By Doug Ohlemeier
Kansas wheat Commission
Better-informed international buyers make for better and more reliable customers.
That is what John Oades, director of U.S. wheat Associates' West Coast office, told a group of wheat buyers attending a recent Kansas State University International Grains Program short course. This two-week grain buying course is held yearly. It is co--sponsored by the Kansas wheat Commission.
"The better our customer base understands how the rather complicated U.S. free enterprise system works, the more likely you, as individual buyers, will be able to make it work, and the better grain exporters and producers will be to supply your needs," Oades told the attendees.
Oades is often asked to give this talk to IGP short courses. The recent short course attracted participants from around the world, including Mexico, Guatemala, Egypt, Tunisia, Sri Lanka, Pakistan, Malaysia, Singapore, Indonesia and Vietnam. His talk is entitled, "Purchase Quality Specifications: Getting the wheat Quality You Want." Oades told the group the title should be changed to: "Getting the wheat Quality You Want and Are Willing to Pay For."
"The export sales business is one of competition. You, as a buyer, decide whom to invite to this competition. If you have a close working relationship with one company that is supplying your needs well and supplying the quality you want, one company works well. We see a lot of customers having relationships with one to two sellers," Oades said.
But Oades said it is good to occasionally check the trap line. "It is your choice on how competitive it is," Oades said. Price competition is based on quality specifications, quantity specifications and the shipping period.
In the export business, it is critically important that buyers make known to exporters the wheat quality they need for their milling operations. Oades told the buyers they will receive what is stated in their contract, but it may be at the lower end on some quality factors. Contract terms represent minimum acceptable quality. As a buyer's contract specifications become more complicated, exporters will assume more risk in supplying the quality of wheat desired.
Oades discusses, in detail, all aspects of quality specifications for export purchase contracts, including wheat class, U.S. grade factors, protein, dockage, moisture and falling number. Methods to control quality variability also are discussed. Questions from the course participants are strongly encouraged.
Fewer wheat exporters are telling buyers they cannot meet the buyers' specifications, according to Oades. "Sellers are becoming more innovative and able to meet buyers' quality demands. That is good news for buyers, sellers and producers.
"The export industry is changing. It is becoming more sophisticated and more end--user minded. We are seeing more limited liability corporations in the U.S. export business, combining the strengths of two or more companies under one management team," he says . According to Oades, of the 30 to 35 companies involved in the export wheat business, eight or nine do much of the wheat business. "There used to be more. There has been a lot of consolidation in the export grain trade business," he adds.
USWA' role as an export market development organization is to provide information sharing and problem solving for buyers and work with cooperators, such as the U.S. Department of Agriculture's Foreign Agriculture Service and KSU's International Grains Program. Kansas wheat producers, through the Kansas wheat Commission, are the biggest funding supporters of this international market promotion from among the wheat states.