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Meet the USW Technical Experts: Peter Lloyd – International Man of Milling

Name: Peter Lloyd

Title: Regional Technical Director

Office: USW Middle Eastern, East and North African Region, Casablanca Office

Providing Service to: North Africa and the Middle East

Peter Lloyd’s eyes lit up the moment he saw the MIAG pilot flour mill and baking lab at Mennel Milling‘s Fostoria, Ohio, plant.

Lloyd, who was with U.S. Wheat Associates (USW) colleagues gathering information on new U.S. wheat export opportunities, said: “there is no end to that plant’s potential in soft wheat product development.”

That is strong praise coming from someone who has designed, serviced, and visited more flour mills worldwide than he can count. Lloyd’s USW title of Regional Technical Director does not do justice to his global responsibilities. Based in USW’s office in Casablanca, Morocco, Lloyd travels the world to conduct technical support that helps prove the value of U.S. wheat in the customer’s mill.

“I believe the work I do and that my USW colleagues and consultants do brings the greatest value where it makes the most difference — on the bottom line profit for a supply chain manager, miller or baker,” Lloyd noted. “A clear knowledge of the customer’s business is also vitally important to opening the door to U.S. wheat farmers as valued suppliers.”

Peter Lloyd; Marcelo Mitre, Technical Specialist, USW/Mexico City; Dr. Byung-Kee Baik, Acting Research Leader, USDA-ARS, Wooster, Ohio; Brad Moffitt, Director of Market Development and Membership, Ohio Small Grains Marketing, Program; Tarik Gahi, Milling & Baking Technologist, USW/Casablanca. February 2016 at the USDA-ARS Soft Wheat Quality Laboratory, Wooster, Ohio.

A Storied Career

Just a thumbnail of Lloyd’s professional credentials would be enough to open that door, starting with his British father’s successful flour milling career that took him from Liverpool to Kenya, where Lloyd was born. Intrigued by his youthful visits to mills with his father, Lloyd decided to follow him into the business in 1977.

Milling engineering training and working with Henry Simon in the United Kingdom and South Africa built the foundation for Lloyd to become a mill manager in Botswana in his mid-20s. He returned to the UK with the Simon Group in an engineering sales position in 1986 that, along with his emerging knowledge of high technology applications, led to a job with the United Milling Systems division of the Carlsberg Research Center in Denmark. Lloyd eventually started his own consulting business that continued his work in Africa.

“Then, in 1991, I saw an advertisement in World Grain magazine for the post of Dean of the new Egyptian Milling School in Cairo from an organization called U.S. Wheat Associates,” Lloyd recalled.

Peter Lloyd, left, discusses soft red winter wheat variety development with Dr. Clay Sneller, Associate Professor, Dept. Horticulture and Crop Science, The Ohio State University, Tarik Gahi, USW/Casablanca and Dr. Byung-Kee Baik, Director, USDA-ARS Soft Wheat Quality Laboratory, Feb. 2016, Wooster, OH.

Per its agreement with its Egyptian business partners at the time, USW had management responsibilities for the school’s development and first two years of operation. Lloyd applied for and eventually earned the position where he directed construction and curriculum development — and discovered a love of teaching. Moreover, he was impressed by USW’s approach to export market development.

“Building trust is crucial, and I think USW’s biggest asset is not having sales objectives. We give advice based upon its merit only,” Lloyd observed. “From U.S. wheat farms to the school in Cairo, we were truly committed to forging a long-term partnership with overseas customers, offering technical assistance without a commercial profit motive.”

USW’s substantial funding for the school ended in 1994, and Lloyd moved on to a technical support position in Egypt with the Australian Wheat Board (AWB), which was, at the time, a fully governmental organization. After the organization was privatized, Lloyd said the drive to meet sales goals, and quarterly returns did not match his values. A return to consulting in the Middle East, including for USW, opened an opportunity to join the Wheat Marketing Center (WMC) in Portland, Ore., in 1996.

L-R: Nihal Habib, formerly with USW/Cairo; Peter Lloyd; Hoda Moawad, formerly with USW/Cairo; two Egyptian grain officials; Tarik Gahi, USW/Casablanca, at a USW Buyers Conference in Sharm El Sheikh, Egypt, 2013.

“Working with the director Bob Drynan (who had also worked for USW and the California Wheat Commission), wheat growers, the grain trade, and the researchers at USDA and Washington State University was one of the most enjoyable periods in my career,” Lloyd recalled. “Perhaps most significant in terms of my future work with USW was the interaction with Asian millers and bakers to learn about the product quality and diversity in their markets.”

An Invaluable Resource

After personal choices drew him back to the UK and consulting work in 1998, Lloyd answered another call from USW to help address some challenges at the new IFIM Milling School in Casablanca. That role grew into a longer-term opportunity to implement a Miller Outreach Program with the goal of building professional expertise and a greater understanding of U.S. wheat quality and value in North Africa and the Middle East through the IFIM school.

“That was very rewarding, but I recognized I needed to get reacquainted with the latest mill operations and moved to a technical milling position in Dubai for two years,” Lloyd said. “In 2005, I returned to USW to run the Tunisian Outreach Program and served in Tunis until 2009. During this time, we expanded the technical assistance role from Tunis to many of the other USW offices in Asia, the Middle East, and North Africa, as well as supporting the opening of new markets in Libya and Algeria at that time.”

Though much has changed in the last ten years, including his move to USW’s Casablanca, Morocco, office, Lloyd’s work with USW in North and South Asia, the Middle East, Africa, and occasionally Latin America and Europe in support of U.S. wheat export market development continues today.

Peter Lloyd providing technical support at a Colombian flour mill, October 2009.

“Our objective remains the success of the people we support,” he asserted. “Why? Because successful millers and bakers are most likely to buy what we have to offer: high-quality wheat from high-quality farmers to produce high-quality flour for high-quality products.”

The beneficiaries of his work agree.

“Peter Lloyd has been an invaluable resource for us for the better part of 10 years, giving advice ranging from mill cleanliness and fumigation to more complex topics like milling economics and flour customization,” said an executive with a large flour milling company in the Philippines. “We cannot thank him enough for all his help. He is a true encyclopedia of flour milling.”

A Chinese milling executive said Lloyd’s efforts helped his team better understand the processing characteristics of the individual classes of U.S. wheat.

Peter Lloyd, current President Vince Peterson, and customers at USW Middle Eastern Grain Buyers Conference, Sharm El Sheikh, Egypt, 2009.

“His constructive opinions on our production process have helped us be more efficient in milling U.S. wheat and helped improve the competitiveness of our flour products,” the executive concluded.

“USW is so lucky to have such a talented, charismatic individual like Peter on our staff,” said USW Regional Vice President Ian Flagg, who directs export market development activities in North Africa, the Middle East, and Europe. “Not only is Peter a great technical asset, he is completely committed to our mission to return value to the farmers we represent and their customers, and that is what he does all over the world.”

“I am doing exactly what I want to be doing at this point in my career with and for some of the nicest people on Earth,” Lloyd said. “Our customers welcome us to their offices, listen to what we have to say, and trust us. Then coming back months later and finding that we helped them improve their business is very rewarding. And the U.S. wheat farmers we work for represent values I hold in the highest esteem: honesty, integrity, human decency, hard work, a love of the land, and a deep respect for our Creator.”

He also remains very upbeat about the global wheat industry.

“End products are made from flour, not whole wheat kernels, so the growth of the milling and food processing industries are inextricably linked,” Lloyd noted. “As much as any foodstuff, wheat-based products have a prominent place in shopping baskets in every country of the world, and for every income group for the foreseeable future — and there are more and more shoppers every day.”

Peter Lloyd visits Mennel Milling, Fostoria, Ohio, Feb. 2016

Peter Lloyd visits Mennel Milling, Fostoria, Ohio, Feb. 2016

By Steve Mercer, USW Vice President of Communications

Editor’s Note: This is the second 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: Peter Lloyd’s presentation at the 2015 USW Crop Quality Seminar, Cairo, Egypt

Meet the other USW Technical Experts in this blog series:

 

Ting Liu – Opening Doors in a Naturally Winning Way
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
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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Meet the USW Technical Experts: Ivan Goh – An Energetic Individual Born to the Food Industry

Name: Kong Song “Ivan” Goh

Title: Biscuit/Bakery and Noodle Technologist

Office: USW South Asia Regional Office, Singapore

Providing Service to: Indonesia, Malaysia, Myanmar, Republic of the Philippines, Singapore, Sri Lanka, Thailand, and Vietnam

Regional Profile: Rapidly rising disposable income and urbanization in South Asia are opening markets for baked goods, biscuits, cakes, and other foods that require more types of higher-quality flour. As the milling and wheat foods industries rush to increase capacity, USW is helping them improve and expand product lines using high-quality soft white (SW) for cake, biscuit, and confectionery flour, and U.S. hard red winter (HRW) and hard red spring (HRS) for bread flour. USW also conducts baking seminars to introduce new products with higher profit margins using flour milled from U.S. wheat.

Common Roots

From far southern Myanmar and southwest Thailand, the Asian continent continues south as the Malay Peninsula to include Western Malaysia and Singapore near its southern tip. Northwest of Kuala Lumpur is the Malaysian state of Malacca. This area has gained a certain notoriety among South Asian wheat food producers as the source of valuable technical support from long-time U.S. Wheat Associates (USW) Baking Consultant Roy Chung and now USW Biscuit/Bakery and Noodle Technologist Ivan Goh.

“Roy and I were born in the same hometown in Malacca,” Goh said. “Roy’s father ran a bakery, and my story starts with my family, too. My mum earned a living by selling bite-size snacks called Kuih-muih and fried spring rolls called Popiah. I was nine years old when I started helping her make and sell her food. My interest in cooking and food preparation grew from there. In fact, most of my family members are in food-related work.”

Goh went on to earn a bachelor’s degree in Food Science and Technology from the University of Putra Malaysia, and his talent landed him two job offers even before he graduated in 2012. He said because he is “not a shy person who can do routine jobs,” he chose a technical service position with FFM Berhad in Port Klang, Malaysia, that would expose him to as many parts of the flour milling and baking industries as possible.

“The knowledge I gained there has been very valuable,” he said. “I especially enjoyed the opportunities in technical troubleshooting and handling customer complaints.”

He added that the company always taught its colleagues to appreciate the people who helped them in their work, an experience that would prove important to Goh’s next career opportunity.

An Introduction to USW

USW first crossed paths with Ivan Goh when Roy Chung conducted a USW baking workshop at FFM Berhad in 2014. In 2015, the company sent Ivan to one of the popular USW baking courses Chung developed and led with the UFM Baking & Cooking School in Bangkok, Thailand. USW Regional Vice President Matt Weimar was also there to identify potential candidates to fill a vacant technical position in USW’s South Asian Region.

“Ivan Goh was one of the individuals who stood out in terms of their work and leadership,” Weimar said. “He also impressed Roy, so we decided to follow his career path until it was the right time to invite him to work for our organization.”

That opportunity emerged early in 2018, and Goh has been representing U.S. wheat farmers in the South Asian region since last March.

“The wheat foods industry is rapidly expanding in the region, and we knew Ivan’s experience in quality assurance and control was ideal to help flour mills, bakeries, cookie/cracker, and confectionery processors better understand the quality, value, and use of U.S. wheat flour,” said Weimar. “We set up an active development schedule for Ivan. It started with Ivan shadowing Roy at the USW baking classes at UFM, then on an extended technical service visit with Roy to several flour mills and baking customers in Indonesia.”

On the Road

Goh, who is fluent in several languages spoken in the region, participated with millers from the Philippines, Indonesia, and Vietnam in a USW Contracting for Value workshop and joined Weimar as co-host of a regional trade team that visited Washington state, Idaho, and Montana last August. That schedule keeps Goh mostly away from a home office in Kuala Lumpur and the USW South Asia regional office in Singapore. But he is very excited about the opportunity.

“Roy Chung is a legend as a teacher and technical resource in this region,” Goh said. “I never imagined that one day I would be his colleague. Another thing that impressed me is that USW is the only wheat organization that invites overseas millers to evaluate the quality of every U.S. wheat crop and sincerely listens to their feedback. That must be part of the working culture because I am also free to voice my opinions.”

Late in 2018, there was additional, extensive training for Goh as a student in Class 193 of the 16-week Baking Science and Technology Course at the AIB Institute in Manhattan, Kan.

“Our goal is to help customers improve their product lines and manage cost risks, so the course further strengthened my confidence in helping large-scale bakeries,” Ivan said. “In addition, seeing the performance and benefits of using flour from U.S. wheat classes firsthand will help me demonstrate how customers can get the most value possible from those flour products in their own bakeries.”

“Ivan received a medal as the fourth-ranked student in the class and was recognized with one of the Bakery Equipment Manufacturers Association awards recognizing ‘Excellence in Laboratory Leadership Performance,” Weimar said. “The relationships he developed with his fellow students will also be very valuable in the future.”

Weimar noted that Ivan Goh has had a very productive first year with U.S. Wheat Associates, adding “we are proud of Ivan’s progress, and we look forward to many more successful technical support activities to come. That is a commitment to our South Asian customers and the U.S. wheat farmers we are proud to represent.”

By Steve Mercer, USW Vice President of Communications

Editor’s Note: This is the first 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.”

Meet the other USW Technical Experts in this blog series:

 

Ting Liu – Opening Doors in a Naturally Winning Way
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
 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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Wheat Growers See Challenges and Promise in African Markets

By Steve Mercer, USW Vice President of Communications

 

Things have changed in Nigeria’s flour milling industry. Members of a U.S. Wheat Associates (USW) Board Team meeting with millers in Lagos recently learned more about how the West African nation’s economy and consumer preferences are forcing mills to reduce costs and produce a wider range of flour products without diminishing quality.

 

State wheat commission leaders who participated in the Sub-Saharan Africa Board Team that traveled to Lagos, Nigeria, and Johannesburg and Cape Town, South Africa, included Jay Armstrong of Muscotah, Kan., a Past-Chairman of the Kansas Wheat Commission and USW director, Michael Edgar of Yuma, Ariz., and Don Schieber of Ponca City, Okla., who are both Past USW Chairmen. USW staff included Vice President of Communications Steve Mercer and Assistant Regional Director Chad Weigand. USW Marketing Consultant James Ogunyemi and Administrative Officer Olatunde Omatayo, based in Lagos, and Regional Director Gerald Theus, based in Cape Town, met the Team in Lagos.

 

Many millions of Nigerians cannot afford to spend much more than $2 on food every day, according to USDA Foreign Agricultural Service Regional Agricultural Counselor Jude Akhidenor, who briefed the Team in Lagos.

 

“We used to sell all we could produce; now we produce only what we can sell,” the general manager of a leading Nigerian flour milling company told the Team. He said consumers are looking for variety and mills are competing aggressively to respond. High-loaf bread is being eclipsed by instant noodles and pasta as staples.

 

Nigeria is one of the few global markets that has imported all six U.S. wheat classes. The changes in the market are putting pressure on Nigerian mills to cut their costs, however, leading to a growing volume of imported Black Sea region wheat because its price has been significantly lower than the U.S. hard red winter (HRW) that used to dominate Nigerian imports. Nevertheless, one leading miller in Nigeria continues to import HRW even in the face of that price difference.

 

USW 2018 Sub-Saharan Africa Team, L – R, James Ogunyemi, Chad Weigand, Oletunde Omatayo, Steve Mercer, Michael Edgar (behind), Gerald Theus, Jay Armstrong, Don Schieber.

 

The team members noted that the price of HRW and other U.S. classes is determined transparently by the market, not by farmers or the sellers and emphasized the industry’s efforts to continue improving HRW milling, baking and processing characteristics. The shift will likely continue, the millers said, even though they know by experience that HRW offers consistent performance and usually higher quality milling characteristics than Black Sea wheat.

 

“For those who like to see things stay as they are, that would be disappointing,” said Armstrong. “Markets change, however, and for those who like to adapt to new markets this could be viewed as an opportunity. To be more competitive again in Nigeria, I believe we will have to ramp up production of hard white (HW) wheat back at home. The millers we met with in Nigeria and in South Africa all made it clear the benefits of hard white wheat would outweigh cost differences.”

 

After USW introduced HW to Nigerian millers in 2008, Nigeria became the leading global importer of this wheat class.

 

Scaling up HW production in the United States to the point at which exportable supplies are consistently available will take a long, sustained effort. There are signs that the industry is moving in that direction.

 

Hard red winter wheat, however, will remain a very competitive class in the domestic market and in many other parts of the world. The U.S. supply chain is doing all it can to make HRW as competitive as possible, including opportunities to reduce export basis. This year, as exportable Russian wheat supplies decline or are blocked by government interference, Nigeria’s millers will be prepared to import more HRW.

 

From Lagos, the team travelled to Johannesburg, South Africa, and then to the capital city of Pretoria to meet the USDA/FAS agricultural team headed by recently posted Minister Counselor for Agricultural Affairs Jim Higgiston. Over lunch, he and his colleagues discussed the South African agricultural economy and unique challenges including the government policy of “expropriation” of land.

 

Income and gross domestic product are significantly higher in South Africa compared to Nigeria, but as they visited flour millers there the last two days of their trip, the Team members heard that cost is also a determining factor. In addition, the South African government sets domestic wheat prices at levels that remain consistently more competitive than U.S. No. 2 HRW prices to encourage production at home.

 

The USW Board Team at Tiger Foods headquarters in Pretoria, South Africa.

 

Three meetings with the flour milling divisions of successful South African food companies rounded out the team’s trip.

 

“It was very encouraging to hear that South Africa’s millers like U.S. wheat very much and do import more of it when prices are more competitive,” said Schieber. “And the people we met were so welcoming. One of the managers spent the last free day on our trip taking me to visit an implement dealer and a farm machinery show. I really appreciate that.”

 

Two additional highlights of the team’s South African visit were a tour of a plant where a popular, wheat breakfast food is produced and time with a very impressive South African family at their large dairy and grain farm.

 

USW and the team members want to thank all the customers they met on this trip for their candor and hospitality, and the USW staff who worked hard to make the arrangements, including Financial Accountant Cathy Marais and Regional Program Coordinator Domenique Opperman based in the USW Cape Town Regional Office.

 

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A Risky Proposition

By Steve Mercer, USW Vice President of Communications

Two recent market articles by Reuters have caught our attention here at U.S. Wheat Associates (USW).

At first glance, the Aug. 20  story “Russian Traders May Speed Up Grain Exports Amid Risks of Curbs,” and the Aug. 22 story “Global Wheat Supply to Crisis Levels; Big China Stocks Won’t Provide Relief” may not seem related. Together, however, they are another caution sign for the world’s wheat buyers.

We understand why the Russian traders would want to “speed up” exports if they could: they are afraid of export restrictions. There is plenty of proof that the Russian government is willing to curb overseas sales. Restrictions in 2007/08 helped tip the markets into a supply shock with unprecedented price increases. A complete Russian export ban in 2010 pushed prices higher and showed complete disregard for the sanctity of sales contracts. Two years later when drought again hurt the Russian crop and the government threatened an export ban, global wheat prices moved up. Then when the government imposed an export tax in 2014, the market reacted as expected.

What is quite striking to us, however, is the fact that the possibility of export restrictions has come up again in a year in which Russia has produced its third largest wheat crop.

As an unnamed industry source in the Reuters article said: “When it comes to choosing between meeting food security or curbing exports, they will be choosing (limits on) exports again and again.”

Yes, a Russian government official said, “the introduction of grain export duty is not planned so far.” But we all saw futures prices bounce up quickly when just the subject of Russian restrictions came up last week. We should not forget that prices jumped “limit up” just on an apparently false rumor that Ukraine’s government might restrict wheat exports.

Which brings up the second Reuters article that started this way:

“A scorching hot, dry summer has ended five years of plenty in many wheat producing countries and drawn down the reserves of major exporters to their lowest level since 2007/08, when low grain stocks contributed to food riots across Africa and Asia.”

A bit of hyperbole there, perhaps, and the article suggests that there are factors that could mitigate a similar supply shock. Yet, the article noted: “Experts predict that by the end of the season, the eight major exporters will be left with 20 percent of world stocks – just 26 days of cover – down from one-third a decade ago.”

“The world just continues to grow,” said USW President Vince Peterson. “If we check on it, we see that world wheat consumption has grown 100 million metric tons in just the last 10 years. And we’re now at a place that even a very good crop in Russia causes concern.”

There is an old saying that keeping all your eggs in one basket is a risky proposition. Instead, the world’s wheat buyers might consider keeping a more diversified stable of suppliers — ahead of what could be, if not yet “crisis level,” at least a steady rise in global wheat prices.

Fortunately, the U.S. government long ago learned from experience that disrupting export grain trade only brings logistical problems and potential economic catastrophe for every segment of the market, including farmers. By law the only way to block U.S. grain exports is through a presidential declaration of national emergency. Importantly, a national emergency does NOT include short-term, fundamental rises in wheat prices. Further, export taxes are expressly forbidden by the U.S. Constitution.

The U.S. wheat industry offers reassurance in the fact that our doors are open for business 365 days per year. In our collective efforts to offer and efficiently supply the widest range of the highest quality wheat in the world, we live up to our claim as the world’s most reliable supplier.

The Russian government’s past actions prove that even a hint of rising domestic food costs can spark intervention in the free flow of its wheat to an increasingly hungry world.

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A Welcome Look at Hybrid Wheat Research

By Steve Mercer, USW Vice President of Communications

Several colleagues from U.S. Wheat Associates (USW) had a great experience on May 16 on a visit to Bayer Corporation’s main North American wheat breeding laboratory and nursery near Lincoln, Neb. They had a true look at the future, one that includes a more stable supply of high quality wheat for millers and wheat food processors around the world.

Bayer has made a substantial commitment to overcoming an age-old wheat breeding challenge: to develop and commercialize hybrid wheat.

The process of producing hybrid plant seeds can be simply described. Two distinct varieties of the same plant, each with unique characteristics are cross-bred. One plant has sterile female flowers, the other produces pollen and the fertilized plant produces a new, unique offspring.

But with a complex plant like wheat with three whole genomes in each cell and often 6 copies of each gene, that process is not easy. In fact, it was described as downright complex. Some of the scientists USW met with have worked toward hybrid wheat for more than 10 years. They say the work requires collaboration with a wide range of scientific disciplines; a true team effort. And the team at Bayer certainly represent that. They are focused on the hybrid goal, their comradery is quite evident and they are very excited about the potential of the work. The team includes experienced winter and spring wheat breeders, as well as plant pathologists who are testing new varieties for resistance to diseases like Fusarium head blight, or scab. Perhaps most important for the world’s U.S. wheat buyers, this team includes wheat quality specialists who are determining if new hybrid varieties meet or exceed grade and functional milling, baking and processing standards for the wheat class. If a new line does not meet or exceed standards, it is rejected.

Bayer and other public and private breeders are working toward hybrid lines for several reasons. Hybrid wheat demonstrates a productive yield increase. This is needed by farmers, especially small holder farmers, around the world to offset the currently limited profitability of growing single line wheat varieties. It is also needed to continue meeting record setting use of wheat by a growing global population. They see much more stable production levels across a variety of growing conditions with hybrid wheat. Hybridization also allows breeders to “stack” native and non-GM traits into wheat seed more precisely and efficiently than other breeding methods.

There is much work to be done, especially to screen and refine the new lines being produced, and it will be many years before hybrid wheat seeds are fully ready for farmers’ fields. However, the USW colleagues saw why the Bayer team is so enthusiastic about their work in the field trial plots around the Nebraska facility. What was described as a “radical transformation” of the tools available to conduct this complex research is accelerating the ability to bring new wheat lines to market. Most encouraging was the company’s willingness to incorporate into their work USW’s knowledge of what overseas millers, bakers and wheat food processors need to improve the quality of and demand for their end products.

USW wants to thank not only the Bayer team for their transparency and interest in our work with the world’s wheat buyers and users, but also wheat breeders around the world, who are working day and night to improve this staple crop for an increasingly hungry world.

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Latest USDA Forecast Accounts for Increased U.S. Wheat Export Demand

By Steve Mercer, USW Vice President of Communications

USDA market analysts cited Iraq’s major purchase of hard red winter (HRW) wheat as the specific basis for a significant drop in U.S. ending stocks in the November World Agricultural Supply and Demand Estimates (WASDE) report. The report correspondingly put its total U.S. export forecast for 2017/18 up 0.7 million metric tons (MMT) to reach 27.2 MMT. This would be down 5 percent from 2016/17 but 2 percent above the 5-year average, if realized.

The ending stocks forecast continues to be the primary plot of the 2017/18 global wheat market story. The WASDE report noted that even with slightly lower supplies and higher use, ending stocks are still expected to hit a record level.

USW Market Analyst Stephanie Bryant-Erdmann, who is currently on an international assignment, shows in USW’s latest Supply and Demand Report that global ending stocks are projected to reach a record level: 268 MMT, or 5 percent higher than 2016/17, if realized. Estimated Chinese ending stocks of 127 MMT account for 48 percent of global ending stocks, which is 58 percent greater than the 5-year average.

Bryant-Erdmann provides a more nuanced analysis of global stocks by charting the current global stocks-to-use ratio with and without China’s stocks, which are not likely to move to export. She shows that the 2017/18 ratio drops about 64 percent from 36 percent to 22 percent without Chinese stocks. More significant, though, is the historical look, showing that exportable stocks are on a three-year downward trend. In fact, Bryant-Erdmann shows that exporter ending stocks are expected to fall 5 percent year over year to 74.3 MMT, and ending stocks in importing countries are forecast to fall to 66.0 MMT, 5 percent below the 5-year average of 70.5 MMT.

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Cuba’s Recovery from Another Hurricane Should be Eased by an End to the U.S. Embargo

By Steve Mercer, USW Vice President of Communications

The aftermath of Hurricane Irma is simply stunning. So many of our Caribbean neighbors are facing so much destruction, including in Cuba where the full fury of Irma raked the northern coastline as a Category 5 hurricane that killed at least 10 people and flooded central Havana.

As I read about the damage in Cuba, I could not help thinking about other hurricanes and their impact on our relationship with the island nation.

In 1998, Hurricane Lily hit Cuba hard, too, putting flour mills offline. The Kansas Wheat Commission responded with a generous offer to donate 20 MT of flour to help Cuban people in need. USW helped coordinate the donation, but it had to be made to Caritas, a CARE affiliate non-governmental organization relief organization, not directly to Cuba, because the U.S. government’s embargo prevented them from sending it directly to Cuba.

We believe that the donation did help open some hearts and minds, and the Trade Sanctions Reform Act (TSRA) of 2001 opened exports of wheat and other U.S. agricultural products to Cuba. Yet, the travel and financing restrictions that remained continued to compound the regulatory difficulties of trading with Cuba.

When another hurricane, Michelle, struck Cuba later in 2001, the U.S. government offered aid. The Cuban government refused that offer, but the gesture helped encourage Alimport, Cuba’s food buying agency, to import its first bulk load of U.S. HRW wheat. According to former USW President Alan Tracy, “Cuba’s flour millers and bakers loved that wheat.”

More and more HRW was imported until the annual volume reached almost 500,000 MT, a substantial portion of Cuba’s annual imports of about 800,000 MT.

In 2005, it was not a hurricane, but rather new regulations implemented by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) that interrupted this trade. The changes forced Cuba to obtain and present letters of credit from a third-party, foreign bank, and U.S. exporters had to receive payment only from a third-party bank, rather than through direct payment from Alimport. It was an excessive and unnecessary administrative burden that increased Cuba’s cost of buying U.S. wheat. OFAC also modified the definition of “cash in advance” that required payment before a shipment left a U.S. port rather than before the title changed hands at the shipment’s destination. This rule was unique to our exports to Cuba and removed the ability of Alimport officials to inspect U.S. origin cargo before payment.

Alimport slowed and ultimately stopped importing U.S. HRW wheat completely by marketing year 2011/12.

There was renewed hope when the Obama Administration announced its intention to renew and, eventually, re-open diplomatic relations with Cuba and ease some travel restrictions. Several organizations, including USW, formed the United States Agricultural Coalition for Cuba (USACC) to work together toward more open trade. However, the OFAC rules were never reversed and Cuba continued to import all its wheat from Canada and the EU — no doubt at higher freight rates and likely at higher relative FOB costs.

And, sadly, just hours before Irma struck Cuba, the United States officially renewed its embargo for another year, as required under TSRA.

Cuba’s proximity, as well as historical and cultural ties, should make it a natural trading partner for the United States. The U.S. wheat industry supports easing travel restrictions, permanently overturning the 2005 regulatory changes and increasing access to credit and USDA commercial loan programs. However, the larger political implications of the embargo and its negative effects will likely preclude effective competition by U.S. wheat exporters even if these other changes are implemented.

“Aside from hurting the Cuban people, the embargo has only strengthened the Castro brothers’ grip on power and stymied any change for the better,” Tracy said.

Soon after the most recent hurricane, our organization and other USACC member organizations sent a letter of support and concern to the Cuban people through Cuba’s ambassador. We wrote: “It is at these times when humanity stands together both in fear of the destructive forces of nature that impact us all, and in solidarity in the determination to help one another recover.”

In that spirit, we stand with U.S. wheat farmers to support ending the Cuban embargo entirely.

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Rail and Port Operation Recovery in Texas Gulf is Encouraging

By Steve Mercer, USW Vice President of Communications

Officials have classified it as a 1,000-year flood event, unleashed at the center of U.S. HRW wheat’s export industry. Following the catastrophic flooding from Hurricane Harvey, some ports are still closed, rail embargos remain in effect and virtually no wheat was inspected for export last week at Texas grain export elevators. Even with the human and industrial costs of the storm, the supply chain is making good progress toward bringing the system fully back on line as soon as possible.

Federal Grain Inspection Service (FGIS) reporting regions of Louisiana and North and South Texas account for account for 46 percent of total U.S. wheat exports based on the 5-year average. Texas elevators are near Galveston, Houston and Corpus Christi and account for about 56 percent of total Gulf wheat export volume. Texas wheat exports are almost all HRW, and most of the volume moves through elevators in the Galveston and Houston area, which took the brunt of the storm.

The Corpus Christi area did not experience the full force of the hurricane, so rail and elevator service will likely come back on line there first.

“Reports from the Port of Corpus Christi indicate that grain elevators are mostly operational,” said Darby Sullivan, communications director with the Texas Wheat Producers Board, Amarillo, Tex. “Last week’s closure was to ensure that ships were able to enter the port safely. This week, they estimated that the railroads are running at about 80 percent speed and capacity.”

USW has not been able to obtain much detail about elevator operations in the North Texas region, but

Sullivan said flood recovery work is still needed at some of the elevators. One elevator manager from the Houston area told her they loaded and unloaded some rail cars, but did not expect to be fully operational until late this week. At this point, the status of rail bed repairs will have the most influence on when the interruption eases.

With the safety and well-being of its employees and their families as its top priority, the Union Pacific (UP) Railroad said on Sept. 2 it is making good progress repairing lines serving the North Texas elevators. Some lines have re-opened, and the UP said even crucial east-west lines blocked by flood damage may be repaired by Sept. 7. The railroad’s report on Sept. 6 confirmed its progress on repairs. Union Pacific posts line status at https://www.up.com/customers/embargo/list/index.htm.

The BNSF Railroad also serves the Texas Gulf supply system. Its latest report to customers on Sept. 5  said “with improving conditions and aggressive efforts by our BNSF crews, rail service on most BNSF subdivisions in the Houston area and throughout southeastern Texas has been restored.”

Although the railroad said it is experiencing ongoing challenges involving the primary rail line that provides access to locations southwest of Houston, including Corpus Christi and Brownsville, it is re-routing or diverting as much traffic as possible around this affected location as well as other areas that are currently blocked. BNSF access into the Houston complex from the north and west is largely clear, the railroad said, which is important for HRW wheat moving from western Texas, Oklahoma, Kansas, Colorado and southwestern Nebraska.

Considering that Hurricane Harvey set a new, single storm rainfall record of more than 50 inches (127 centimeters), the progress toward re-opening the Texas grain ports is quite remarkable. We are glad the interruption is being managed by the supply chain participants and our overseas customers to the best of their abilities. At the same time, we are keeping the people affected by this storm in our concerns — as well as the farmers, ranchers and industry affected by the devastating fires in Montana, Oregon, Washington and many other western states.

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First Reports on HRW Damage from Late Season Snow and Freeze Events: “Just Terrible.”

By Steve Mercer, USW Vice President of Communications

Kansas Wheat CEO Justin Gilpin is not a fellow who is prone to hyperbole. So, when @jp_gilp “Tweets” to the world that “we lost the Western Kansas wheat crop,” people notice.

Blizzard conditions and up to 18 inches (45.8 cm) of heavy, wet snow came down hard on the rapidly maturing hard red winter (HRW) wheat crop in northwest Oklahoma, western Kansas, eastern Colorado and southwest Nebraska April 29 and 30. Much of that wheat looked very good before the storm. Its higher yield potential was a cautious hope for some farm profit this year, a hope now broken like the stems under the snow in so many fields.

This unusual event may have overshadowed separate freeze events April 22, 23 and 27 that affected a big portion of central Kansas as well as south central Nebraska and north central Oklahoma. Kansas Wheat said “the freezes may cause significant damage in many areas because the crop was in boot and early heading stages at the time.”

Local agronomists say it will take 10 to 14 days before the final effects of the unprecedented late-season freeze and snow events can be determined with any accuracy. The first estimate from the snow alone put loss potential at 50 million bushels or almost 1.4 million metric tons (MMT). That would be roughly equal to 5 percent of the 23.8 MMT 5-year average total U.S. HRW crop.

National Association of Wheat Growers (NAWG) President David Schemm, who farms near Sharon Springs in far western Kansas, captured what is probably on the minds of most Kansas farmers. In a Facebook Live video from one of his fields as he surveyed the damage, he said, “all we can say, thankfully, in these situations is that with crop insurance we can maybe keep our farm for another year.”

More tough blows to already strapped farmers are, as Justin Gilpin added in his striking Tweet, “Just terrible.” Perhaps some of the wheat — and all Central and Southern Plains wheat farmers — will recover from these stresses.

We can only hope.

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Mexico Stands as a Leading U.S. Wheat Buyer

By Steve Mercer, USW Vice President of Communications

U.S. Wheat Associates (USW) represents the interests of U.S. wheat farmers in international markets. The organization is grateful to all its overseas wheat buyers, flour millers and wheat food processors for their strong preference for U.S. wheat and for their friendship. At a time when new circumstances have generated some uncertainty about trade, USW believes it is important to provide perspective on the long-standing, loyal relationship U.S. wheat farmers have with one of those customers: our neighbor to the south, Mexico.

Simply put, Mexico is one of the largest U.S. wheat buyers in the world, importing just under 3.0 million metric tons (MMT) on average going back many years. Mexico’s U.S. wheat imports typically only fall just short of the volume Japan imports. Not this year, however. In the first 7 months of marketing year 2016/17 through Feb. 2, Mexico’s flour millers have imported 2.4 MMT of U.S. wheat, which is more than any other country. That volume is up 5 percent over last year at the same time.

Breaking down their purchases by class, flour millers in Mexico generate strong demand for U.S. hard red winter (HRW) wheat. In 2015/16, they were the leading HRW importers and are taking advantage of the favorable prices and high quality of the 2016/17 HRW crop. At a current volume of about 1.4 MMT, they have imported 71 percent more HRW this year and again lead buyers of that class. A rising number of industrial bakeries, along with traditional artisanal bakeries, account for about 70 percent of wheat consumption according to CANIMOLT, the association representing Mexican millers. That puts HRW producers in a good position to meet that demand. Being closer to HRW production and having a highly functioning ability to import a large share of HRW directly via rail from the Plains states is an advantage for Mexico’s buyers.

In addition, Mexico is home to Bimbo, the world’s largest baked goods company, and an increasing number of cookie and cracker companies. The low protein content, soft endosperm and weaker gluten of U.S. soft red winter wheat (SRW) is well suited to the production of cookies, crackers and pastries, and serves as an excellent blending wheat. Millers supplying this growing market imported an average of 1.2 MMT of SRW between 2011/12 and 2015/16. With imports from the Gulf of more than 730,000 MT of SRW so far in 2016/17, Mexico is the top buyer of SRW again. USW and state wheat commissions from the PNW are also helping demonstrate how millers and bakers can reduce input costs by blending with U.S. soft white (SW).

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

Yet our customers there have many other sources of milling wheat to which they can turn. In response to rising world grain prices in 2008, Mexico lifted a 67 percent import tariff on wheat from outside the United States and Canada. In 2009/10, France made the first non-NAFTA origin wheat sale to Mexico since the trade agreement was implemented in 1995. Russian and Ukrainian wheat has been imported, too. To date, the tariff has not been reapplied and the Mexican import market is currently tariff-free for wheat from all qualified origins. Just this week, the leaders of Brazil and Argentina, both large grain exporting nations, said they would pursue closer ties with Mexico and other Latin American nations.

Looking ahead, NAFTA will likely be renegotiated. USW and wheat farmers understand that there are a number of elements of the trade agreement that need to be re-examined and modernized. The successful story of how U.S. wheat farmers and their customers in Mexico have worked together in a mutually beneficial way must be shared as part of the effort to update NAFTA. For now, U.S. wheat continues to flow to our customers in Mexico. During upcoming trade negotiations and beyond the eventual outcomes, wheat farmers, through USW, will continue to help and support the buyers from Mexico, as they would help and support their own neighbors.

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