Ag groups celebrate U.S.-Colombia Free Trade Agreement
Wheat buyers and millers from Colombia were honored at a dinner that recognized the ratification of the U.S.-Colombia Free Trade Agreement in May. The guests were members of a Colombian Wheat Trade Mission to Kansas, sponsored by the Kansas Wheat Commission, U.S. Wheat Associates and the USDA's Foreign Agricultural Service.
Representatives from the Kansas Wheat Commission, Kansas Department of Agriculture, the Kansas Grain and Feed Association and Kansas Farm Bureau, and the offices of Second District Congresswoman Lynn Jenkins and First District Congressman Tim Huelskamp were present.
The U.S.-Colombia Free Trade Agreement eliminates all tariffs on U.S. wheat imports into Colombia so Colombian millers can purchase the high quality U.S. wheat they prefer at more competitive market prices. Just 15 years ago, U.S. supplied nearly 90 percent of Colombia's wheat needs, which were used in cookies, crackers, pasta and bread. In 2006, Colombia signed the MERCOSUR agreement, which eliminated tariffs on wheat the country imported from Argentina; a similar agreement was signed with Canada in 2011.
"These agreements made it much more practical to buy wheat from those two countries," says Hernan Garzon, vice president of the biscuits unit from Colombia, one of the country's largest milling companies. "As a result, just 9 percent of our wheat purchases came from the U.S. last year."
In the last few years, Colombian millers have learned how to use wheat sourced from other countries. This is important, as the quality and consistency of wheat varies depending upon where it is grown. For years, the U.S. Wheat Associates has provided expert technical assistance to buyers, explaining how to use U.S.-sourced wheat in various baking blends. In the last few years, these buyers have learned how to use wheat from Canada and Argentina in a similar fashion. Garzon says it will take a tremendous effort to re-educate Colombian millers on how to use U.S. wheat classes once again.
Still, the advantages to using U.S. wheat are many, he adds. U.S. wheat is shipped from the Gulf of Mexico, which reduces shipping cost. Plus, wheat sourced from the U.S. spends only five days in transit, while Canadian wheat takes much longer to ship. Also, the U.S. can supply consistent, high-quality supplies of all six classes of wheat, easily meeting the needs of Colombian millers and bakers.
"Market share for U.S. wheat will grow. In my opinion, American wheat will have 50 percent of the general market in Colombia," Garzon says.
Wheat imports and consumption are steadily rising in Colombia, where total wheat consumption was 1.40 million metric tons in 2011. Overall, Colombia still has lower per capita bread, pasta and cookie consumption compared to its South American neighbors, signifying room for market growth. However, Garzon says the country's milling companies must pay close attention to wheat quality, and need consistent supplies of high-quality wheat," he said.
In presenting a plaque to the Colombian group, Rich Randall, chairman of the Kansas Wheat Commission, said the U.S-Colombia Free Trade Agreement, which was ratified on May 15, signifies the next major step in a growing relationship between the two countries.