Prairie Grains Jan.-Feb. 98

Issue 11
Jan./Feb. 1998
BARLEY BREWINGS

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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.

Global Market No Fair Shake For U.S. Malt

The Milwaukee-based Froedtert Malt Corporation had the blueprint ready to build a new malting facility in Portland to process and export malt from malting barley. But that plan was scrapped last fall.
Due to the effects of subsidized trade in barley malt in the international market, it was decided that the level of risk in earning an adequate return was too high to justify the investment.
"Froedtert concluded that Europe's export restitution (subsidy) system will be maintained. It might be reduced or suspended periodically, but the restitution system will be there to help their maltsters protect their market share. Froedtert also felt that Canada will not be moving away from Wheat Board control of barley," says Amy Germershausen, international sales manager for International Malting Corporation Exports, which conducts export business for Froedtert, among the top five U.S. malting companies.
The EU controls about 60% of the world's malt market. EU export subsidies not only detract U.S. malt customers, says Germershausen, they discourage investment in the U.S. malt industry, beneficial for protecting EU market share over the long-term. The Canadian Wheat Board bases its prices of malting barley to its domestic maltings on comparisons of global barley prices and subsidies, not on price signals generated internally by a market-driven system.
In South America, she says, EU and Canadian direct and indirect export market subsidies have undercut the U.S. price by about $30 a ton. She gives a recent pricing example in Costa Rica. ""I offered an initial price on a delivered basis. The Canadians countered at $15/tn lower, so I came down to that price. Canada then lowered the price another $15/tn. It's constant undercutting."
Germershausen says the U.S. Trade Representative has not been responsive to U.S. malt claims of unfair trade, citing a lack of documentation that proves the industry has been substantially harmed. As well, the top export markets for U.S. malt-Mexico, the Dominican Republic, and Japan, have remained steady.
The situation is frustrating, she said, since the U.S. malt industry can demonstrate to potential buyers that brewing six-row malt can be beneficial, because of the attractive enzyme package six-row malt offers.
She is not optimistic that future trade talks will offer any changes. "Canada and the EU have been exporting for so long that I think their governments will assure them an advantage," says Germershausen. "This will make things more difficult for the US malt industry."
1998 To Set Pace of 1999 Trade Talks

The pace and scope of the anxiously-awaited meeting in 1999 of the World Trade Organization (which evolved from the General Agreement in Tariffs and Trade) will likely be established by several important international trade meetings held this year.
In March, trade officials from North, Central and South American will meet in San Jose, Costa Rica to draft initial documents determining the pace, linkage and scope of negotiations to create the Free Trade Area of the Americas. This will be followed by an April meeting of heads of state in Santiago, Chile to endorse and fine-tune the plans forged in Costa Rica. Then in May, trade ministers and heads of state from around the world will descend on Geneva, Switzerland for the 50th anniversary of the GATT.
The U.S. Feed Grains Council is developing a list of trade policy recommendations to hand to U.S. trade officials in February, 1998, including measures to address several barriers and distortions that still exist in global barley markets.
MN Barley represented in Ag Trade Mission

Tom Conroy of Wheaton, MN, represented the Minnesota Barley Council in the Pioneer International Agricultural Trade Fellowship Mission to South America last year. "What first struck me was the people - 16.5 million in Sao Paulo alone. I think we need to get Brazilians to recognize barley as a feed grain. There are going to be some opportunities for barley, but it's going to take a while."
New MN Barley Leadership

The Minnesota Barley Growers Association elected two new Board members and re-elected one at the annual Wheat & Barley convention. The Board welcomes Robert Rynning of Kennedy in District 1. Rob will be replacing Roger Dziengel, Kennedy, who has taken the position held by Jim Thompson, Hallock, on the Minnesota Barley Research and Promotion Council (Thanks, Jim, for your nine years of service!)
Harlan Hoff, Ada, was elected to District 2, replacing Dave Vilmo, Ada. Harlan's term will begin July 1, 1998. Selvin Brenden, Rothsay, was re-elected to District 3. Selvin has served on the MBGA Board of Directors since 1990.

Copyright Prairie
Grains Magazine January 1998

Issue 11 Jan./Feb. 1998	BARLEY BREWINGS

Library Home E-Mail Back Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.	Global Market No Fair Shake For U.S. Malt The Milwaukee-based Froedtert Malt Corporation had the blueprint ready to build a new malting facility in Portland to process and export malt from malting barley. But that plan was scrapped last fall. Due to the effects of subsidized trade in barley malt in the international market, it was decided that the level of risk in earning an adequate return was too high to justify the investment. "Froedtert concluded that Europe's export restitution (subsidy) system will be maintained. It might be reduced or suspended periodically, but the restitution system will be there to help their maltsters protect their market share. Froedtert also felt that Canada will not be moving away from Wheat Board control of barley," says Amy Germershausen, international sales manager for International Malting Corporation Exports, which conducts export business for Froedtert, among the top five U.S. malting companies. The EU controls about 60% of the world's malt market. EU export subsidies not only detract U.S. malt customers, says Germershausen, they discourage investment in the U.S. malt industry, beneficial for protecting EU market share over the long-term. The Canadian Wheat Board bases its prices of malting barley to its domestic maltings on comparisons of global barley prices and subsidies, not on price signals generated internally by a market-driven system. In South America, she says, EU and Canadian direct and indirect export market subsidies have undercut the U.S. price by about $30 a ton. She gives a recent pricing example in Costa Rica. ""I offered an initial price on a delivered basis. The Canadians countered at $15/tn lower, so I came down to that price. Canada then lowered the price another $15/tn. It's constant undercutting." Germershausen says the U.S. Trade Representative has not been responsive to U.S. malt claims of unfair trade, citing a lack of documentation that proves the industry has been substantially harmed. As well, the top export markets for U.S. malt-Mexico, the Dominican Republic, and Japan, have remained steady. The situation is frustrating, she said, since the U.S. malt industry can demonstrate to potential buyers that brewing six-row malt can be beneficial, because of the attractive enzyme package six-row malt offers. She is not optimistic that future trade talks will offer any changes. "Canada and the EU have been exporting for so long that I think their governments will assure them an advantage," says Germershausen. "This will make things more difficult for the US malt industry." 1998 To Set Pace of 1999 Trade Talks The pace and scope of the anxiously-awaited meeting in 1999 of the World Trade Organization (which evolved from the General Agreement in Tariffs and Trade) will likely be established by several important international trade meetings held this year. In March, trade officials from North, Central and South American will meet in San Jose, Costa Rica to draft initial documents determining the pace, linkage and scope of negotiations to create the Free Trade Area of the Americas. This will be followed by an April meeting of heads of state in Santiago, Chile to endorse and fine-tune the plans forged in Costa Rica. Then in May, trade ministers and heads of state from around the world will descend on Geneva, Switzerland for the 50th anniversary of the GATT. The U.S. Feed Grains Council is developing a list of trade policy recommendations to hand to U.S. trade officials in February, 1998, including measures to address several barriers and distortions that still exist in global barley markets. MN Barley represented in Ag Trade Mission Tom Conroy of Wheaton, MN, represented the Minnesota Barley Council in the Pioneer International Agricultural Trade Fellowship Mission to South America last year. "What first struck me was the people - 16.5 million in Sao Paulo alone. I think we need to get Brazilians to recognize barley as a feed grain. There are going to be some opportunities for barley, but it's going to take a while." New MN Barley Leadership The Minnesota Barley Growers Association elected two new Board members and re-elected one at the annual Wheat & Barley convention. The Board welcomes Robert Rynning of Kennedy in District 1. Rob will be replacing Roger Dziengel, Kennedy, who has taken the position held by Jim Thompson, Hallock, on the Minnesota Barley Research and Promotion Council (Thanks, Jim, for your nine years of service!) Harlan Hoff, Ada, was elected to District 2, replacing Dave Vilmo, Ada. Harlan's term will begin July 1, 1998. Selvin Brenden, Rothsay, was re-elected to District 3. Selvin has served on the MBGA Board of Directors since 1990.
Copyright Prairie Grains Magazine January 1998