, allowing them to make important production decisions in advance based on the characteristics of the wheat before it arrives. In addition, the buyer knows that an independent agency will certify that every shipment meets the grade requirements specified in their contract, avoiding costly conflicts between the buyer and seller. The U.S. farmer works hard to produce a high-quality crop demanded by the market, and the FGIS inspection process helps maintain that quality all the way to the end user. This is a significant differential advantage of purchasing U.S. wheat versus other origins.

FGIS has an international affairs office that provides educational training programs explaining the roll and procedures of the agency. U.S. Wheat Associates (USW) has used this service many times over the years, most recently July 15 to 19, 2019, in Peru, an import market of about 2.0 million metric tons (73.5 million bushels). FGIS agent Jose Robinson traveled to Peru to conduct half-day seminars in the five largest wheat importing companies in the country. Robinson gave presentations and demonstrated parts of the inspection process to 53 participants from the quality control departments of the five mills. The participants shared their processes with Robinson, showed examples of the wheat they inspected in plant and were able to test their abilities to conduct similar inspections while receiving guidance from an expert.

The participants gained a deeper understanding of the FGIS inspection protocol and testing methods and left with increased trust and confidence in the FGIS certification process. The changes implemented in the mills following the training sessions will result in fewer discrepancies between the FGIS grade and the results of local, in-plant inspections, leading to increased satisfaction with U.S. wheat.

The ability to send an FGIS agent overseas allows USW to train a large number of participants at a fraction of the cost it would require to train even a few customers in the United States.

The USW Santiago Office plans to repeat this training activity in four other South American countries over the next two years. Learn more about how USW works with buyers here.

 

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Promoting U.S. Wheat Around the World

As U.S. Wheat Associates (USW) President Vince Peterson often says, at any given hour of the day there is someone, somewhere, talking about the quality, reliability and value of U.S. wheat. Wheat Letter wants to share some of the ways USW was working in June to promote all six classes of U.S. wheat in an ever more complex world wheat market.

Mexico. The USW Mexico City Office hosted the Mexico Wheat Trade Conference in Cancun, Mexico. Mexican millers, representing more than 85% of total Mexican milling capacity, attended the conference, as well as Mexican government officials, U.S. farmers from 13 states, U.S. grain trade representatives, and representatives from the four railroads serving the Mexican market including BNSF, Ferromex, Kansas City Southern-Mexico and Union Pacific. The program included messages from USW Chairman Chris Kolstad and USW President Vince Peterson, thanking the Mexican milling industry for their business and many years of close friendship, as well as presentations and discussions on the United States-Mexico-Canada Agreement (USMCA), price risk management, rail transportation, ocean freight, contracting for wheat value and more. Read the full article about the conference here.

https://youtu.be/tvytAcIROE4

Jamaica. USW Technical Specialist Marcelo Mitre and Assistant Regional Director Stephanie Bryant-Erdmann accompanied Bakery Consultant Kirk O´Donnell to Jamaica to conduct two, 2-day seminars in partnership with a local mill. The seminars—attended by a combined 57 participants from four countries representing the baking, milling and distribution sectors—focused on the quality and versatility of U.S. wheat, baking technology, ingredient functionality, traditional fermentation methods, puff pastries and shelf life.

USW Bakery Consultant Kirk O´Donnell at a seminar in Jamaica. Photo Credit: JF Mills

A participant a the baking seminar in Jamaica. Photo Credit: JF Mills

Brazil. Accompanied by USW Marketing Manager, Casey Chumrau, and Technical Specialist, Andres Saturno, a delegation of Brazilian flour milling managers who are responsible for quality control in their wheat purchases, traveled to Kansas, Ohio and Texas. During its travels, the delegation met with the Federal Grain Inspection Service (FGIS), milling companies, analysis laboratories, wheat breeding facilities and visited wheat farms.

The 2019 USW Brazilian Trade Delegation visits Texas A&M University. Photo Credit: Texas Wheat

The Philippines. The USW Manila and Seoul offices hosted a Korean Bakery Workshop in Seoul, South Korea, for Philippine bakers and millers to learn about Korean products, formulations and production methods to help the industry take advantage of growing opportunities and improving processes in the Philippines. The workshop took place at the Korean Baking School (KBS) under the direction of a Grand Master Baker and was facilitated by KBS program staff, along with USW Food Technologist, David Oh, and Country Director, CY Kang.

USW Korean Bakery Workshop in Seoul, South Korea.

Taiwan. USW collaborated with Chia Nan University (CNU) of Pharmacy and Science to host a full-day 2019 CNU Symposium on Chinese-style Steamed Breads for baking and catering professionals, souvenir development companies and culinary faculty and students. The symposium including hands-on training on how to make fermented steam bread and buns, as well as presentations on quality control of steamed bread, an introduction to wheat flours used for steamed breads and wheat flour inspection and milling.

2019 CNU Symposium on Chinese-style Steamed Breads

China. Together, USW and the Wheat Marketing Center (WMC) hosted a Contracting for Wheat Value Workshop (CFWC) for Chinese buyers and technical officials. This workshop highlighted the strengths of U.S. wheat production and its reliability and high quality. Participants also had the opportunity to travel to visit Padget Ranches in Oregon’s Sherman County. Darren Padget is a wheat farmer and current USW Vice Chairman and invited the workshop participants for a farm tour and dinner barbeque with several local farmers and neighbors.

Contracting for Wheat Value Workshop participants visit Darren Padget’s farm in Oregon’s Sherman County.

*Header Photo Caption: Contracting for Wheat Value Workshop participants visit with a farmer in Oregon’s Sherman County.

Italy. USW Regional Marketing Director Rutger Koekoek spoke at the Romacereali Conference on the outlook for durum wheat for North America and North Africa. The conference is a popular event for the Italian cereal sector organized by the Rome Chamber of Commerce. Its 200 participants primarily work in the Italian durum milling, durum trading and pasta processing industries.

Sub-Saharan Africa. Accompanied by USW Assistant Regional Director, Chad Weigand, and Marketing Specialist, Olatunde Omotayo, a delegation of milling and procurement staff representing companies from Nigeria, South Africa, Senegal, Ghana and Cote d’Ivoire spent 10 days traveling to Washington D.C., North Dakota and Kansas to learning more about the excellent quality of hard red winter (HRW), hard red spring (HRS) and durum supplies available, as well as the promise of more exportable supply of hard white (HW) and the logistical advantages of purchasing from the United States

The 2019 USW Sub-Saharan Delegation at the Kansas Wheat Innovation Center. Photo credit: Kansas Wheat

Nigeria, South Africa and Kenya. USW Vice President of Global Technical Services, Mark Fowler, and IGP Institute Associate Director, Shawn Thiele, conducted on-site milling consultations and hands-on technical training in four flour mills in Nigeria and three flour mills in South Africa. During their visits, Fowler and Thiele gave recommendations for improving milling operations and flour quality for HRW, HW and soft red winter (SRW) flour. They also spoke at the African Milling School (AMS) in Kenya about U.S. wheat classes and milling for U.S. wheat for the AMS Apprenticeship Program

 

Mark Fowler (L) and Shawn Thiele (R) inspect flour at a mill in Nigeria.

USW and IGP staff at a mill for training in Nigeria.

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Wheat Buyers and Officials from Six Countries Kick Off USW Trade Team Season

Each year, U.S. Wheat Associates (USW) invests funding from USDA Foreign Agricultural Service export market development programs to bring several teams of overseas customers and stakeholders to the United States. Visiting wheat-producing states connects customers with farmers as well as state wheat commissions and industry partners that co-sponsor local visits. The goal is the same for USW and partners: to promote the reliability, quality and value of all six U.S. wheat classes to customers around the world. Our success relies on the success of our customers and their ability to create products that appeal to consumers in markets around the globe.

So far in 2019, six USW-sponsored teams and an industry-sponsored team have traveled to 10 different states to gain greater understanding of the new U.S. wheat crops, wheat marketing structure and transportation logistics.

In March, the Wheat Marketing Center in Portland, Ore., sponsored a workshop on the unique characteristics of club wheat, a subclass of soft white (SW), for five baking technologists from Japan. Japan is a major importer of the premier U.S. soft wheat blend of club and SW known as Western White. USW worked with WMC to prepare the workshop and plan a visit to farms in Washington State growing club wheat.

A team of Japanese baking technicians participated in a club wheat workshop at the Wheat Marketing Center in March 2019 with support from USW and state wheat commissions.

In late April and early May, a team of seven senior executives from Japan’s flour milling industry, led by Country Director Charlie Utsinomiya and Associate Country Director Kazunori “Rick” Nakano, made an annual trip to the United States. These executives took in high-level meetings in Washington, D.C., including with USDA Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney, to discuss the state of U.S. trade negotiations with Japan. In Montana, the milling executives spent time with then USW Chairman Chris Kolstad on his farm near Ledger, Mont., and toured a local elevator that loads 100-car shuttle trains with hard red winter (HRW) and dark northern spring (DNS) wheat bound for Pacific Northwest export elevators.

At about the same time, USW/Taiwan Country Director Boyuan Chen led five representatives of the Taipei Bakers Association and three officials from Taiwan’s Department of Public Health on a trade team to Oregon and Manhattan, Kan. The focus for this team was to demonstrate the high-quality of U.S. wheat, sanitation and best management practices employed by domestic flour mills and bakeries and retail trends in the U.S. baking industry. This team saw the Federal Grain Inspection Service process at export, visited high-value commercial flour mills and commercial bakeries, and toured AIB International. USW Vice Chairman Darren Padget also hosted the team at his family’s farm in north-central Oregon. A collection of photos from the team visit is posted online here.

Executives from several Nigerian and South African flour mills traveled with USW Assistant Regional Director Chad Weigand and USW/Lagos Marketing Specialist Olatunde Omotayo to Washington, D.C., North Dakota and Kansas in mid-June. USW, state commissions and educational partners at IGP Institute and Northern Crops Institute demonstrated the excellent quality of HRW, HRS and durum supplies available, as well as the promise of more exportable supply of hard white (HW) for the team and the logistical advantages of purchasing from the United States.

Millers from Nigeria and South Africa saw wheat quality and varietal improvement research at Heartland Innovations in Manhattan, Kan., on their trade team visit this year.

Brazilian flour milling managers who are responsible for quality control in their wheat purchases arrived in Ohio in late June to learn more about U.S. soft red winter (SRW) and HRW quality. The visit coincided with the announcement that Brazil’s government planned to implement a duty-free tariff rate quota (TRQ) for wheat from countries like the United States outside the regional South American trade agreement. If implemented, the TRQ provides an opportunity for U.S. wheat to compete on an equal basis with Argentina for 750,000 metric tons of annual imports. As SRW importers, the Brazilian millers gained good information from a visit to the USDA’s Agricultural Research Service Soft Wheat Laboratory in Wooster, Ohio. The trade team also had the opportunity to tour wheat research facilities at Kansas State University and Texas A&M University in College Station, Tex. USW/Santiago Marketing Manager Casey Chumrau and Technical Specialist Andres Saturno led this team.

USW Market Analyst Claire Hutchins recently provided interesting insight into the trade team experience in a “Wheat Letter” post about the team of seven milling executives from the Philippines while they visited the U.S. wheat supply system in Portland. This team continued from Portland to Eastern Washington State, Idaho and Nebraska before departing for home on June 29. Philippine millers imported more SW and DNS than any other country in marketing year 2018/19 (June to May). Their total U.S. wheat imports put them in a close second position after Mexico.

Looking ahead, additional teams from Peru, Korea, Mexico, Taiwan, Japan and South Asian countries, as well as a team of bakery officials from South American countries, will be in the United States between now and late September. USW wants to thank our partners with USDA-FAS, state wheat commissions, educational organizations and of course the farmers we represent who make these activities possible.

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