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New U.S. Food Consumer Research Offers Insight for Wheat Importers and Processors

In 2015, The Center for Food Integrity (CFI) shared the results of ongoing research showing U.S. consumers want more and more information about their food and primarily expect food companies to provide it. Those U.S. consumers surveyed also look to farmers for information about food.

CFI’s research shows being more transparent about food commodities and products builds consumer trust as well as a greater understanding of the challenges and opportunities facing the U.S. food system.

USW is sharing this information because in a broader sense, U.S. research can give the world’s commercial flour millers and wheat food manufacturers information about how consumer attitudes may evolve in their countries.

CFI took its 2016 research to a new level with an innovative methodology called digital ethnography. Charlie Arnot, CFI’s chief executive officer, said in a release that the new research offers much deeper insights into distinct groups whose actions about where they buy food, or how they form opinions about products, processes, people and brands, influence the decisions of others.

This emerging influence is why more U.S. consumers are flocking toward the things about today’s food that they believe is more sophisticated and represents “progressive” production, CFI noted. Arnot said this is seen in increased demand for food that is less processed, with simple labels that describe what is in, and what is not in, the products. USW see a relevant example for the world’s millers and bakers in the sponge and dough bread production method, using only flour, yeast and water, compared to “no-time” bread production that requires more additives and conditioners. Innovations in plant breeding may also be a resource for consumer questions.

“Understanding consumer attitudes toward food and how those attitudes influence the conversation allows food companies to more effectively talk with consumers,” said Leigh Horner, vice president, communications at The Hershey Company. “Consumers want to feel good about the products they buy for themselves and their families and want easy access to balanced, useful information to know they are making the right choices. These insights will help food companies build trust … and engage in meaningful conversations about the food their customers buy.”

The Center for Food Integrity is a not-for-profit organization that helps today’s food system earn consumer trust. Our members and project partners, who represent the diversity of the food system, are committed to providing accurate information and working together to address important issues in food and agriculture. The Center does not lobby or advocate for individual companies or brands. For more information, visit www.foodintegrity.org.

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World Wheat Supply and Demand Situation and Outlook

By Stephanie Bryant-Erdmann, USW Market Analyst

The USDA pegged 2016/17 world wheat production at 753 MMT (27.6 billion bushels), up 2 percent from 735 MMT (27.0 billion bushels) in 2015/16 and 6 percent above the 5-year average. If realized, it would be the fourth consecutive year of record wheat world production. USDA projects production will increase in seven of the eight major exporting countries. The only exporter with decreased production is the European Union.

Record-large world carry-in stocks add to the global surplus, resulting in the largest estimated world wheat supply on record. USDA estimates 2016/17 world carry-in stocks at 240 MMT (8.84 billion bushels), up 11 percent from last year and greater than the 5-year average of 197 MMT (7.25 billion bushels). Total world supply will reach a projected 993 MMT (36.5 billion bushels), up 40.4 MMT from the record set in 2015/16. The ample world supply will help meet strong global wheat demand.

USDA expects total consumption will increase for the fourth consecutive year and reach a record 740 MMT (27.2 billion bushels), compared to 712 MMT (26.2 billion bushels) in 2015/16. Feed wheat use is predicted to grow an estimated 6 percent to a record high 147 MMT (5.42 billion bushels) due to increased global supplies of feed wheat after rain increased yield in nearly every producing region (with western Europe a notable exception) but hurt quality.

USDA expects 2016/17 world wheat trade to grow to a record large 178 MMT (6.54 billion bushels). If realized, it would be 11 percent greater than the 5-year average of 160 MMT (5.86 billion bushels).  USDA expects world carry-out stocks to increase 12.8 MMT (470 million bushels) year over year to 253 MMT (9.31 billion bushels), 23 percent greater than the 5-year average of 206 MMT (7.56 billion bushels).

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Outlook for 2017/18 U.S. Winter Wheat Plantings

By Stephanie Bryant-Erdmann, USW Market Analyst

U.S. farmers made critical decisions last fall while they had bins full of wheat from record-breaking yields with prices near ten-year lows. Therefore, it is no surprise that many farmers chose to decrease their winter wheat planted area. USDA’s 2017/18 winter wheat seeding report released Jan. 12 reported U.S. farmers planted the second lowest number of winter whea­­t acres on record and 10 percent fewer acres than 2016/17. USDA estimated U.S. farmers planted 32.4 million acres (13.1 million hectares) of winter wheat with reductions for all three classes of winter wheat — HRW, soft red winter (SRW) and white winter wheat.

USDA assessed HRW planted area at 23.3 million acres (9.43 million hectares), down 12 percent from 2016. Planted area in Kansas, the number one U.S. HRW-producing state at 7.40 million acres (3.00 million hectares), is down 13 percent from 2016 and 20 percent below the 5-year average. Nebraska farmers planted a new record low area to winter ­­wheat of just 1.09 million acres (441,000 hectares), 25 percent below the 5-year average.

Total SRW planted area of 5.68 million acres (2.30 million hectares) fell 6 percent from 2016. Increases in Delaware, Georgia, Kentucky, Maryland, North Carolina and South Carolina were not enough to offset decreases in most of the other SRW-producing states, including a 16 percent decline in Ohio, the number one producer of U.S. SRW in 2016/17. USDA believes Ohio farmers planted 490,000 acres (198,000 hectares) of SRW, 15 percent below the 5-year average.

White winter wheat planted area decreased to 3.37 million acres (1.36 million hectares), down 4 percent from 2016/17. Exportable soft white wheat supplies are concentrated in Idaho, Oregon and Washington. Planted area in Idaho and Oregon fell 4 percent and 3 percent, respectively. Idaho farmers planted 730,000 acres (295,000 hectares) compared to 760,000 acres (308,000 hectares) in 2015/16 and 2016/17. Planted area in Oregon dropped 20,000 acres (8,000 hectares) from 2016/17 to 700,000 acres (283,000 hectares), while planted area in Washington remained stable year over year at 1.70 million acres (688,000 hectares).

Durum planting in the Southwestern United States is estimated at 140,000 acres (56,700 hectares), down 8 percent from 2016/17 and 38 percent below 2015/16. According to USDA, planting is well underway in Arizona at 22 percent complete, up 8 percentage points from the same date last year. Delays from wet conditions are slowing progress in California. Arizona and California plant durum from December through January for harvest in May through July.

With the decrease in planted area in the United States, customers should pay close attention to weather maps and consider purchasing farther out to protect themselves from supply shocks.

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Trade Policy and Wheat in the Obama Administration

By Ben Conner, USW Director of Policy

Next week, the United States will hold its quadrennial pageantry to mark the beginning of a new presidential term. Since term limits prevented President Obama from running again, his administration will come to an end.

The wheat industry has not always seen eye to eye on every issue with the Obama Administration, but on trade policy there has been a great deal of common ground. As the Obama years draw to a close, it is worth reflecting on the trade policy accomplishments of this Administration.

The first major trade policy accomplishment of interest to wheat was finishing the agreements with Colombia, Panama and South Korea that were negotiated during the George W. Bush Administration, which were passed by Congress and signed into law in 2011. Tariffs for wheat went to zero as soon as the agreements entered into force. This is especially important as some of U.S. wheat’s major competitors in Australia and Canada were also negotiating FTAs with these countries.

After these agreements were finished, the focus shifted to negotiating the two largest free trade areas in terms of GDP ever attempted — the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). These agreements are full of complexity due to the scope and the number of economies involved. TPP negotiations were completed in 2015 but have not been ratified by Congress. Its future is highly uncertain in the next Administration. TTIP has much further to go, but its delay has much to do with political dynamics in the European Union. Regardless of the ultimate outcome of these agreements, the Obama Administration can rightfully be proud of its ambitious free trade agenda.

One of the most high profile initiatives affecting wheat was the Administration’s reestablishment of diplomatic relations with Cuba and accompanying efforts to reduce the regulatory burdens around trade with that market. Cuba imports no U.S. wheat today, but could be a top 10 market with the end of the trade embargo. Unfortunately, the embargo is still in place and no U.S. wheat has been sold, but these actions to improve relations with Cuba were important first steps.

A major but often overlooked accomplishment is that this Administration finally put the brakes on the World Trade Organization’s (WTO) Doha agenda, which had long since stopped being a serious avenue for opening trade. There are some countries that will still insist that Doha needs to continue, but any real prospect of reviving those negotiations ended with the 2015 Nairobi Agreement. Another accomplishment of that agreement was a phased out end to export subsidies — historically a major source of distortion in global wheat trade.

Finally, there are the WTO cases launched against China’s excessive subsidies and its opaque tariff rate quota (TRQ) administration for wheat imports. These are two of the most significant trade cases ever taken on behalf of U.S. farmers (and, of course, Chinese consumers). USW is proud to have played a major role in getting those cases going and congratulates the Administration for filing them. The incoming Administration has pointed to trade agreement enforcement as one of its priorities, so we have every reason to believe these cases will be pressed to their conclusions.

These are the trade policy accomplishments that grab the headlines. There have been dozens of other actions taken on behalf of U.S. wheat farmers that facilitate sales, keep markets open and improve the global trading system. As the Obama Administration leaves and the Trump Administration begins, the wheat industry can be grateful that the exceptionally competent top career staff at the U.S. Department of Agriculture and U.S. Trade Representative will still be in their jobs on Jan. 21, continuing their efforts on behalf of U.S. agriculture.

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Wheat Exports Rebounding: Even More Impressive on Value

By Stephanie Bryant-Erdmann, USW Market Analyst

2016 ended on a high note for U.S. wheat exports, which posted the largest volume of sales in the fourth quarter since 2010. From October through December, the United States exported 6.5 million metric tons (MMT) of wheat, 48 percent above last year’s sales and 28 percent greater than the 5-year average. The strong export sales pace pushed total U.S. wheat exports to 20.9 MMT through Dec. 29, 7 percent ahead of the 5-year average and greater than total 2015/16 sales of 20.7 MMT.

Hard red winter (HRW) and hard red spring (HRS) are leading the charge. Year-to-date, HRW sales of 8.43 MMT are 24 percent ahead of the 5-year average and already greater than both 2015/16 and 2014/15 total sales. U.S. HRS sales are also 31 percent ahead of the 5-year average at 6.78 MMT and just shy of last year’s total 2015/16 sales of 6.91 MMT. These sales allowed the United States to regain the title of the largest single-country exporter in volume and value in a calendar year from Canada. According to USDA export sales data, U.S. wheat exports totaled 25.9 MMT, up 27 percent from CY 2015.

In CY 2015, Canada exported roughly 2.3 MMT more wheat than the United States and Russia, which nearly tied with a difference of less than 30,000 MT between them, based on Global Trade Atlas (GTA) data. The extra tonnage boosted the value of Canadian wheat exports to $6.23 billion compared to the U.S. wheat export value of $5.62 billion and the Russian value of $3.95 billion. In other words, despite the United States and Russia being virtually tied for the number two spot by tonnage in CY 2015, U.S. wheat exports earned 42 percent more dollars.

This year, the value comparison is even more interesting. GTA data shows U.S. wheat exports back on top from January to November with a value of $4.88 billion. For the same time period, GTA estimates Canadian wheat export value at $4.13 billion and Russian wheat export value at $3.32 billion.

While industry reports tend to focus on tonnage for grains, reports concerning other crops often refer to value of exports. While volume of exports reflects the drawdown of available stocks and infrastructure utilization, the value of exports reflects the relative financial return to the various exporting country economies as well as to producers and grain handlers.  International Grains Council (IGC) data shows the export price of Canadian 13.5 percent protein (on a 13.5 percent moisture basis) spring wheat at Vancouver averaged $218/MT ($5.93/bu) in 2016, and Russian milling wheat averaged $179/MT ($4.87/bu). By comparison, U.S. hard red spring (HRS) 13.0 percent protein (on a 12.0 percent moisture basis) at the Pacific Northwest averaged $232/MT ($6.31/bu) in 2016.

With many of the world’s largest exporters producing record-large crops with lower than normal protein content this year, buyers around the world are looking for high-quality, higher protein wheat. As the fourth quarter sales show, the U.S. wheat store continues to supply customers with the wheat they need. Customers around the world see the value of U.S. wheat versus its competitors and rely on it to provide consistent high quality flour to their own customer demand.

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Premiums Rise as Supplies of High Protein Wheat Fall

By Stephanie Bryant-Erdmann, USW Market Analyst

As the Dec. 9 World Agricultural Supply and Demand Estimate (WASDE) confirms, global wheat supplies are at a record high this year. USDA increased its estimate for 2016/17 global wheat production to 751 million metric tons (MMT), up 2 percent from 2015/16 and 6 percent above the 5-year average. USDA now forecasts Australian wheat production to reach a record 33.0 million metric tons (MMT), up 35 percent year over year, if realized.

Higher yields tend to be associated with lower protein. As discussed in the Nov. 3 Wheat Letter, quality test results from Stratégie Grains, UkrAgroConsult, Canadian Grain Commission and other international agricultural groups show lower-than-average protein in the supplies from wheat-exporting countries.

Lower average protein content is problematic for many end-users. According to work done by Shawn Campbell, USW Deputy Director, West Coast Office, nearly all of the world’s high protein wheat exports (13 percent protein on a 12 percent moisture basis or higher) originate from just six countries: Australia; Canada; Kazakhstan; Russia; Ukraine; and the United States. High protein wheat production in these countries accounts for an average one-fifth of their total production in a normal year.

High protein wheat supply and demand factors are driving the growing premium between the Minneapolis Grain Exchange (MGEX), which trades hard red spring (HRS), and the Chicago Board of Trade (CBOT) and Kansas City Board of Trade (KCBT), which trade soft red winter (SRW) and hard red winter (HRW), respectively. Last December the intermarket spread between MGEX and KCBT averaged 36 cents. Fast forward to this December, and the MGEX to KCBT spread averages $1.47.

If the same high-yield, lower-than-average protein correlation also plays out in Australia, there will be little help from that corner for buyers searching for high protein wheat, further supporting the MGEX to KCBT and MGEX to CBOT spreads.

The demand for higher protein wheat also supports HRW protein spreads, which have widened significantly this year at both Gulf and Pacific Northwest (PNW) ports. Over the past 15 years, the average premium for 12 percent protein (12 percent moisture) at the Gulf has been 12 cents per bushel. This year that premium is 46 cents per bushel. The 15-year average premium for 12 percent protein HRW at the PNW is $1.05 per bushel. Since the beginning of the 2016/17 marketing year on June 1, that average premium is $1.64 per bushel.

Despite the increasing premiums for higher protein HRW and HRS, U.S. HRW exports are 25 percent ahead of the 5-year average and U.S. HRS exports are 29 percent ahead of the 5-year average. While the average protein content of HRW exports this year is down from last year due to increased demand for all HRW, 12 percent protein shipments account for 31 percent of all HRW shipments to date, up from 27 percent last year. The brisk pace of HRW and HRS exports and anecdotal reports from traders indicate buyers are breaking from the hand-to-mouth buying pattern that has been prevalent this past year to secure supplies of higher protein wheat. Forward contracting for high protein needs now makes sense.

When evaluating competing prices of high protein wheat, buyers should be sure to convert protein values quoted to a common moisture basis. Because water can be readily removed (by drying) or added (by tempering), exporters quote protein using a fixed moisture basis, but they do not all use the same basis. The United States specifies protein on a 12 percent moisture basis. The European Union and the Black Sea region typically use a dry-matter (0 percent) moisture basis. Australia uses an 11 percent moisture basis and Canada uses a 13.5 percent moisture basis. Below is an example of how moisture basis impacts actual protein received, and the conversion equation.

Please call your local USW representative if you have any questions about the U.S. wheat marketing system, U.S. wheat supply or moisture basis calculations.

Country Moisture basis used Example: 13% Protein Protein Converted to

Dry-Matter Basis
Australia 11.0 13.0 14.6
Black Sea 0.0 13.0 13.0
Canada 13.5 13.0 15.0
European Union 0.0 13.0 13.0
United States 12.0 13.0 14.8

Equation to calculate protein content based on different moisture basis:

Example: You have a sample of wheat with 10 percent protein on a 13 percent moisture basis (mb) and want to convert to 12 percent mb.

Equation:    Protein1/(100-mb1) = Protein2/(100-mb2)

10/(100-13) = Protein2/(100-12)

10/87=Protein2/88

Protein2= (88*10)/87 = 10.1%

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Panic is Not a Good Strategy When Considering Future Trade Policies

By Ben Conner, USW Deputy Director of Policy

On Nov. 8, 2016, American voters shocked the world and themselves by electing Donald J. Trump to be the 45th President of the United States. To those who trade goods and services across the U.S. border, including wheat buyers, this may be cause for some alarm because of statements made by the President-elect over the past year.

This is, however, no time to panic. The U.S. wheat store will remain open. The President-elect has yet to enact a single policy, and campaign rhetoric always seems to have a way of adjusting to reality, particularly after a year where rhetorical flourishes played such an outsized role on the campaign trail.

And here is the reality. Much of the U.S. economy depends on a rules-based trading system, including free trade agreements (FTAs) and the World Trade Organization (WTO) agreements. All those agreements have provisions to prevent a country from giving special privileges to their producers.

The reason for that is simple enough: special privileges backfire because other countries impose their own special privileges in response. Sets of rules that create a level playing field, such as a trade agreements, allow people in each country to buy and sell without interference based on their own skills and preferences.

The network of trade agreements to which the United States is party — including NAFTA, CAFTA, the six Trans-Pacific Partnership (TPP) member countries that have existing FTAs with the United States, and the WTO — is integral to the function of the U.S. economy, because so many jobs are in whole or part dependent on international trade.

Wheat is the most export dependent grain grown in the United States and our overseas customers rely on its quality, consistency and reliability of supply. New and existing trade agreements are major contributors to the profitability of U.S. wheat farmers and their customers.

It is difficult to appreciate the scale of that dependence and the ramifications of threats to pull out of agreements or impose WTO-inconsistent punitive tariffs should any of those actually occur. However, it is interesting to see the path one formerly protectionist president took toward more open trade. President William McKinley, once one of this country’s most ardent protectionists, told a crowd shortly before his death: “Commercial wars are unprofitable. A policy of goodwill and friendly trade relations will prevent reprisals. Reciprocity treaties are in harmony with the spirit of the times; measures of retaliation are not.”

It will never be too late for President-elect Trump to come to this same conclusion. Despite his disappointing promise to pull out of the TPP, he is already advocating new bilateral trade agreements (it is worth noting that TPP is essentially a collection of bilateral agreements with some shared language).

Fundamentally altering the interests of the U.S. economic and political systems is much easier said than done. So if you are worried about the continued commitment of the United States to the global trading system, cheer up: the campaign is behind us. The work of governing comes next.

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USW Submits Annual Report on Trade Barriers to U.S. Trade Representative

By Elizabeth Westendorf, USW Policy Specialist

Every year, the U.S. Congress requires the Office of the U.S. Trade Representative (USTR) to submit a comprehensive report detailing the trade barriers and policy challenges facing exported U.S. goods and services. The annual National Trade Estimate (NTE), which came in at more than 450 pages last year, takes months of collaborative work to pull together. That is why each year, USTR asks industry stakeholders to provide input on their key trade barriers. Last week, USW submitted comments on the NTE to USTR.

Many of the trade challenges our industry faces are ongoing, unresolved issues. One topic that has been part of USW’s NTE submissions for several years is that of China’s domestic wheat subsidies. USW has shared the results of its investigation of this issue, including through the NTE, to USTR and that work finally came to fruition when the United States government announced it was taking a World Trade Organization (WTO) case against China. In its 2016 submission, USW specifically stated that it “strongly supports the dispute launched by USTR against China’s market price support programs on Sept. 13, 2016. The action is the most significant taken by the U.S. government to date in addressing the imbalances caused by subsidies that violate WTO commitments.”

In the report, USW also identified policy barriers in four broad issue areas: market access; domestic subsidies; export subsidies; and sanitary and phytosanitary (SPS) barriers. Regarding SPS barriers, USW focuses on policies that attempt to protect domestic producers from imported competition without scientifically justified reasons. Consistent USW submissions to the NTE have also facilitated U.S. government activities related to market access efforts in Canada, Brazil and Morocco. USW submitted additional comments on the EU, India, Japan, Kenya, South Korea, Mexico, Taiwan and Turkey.

The NTE submission provides a good overview of the key issues that USW’s policy team works on every year. Submitting our NTE comments annually allows us to assess global progress on these barriers and bring up any new issues we face. It also gives USTR up-to-date information on ongoing problems.

With the national rhetoric on trade turning more and more protectionist, it is important to remember that trade agreements work for American agriculture and its overseas customers, especially when they are enforced. The NTE serves a vital purpose to the enforcement function of the U.S. trade agenda. It is important that all countries play by the rules, and the USTR NTE is one important way to hold other countries accountable. USW is grateful for the continued efforts of the U.S. government on these issues.

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U.S. Industry Stays Engaged in Food Aid, Development Conversation

By Elizabeth Westendorf, USW Policy Specialist

This year, for the first time, USDA and USAID held their International Food Assistance and Food Security Conference in conjunction with the 2016 World Food Prize event in Des Moines, IA, the week of Oct. 10. The two-day event brought together people from commodity organizations, NGOs, government and academic institutions to discuss future food aid and development programming and opportunities for improvement. Representatives from USW, the National Association of Wheat Growers (NAWG) and from wheat commissions in Oklahoma, Nebraska and South Dakota attended the conference and hosted an exhibit detailing the importance of wheat to food aid and food security.

As part of the conference program, two representatives from the Jordanian government talked about their important work with wheat monetization through USDA’s Food for Progress program. Monetization is a process that funds development projects with the sale of donated U.S. commodities. The proceeds from a 2012 wheat monetization program went to Jordan’s Al-Karak Dam project, which is nearing completion. The proceeds from a second wheat monetization in 2015 were split between 10 different projects that focus on water conservation amid the country’s rising refugee populations.

Conferences like this one allow USW to connect with implementers of food aid programs and discuss how best to improve communication and commodity use efficiency. Wheat makes up, on average, 40 percent of all in-kind U.S. food aid. In marketing year 2015/16, 710,100 MT of wheat were exported for donation in food aid programs, including 410,000 MT to Ethiopia alone to help prevent famine during a historic drought. That is why U.S. wheat farmers and the organizations that represent them remain dedicated to ensuring that these programs work well and continue to be a focus for the U.S. government.

The USDA-USAID conference preceded the annual World Food Prize event that honors individuals improving the quality, quantity or availability of food in the world. This year’s prize went to four scientists for their work in biofortification — Dr. Maria Andrade, Dr. Robert Mwanga, Dr. Jan Low, and Dr. Howarth Bouis. Biofortification is the use of breeding to increase the critical vitamin and micronutrient content in staple crops. The busy week included the annual Borlaug Dialogue International Symposium in which 1,200 leaders in global food security discussed biofortification, the role of women in economic development, and the importance of food security to national security, among other topics.

Both the USDA-USAID conference and the Borlaug Dialogue featured trade prominently. USDA Foreign Agricultural Service Administrator Phil Karsting spoke at the USDA-USAID conference, where he argued that stakeholders who care about human rights and development should also care about Trans-Pacific Partnership (TPP) and enhancing free trade. U.S. Secretary of Agriculture Tom Vilsack spoke at the Borlaug Dialogue and focused on the importance of trade, and TPP specifically, to food security.

USW extends its sincerest congratulations to this year’s World Food Prize Laureates and its thanks to USDA and USAID for holding the Food Assistance and Food Security Conference. We appreciate the opportunity to participate in both of these important events because wheat is so vital to food security around the world. As Dr. Norman Borlaug, wheat scientist, Nobel Peace Prize Laureate, and World Food Prize founder, said, “If you desire peace, cultivate justice, but at the same time cultivate the fields to produce more bread; otherwise there will be no peace.”

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WTO Negotiations Facing New Realities

By USW Deputy Director of Policy Ben Conner

After attending a series of World Trade Organization (WTO) meetings in Geneva in September, it appears to me that member representatives are at the intersection of two trends influencing agricultural trade negotiations.

First, there is growing recognition that the Doha Round approach to future trade negotiations is not viable , so some countries are casting about for new approaches, while others are digging into seemingly unworkable positions. Second, more countries understand that the policy environment has shifted dramatically since the Doha Round started in the early 2000s. Many now see that the vast majority of trade distortions in agriculture now come from developing country policies.

This second point was felt like an earthquake in Geneva when the United States initiated a first-of-its-kind dispute against China’s price supports for wheat, corn and rice. U.S. industry and government officials had been talking about the problem of advanced developing country farm subsidies for years, but it was easy to ignore as long as no one thought anything would be done. What is hard to ignore now is this: one Chinese program covering three crops provides more than $100 billion in support, which is greater than the GDPs of more than 100 WTO member countries.

Negotiators are still digesting the potential impact of that case, but everyone should know that this is not simply symbolism meant to bolster the prospects of trade agreements like the Trans-Pacific Partnership (TPP). This reflects the serious problem of developing country subsidies that must be addressed. Any new negotiations need to be based on reality, particularly this reality. We at USW believe that developing country subsidies are by far causing the greatest distortions in world wheat trade today.

Outdated frameworks, in which the least ambitious participant dominated, have bogged down negotiators for years. Now, many countries are approaching the negotiations with fresh eyes, ready to tackle specific topics and go beyond the old multilateral model.

However, that is not to say that an agricultural outcome will have the effect of opening trade in wheat. In fact, the last two agriculture agreements actually had the opposite effect.

At the Bali ministerial meeting in 2013 and the Nairobi meeting in 2015, the agricultural agreements reversed some of the progress made by the WTO Agriculture Agreement. In Bali, India and other countries negotiated language, that masquerades trade-distorting price supports as food security programs. At Nairobi, WTO members notably agreed to eliminate all export subsidies but, at the same time, granted an eight-year, unlimited exemption for certain export subsidies commonly used by developing countries in violation of the original WTO Agriculture Agreement.

The next ministerial meeting will be in Buenos Aires in 2017. There, trade ministers will be under pressure to deliver something on agriculture. Again, certain advanced developing countries will try to reverse the progress already been made on trade liberalization and protect current trade-distorting programs.

The United States has clearly sent a strong signal with the China case that not following the existing rules will no longer be ignored. The top priority in Buenos Aires should be preventing further erosion of the trade liberalizing provisions of the WTO Agriculture Agreement, even if that means no new agreement on agriculture.

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