Prairie Grains Jan.-Feb. 98 -

Issue 11
Jan./Feb. 1998
WHEATWORLD

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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.

USW Distributing Crop Quality Report

U.S. Wheat Associates, the wheat growers' foreign market development organization, is distributing information contained in its "1997 Crop Quality Report" to overseas buyers and millers through crop quality seminars in various locations around the world.
USW has published an annual crop quality report and conducted related seminars for more than 10 years. The report contains detailed quality data on all six classes of U.S. wheat, and urges importers to use the quality parameters in the report to assist them in specifying quality requirements in their purchase contracts.
For the report, a total of 1,222 Hard Red Spring (HRS) samples were collected during the 1997 harvest from grain elevators and growers in Minnesota, Montana, North Dakota, and South Dakota.
1997 HRS has stronger quality performance

While the 1997 U.S. hard red spring (HRS) wheat crop is about 20% smaller than in 1996, it has some significant performance improvements, according to Truman Olson, North Dakota State University cereal scientist.
The 97' crop is higher in protein content and is producing stronger doughs, characteristics that benefit customers who blend HRS with lower protein wheats. Despite lower test weights, flour extraction levels are the same as in 1996 with higher flour ash content. Other positives in the 1997 crop compared to recent years are its lower moisture content and higher falling numbers, meaning the crop is generally sound and free of sprout damage.
Heavier weed growth did result in higher dockage levels, and HRS quality does vary within the Northern Plains due to differences in environment. Olson says appropriate contract specifications are the best tool that buyers can use to get the quality of HRS they need and want.
South American Buyers Satisfied

Olson participated in the USW crop quality tour of seven South American countries, reviewing HRS and durum quality. "Generally, there were not a lot of complaints," he says. The key message at many of the seminars is that the U.S. can deliver wheat "made to order." For example, the question of dockage and disease was raised in several countries. "We assured them that these are things that can be specified in the contract. They can spec for lower dockage, and use test weight and damage specs to keep scab and vomitoxin out of wheat," he says. That's a key role for USW: to provide the background "what, why, when, where, and how" information about purchasing U.S. wheat to prospective buyers.
Europe: "Still A Need for High Quality Wheat"

Bert D'Appolonia, professor emeritus of cereal science at NDSU, delivered the HRS and durum quality reports on the European leg of the USW crop quality tour. "We're seeing more HRS and durum export activity in that area than in the past. In Italy, Spain, Belgium, there seems to be a need for quality premium wheat for blending. There was interest even in Germany, which generally has higher protein wheat."
D'Appolonia suggests several factors behind the additional interest in U.S. HRS: France's wheat quality is lower than average, and more European wheat is being used for feed. There has been some positive change in European trade barriers. And more privatized purchasing has meant more attention to quality, and a need for higher-quality wheat.
He points out that McDonalds in Great Britain requires 50% U.S. Dark Northern Spring wheat in hamburger and sandwich buns. "There's a need for high quality wheat," says D'Appolonia.
A Need For U.S. Durum

D'Appolonia noticed a lot of interest in U.S. northern and desert durum during the European crop quality tour, not only in Europe but the Middle East. "There seems to be a worldwide shortage and the recommendation I would make is that there is a need for more durum in the northern U.S.," he says. "There are probably some untapped markets we could take advantage of, if we can get a handle on scab."
China Moves Toward Ending Monopoly on Wheat Imports

According to industry sources in China, the country is moving away from their monopolistic wheat buying system, in an effort to gain accession to the World Trade Organization. Currently, COFCO, a state-trading company has a monopoly on wheat imports. However, starting in 1998 China will allow more companies at the provincial level to purchase wheat directly. (China will still manage quantity through a quota system.) Vice-Premier Zhu Rongji, China's "economic czar," views the current system as inefficient, and fully supports such action.
USW Crop Quality Seminars in China

With the completion of materials in English by USW entities and presenters based in the U.S., USW staff in Beijing and Hong Kong spent long hours making certain the materials translated to Chinese were ready for participants. Over 200 individuals attended presentations on the 1997 U.S. Wheat Crop Quality in the cities of Shenzhen in southern China and Beijing in the north. The attendees represented foreign trading entities, general import and export corporations, flour mills and wheat foods processors. Presentations at the seminars not only covered crop quality, but also the inspection methods utilized by the U.S. to determine protein percentage in cargoes of U.S. wheat.
Additionally, USW had the opportunity to present new findings on wheat and flour blends for processing various types of noodles.
Canada Engaging in Unfair Wheat Pricing Practices Overseas

USW reports that the Canadian Wheat Board is dramatically undercutting U.S. wheat prices in overseas markets, where it recently offered and sold wheat at up to $7 per ton less than U.S. prices for comparable wheat.
During a market survey trip to Asia by USW President Alan Tracy and Chairman Dan Gerdes last fall, millers in the Philippines reported such offers. USW staff in other offices also have reported heavy price discounting by the Wheat Board in other countries, including China, Mexico and Sri Lanka.
"It is disturbing that the Canadian Wheat Board is willing to offer such large discounts to the U.S. market, which is freely established by economic factors, in order to make sales that we would regard as uneconomic," USW President Alan Tracy said.
"Such discounts are unnecessary, disruptive of markets and unfair to both the Canadian farmers, who apparently pay for the discount, and to U.S. farmers who suffer the loss of market," Tracy said. "The Canadian Wheat Board does not have to worry about the wheat's replacement cost or a profit/loss report to stockholders, as do exporters of U.S. wheat."
Canadian law requires its farmers to export their wheat and barley through the Wheat Board, making it illegal to sell it abroad in any other way. Last September, amendments to the Canadian Wheat Board Act were presented to the Canadian Parliament by the ruling Liberal party. However, the amendments would not change the monopoly the Wheat Board has over Canadian wheat exports. Strong support for reform of the Wheat Board is most evident in western Canada.
Various sectors of the U.S. wheat industry have long complained about the unfair practices of the CWB and feel that the issue of state trading enterprises was not adequately addressed in the GATT. Many U.S. wheat industry representatives feel that discipline of wheat board pricing practices needs to be high on the agenda in the next trade round negotiations.

Copyright Prairie
Grains Magazine January 1998

Issue 11 Jan./Feb. 1998	WHEATWORLD

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.	USW Distributing Crop Quality Report U.S. Wheat Associates, the wheat growers' foreign market development organization, is distributing information contained in its "1997 Crop Quality Report" to overseas buyers and millers through crop quality seminars in various locations around the world. USW has published an annual crop quality report and conducted related seminars for more than 10 years. The report contains detailed quality data on all six classes of U.S. wheat, and urges importers to use the quality parameters in the report to assist them in specifying quality requirements in their purchase contracts. For the report, a total of 1,222 Hard Red Spring (HRS) samples were collected during the 1997 harvest from grain elevators and growers in Minnesota, Montana, North Dakota, and South Dakota. 1997 HRS has stronger quality performance While the 1997 U.S. hard red spring (HRS) wheat crop is about 20% smaller than in 1996, it has some significant performance improvements, according to Truman Olson, North Dakota State University cereal scientist. The 97' crop is higher in protein content and is producing stronger doughs, characteristics that benefit customers who blend HRS with lower protein wheats. Despite lower test weights, flour extraction levels are the same as in 1996 with higher flour ash content. Other positives in the 1997 crop compared to recent years are its lower moisture content and higher falling numbers, meaning the crop is generally sound and free of sprout damage. Heavier weed growth did result in higher dockage levels, and HRS quality does vary within the Northern Plains due to differences in environment. Olson says appropriate contract specifications are the best tool that buyers can use to get the quality of HRS they need and want. South American Buyers Satisfied Olson participated in the USW crop quality tour of seven South American countries, reviewing HRS and durum quality. "Generally, there were not a lot of complaints," he says. The key message at many of the seminars is that the U.S. can deliver wheat "made to order." For example, the question of dockage and disease was raised in several countries. "We assured them that these are things that can be specified in the contract. They can spec for lower dockage, and use test weight and damage specs to keep scab and vomitoxin out of wheat," he says. That's a key role for USW: to provide the background "what, why, when, where, and how" information about purchasing U.S. wheat to prospective buyers. Europe: "Still A Need for High Quality Wheat" Bert D'Appolonia, professor emeritus of cereal science at NDSU, delivered the HRS and durum quality reports on the European leg of the USW crop quality tour. "We're seeing more HRS and durum export activity in that area than in the past. In Italy, Spain, Belgium, there seems to be a need for quality premium wheat for blending. There was interest even in Germany, which generally has higher protein wheat." D'Appolonia suggests several factors behind the additional interest in U.S. HRS: France's wheat quality is lower than average, and more European wheat is being used for feed. There has been some positive change in European trade barriers. And more privatized purchasing has meant more attention to quality, and a need for higher-quality wheat. He points out that McDonalds in Great Britain requires 50% U.S. Dark Northern Spring wheat in hamburger and sandwich buns. "There's a need for high quality wheat," says D'Appolonia. A Need For U.S. Durum D'Appolonia noticed a lot of interest in U.S. northern and desert durum during the European crop quality tour, not only in Europe but the Middle East. "There seems to be a worldwide shortage and the recommendation I would make is that there is a need for more durum in the northern U.S.," he says. "There are probably some untapped markets we could take advantage of, if we can get a handle on scab." China Moves Toward Ending Monopoly on Wheat Imports According to industry sources in China, the country is moving away from their monopolistic wheat buying system, in an effort to gain accession to the World Trade Organization. Currently, COFCO, a state-trading company has a monopoly on wheat imports. However, starting in 1998 China will allow more companies at the provincial level to purchase wheat directly. (China will still manage quantity through a quota system.) Vice-Premier Zhu Rongji, China's "economic czar," views the current system as inefficient, and fully supports such action. USW Crop Quality Seminars in China With the completion of materials in English by USW entities and presenters based in the U.S., USW staff in Beijing and Hong Kong spent long hours making certain the materials translated to Chinese were ready for participants. Over 200 individuals attended presentations on the 1997 U.S. Wheat Crop Quality in the cities of Shenzhen in southern China and Beijing in the north. The attendees represented foreign trading entities, general import and export corporations, flour mills and wheat foods processors. Presentations at the seminars not only covered crop quality, but also the inspection methods utilized by the U.S. to determine protein percentage in cargoes of U.S. wheat. Additionally, USW had the opportunity to present new findings on wheat and flour blends for processing various types of noodles. Canada Engaging in Unfair Wheat Pricing Practices Overseas USW reports that the Canadian Wheat Board is dramatically undercutting U.S. wheat prices in overseas markets, where it recently offered and sold wheat at up to $7 per ton less than U.S. prices for comparable wheat. During a market survey trip to Asia by USW President Alan Tracy and Chairman Dan Gerdes last fall, millers in the Philippines reported such offers. USW staff in other offices also have reported heavy price discounting by the Wheat Board in other countries, including China, Mexico and Sri Lanka. "It is disturbing that the Canadian Wheat Board is willing to offer such large discounts to the U.S. market, which is freely established by economic factors, in order to make sales that we would regard as uneconomic," USW President Alan Tracy said. "Such discounts are unnecessary, disruptive of markets and unfair to both the Canadian farmers, who apparently pay for the discount, and to U.S. farmers who suffer the loss of market," Tracy said. "The Canadian Wheat Board does not have to worry about the wheat's replacement cost or a profit/loss report to stockholders, as do exporters of U.S. wheat." Canadian law requires its farmers to export their wheat and barley through the Wheat Board, making it illegal to sell it abroad in any other way. Last September, amendments to the Canadian Wheat Board Act were presented to the Canadian Parliament by the ruling Liberal party. However, the amendments would not change the monopoly the Wheat Board has over Canadian wheat exports. Strong support for reform of the Wheat Board is most evident in western Canada. Various sectors of the U.S. wheat industry have long complained about the unfair practices of the CWB and feel that the issue of state trading enterprises was not adequately addressed in the GATT. Many U.S. wheat industry representatives feel that discipline of wheat board pricing practices needs to be high on the agenda in the next trade round negotiations.
Copyright Prairie Grains Magazine January 1998