Export opportunities expanding for U.S. wheat
By Jennifer M. Latzke
The sun never sets on export opportunities for U.S. wheat.
That’s the message Shannon Schlecht, U.S. Wheat Associates vice president of policy, shared at the 2014 Kansas Commodity Classic, Feb. 13, in Manhattan, Kan. With growing demand outside of the United States for wheat—about 95 percent of consumers of wheat are found outside of our borders—the U.S. wheat farmer is uniquely positioned to meet that demand, Schlect said.
“As we look at world population growth, we are expected to reach 9 billion by 2050, we see that most of that growth is in non-wheat producing regions like Africa, Asia, Latin America,” Schlecht said. “That provides a lot of opportunities for U.S. wheat exports to move into those markets. We must be in front of our customers. There is static demand here in the U.S. Most of the growth in population and income will come from outside our borders.” As those diets change, the demand for quality U.S. wheat will rise and now is the time for U.S. farmers to lead the way, he added.
But one opportunity in particular has recently opened up that is surprising to U.S. Wheat—Brazil.
Year in and year out Brazil is the No. 3 importer of wheat on the world market. However, in the last few years Brazil has looked outside of the Mercosur to fill its growing wheat demand. In particular, Brazilians have looked to the United States.
Brazil is on track to be the top importer of U.S. hard red winter wheat this year, at about 3.5 million metric tons. Schlect said a short crop in Argentina coupled with policy and export tax changes the country has placed upon its wheat farmers have had Brazil looking outside of the Mercosur states for wheat. And, while Uruguay and Paraguay are working to fill the gap, there is still a lot of wheat sales to pick up and U.S. wheat is there.
“Brazil exempted the $1 per bushel tariff on U.S. wheat and that makes us comparable to Mercosur countries,” Schlecht said. “We are optimistic that will continue for 2014 and we are pushing for that to continue for non-Mercosur countries to provide more consistent opportunities for the U.S. to move into that market and provide a more level playing field for U.S. wheat in that market.” This new market is adding a value of about $136 million to the U.S. wheat crop.
“This is the first year that Brazil millers are grinding U.S. wheat in January,” he said. “That’s exciting because they don’t have that new crop from Argentina. They are still buying and milling U.S. wheat at this time. They typically purchase our wheat in the summer when we are most competitive and they are at the end of their season.”
Latin America is providing some exciting export opportunities with growth in recent years. About one-third of all U.S. wheat exports go to countries in the western hemisphere, because buyers find value and quality are competitive against Canadian wheat. Colombia is another country where U.S. wheat popularity is returning.
At one point Colombia was the largest market in South America for U.S. wheat, Schlecht explained. Then, when the U.S. delayed in signing a free trade agreement that would take away a 10 percent tariff on wheat imports, Canada came in with its own agreement. That made Canadian wheat attractive to buyers, Schlect said. Finally the U.S. approved the FTA with Colombia and has been trying to regain market share ever since.
Saudi Arabia is another example of U.S. Wheat striking when the iron is hot. Schlecht said the country decided about six or seven years ago to change policy to conserve their groundwater and phase out domestic wheat production. “They typically produced a higher protein hard red winter, 12 to 12.5 percent protein,” he said. That opens up a market for hard red winter wheat from Kansas in particular.
As more countries reconsider their agricultural production methods and their natural resources, coupled with rising demand from their citizens for wheat products, Schlecht said they will be looking outside of their borders to import quality wheat at competitive prices. And, the U.S. farmer will be there.
It all starts with the checkoff dollars from producers, he said. Those dollars are leveraged with federal funds to put U.S. Wheat in front of buyers around the world.
“We just have to thank the producers for the farm bill that they worked to put into place,” he said. “And, their forward looking visions to improve their opportunities for wheat sales. Not just from the Kansas Wheat Commission but also the other 18 commissions that send us around the world.”
Jennifer M. Latzke can be reached at 620-227-1807 or email@example.com.