Notes from the 2007 Commodity Classic

Wheat-Infused Commodity Classic Draws Near-Record Crowd

There was near-record attendance at the 2007 Commodity Classic, the joint convention and trade show of the American Soybean Association (ASA), the National Corn Growers Association (NCGA) and, for the first time, the National Association of Wheat Growers (NAWG).  More than 4,000 people attended this year’s Classic, themed “Bounty on the Bay,” in Tampa, Fla., March 1-3.

The 12th annual event featured more companies than ever, with 197 represented and 675 booths on the trade show floor; a keynote speech by U.S. Trade Representative Susan Schwab; an inspirational message from Operation Iraqi Freedom veteran and prisoner of war Ron Young; and an Evening of Entertainment with country music artist Collin Raye.

 “Bringing these three commodity organizations together at one meeting was a great opportunity to strengthen the relationships between the groups and help us work more closely together for the benefit of our producers across the country,” said Dale Schuler, NAWG president during the 2007 Commodity Classic. “We thank the corn and soybeans organizations for their welcome and look forward to next year.”

Next year’s Commodity Classic will take place Feb. 28-March 1 in Nashville, Tenn., at the Gaylord Opryland Hotel.  For more information on Commodity Classic, visit www.commodityclassic.com.

Rollin Sears, an R&D wheat manager with AgriPro-COKER, Junction City, Kansas, referred to this graphic at Commodity Classic, a Doane estimate of leading wheat exporters on the left, leading importers on the right, and expected changes between 2005 and 2013. Note the jump in wheat import needs predicted in Africa.

USTR’s Schwab: Congress Will Write Farm Bill, Not WTO
U.S. Trade Representative Susan Schwab emphasized the important role agriculture plays in a successful trade agenda during her keynote address at the recent Commodity Classic. She said the United States remains steadfast in its commitment to hold firm on market -opening efforts in bilateral and multilateral trade agreements.

In her address, Schwab said the U.S. is prepared to walk away from the talks if the deal “requires sacrifices and concessions from American farmers and ranchers without creating significant new export opportunities around the globe.”

Schwab added the Doha offer is not the basis for a new farm bill. “The farm bill proposal is not a new Doha offer and the Doha offer made 15 months ago is not the basis for the new farm bill,” she said. “Congress will write the farm bill. When it does, we hope lawmakers embrace a more market-oriented approach to farm policy. That means a farm policy that is predictable and strikes the right balance between providing farmers and ranchers with a safety net and not distorting the market. It also means a farm bill that can withstand a challenge at the WTO.”

A Competitive World Wheat Market
U.S. wheat producers face a very competitive trade market, said Jim Frahm, vice president of planning with U.S. Wheat Associates. “We remain the largest wheat exporter in the long-term, according to USDA, with traditional competitors in Canada, Australia, Argentina and the EU remaining fairly steady. The Black Sea region of the former Soviet Union is expected to grow significantly, however. Now, traditionally, the quality of wheat grown here has not been that good, nor very reliable. We’ll see if that changes. But overall, world wheat exports should continue to grow,” he said.

The graphic above shows the top ten customers for U.S. wheat in the past two marketing years.

Frahm explains: “Nigeria was our biggest customer last marketing year, just a little bit above Japan, our most reliable customer over the long-term. I have to mention Iraq because purchases jumped so significantly last marketing year. The monopoly wheat trading organization, Australian Wheat Board, had pretty much cornered the Iraq market by, as it turns out, paying about $220 million in kickbacks to the late Saddam Hussein under the UN’s Oil for Food Program. They got caught, thankfully, and they are out of Iraq now for the most part.”

Will Wheat Beat the Heat?
A good share of the world already depends on wheat for its caloric need (see graphic). And within the next 50 years, world cereal production must double, with 80% of the increased demand expected to come from lands already in cultivation, according to Hans -Joachim Braun, director of CIMMYT’s Global Wheat Program. CIMMYT (International Maize and Wheat Improvement Center) is an internationally funded, nonprofit scientific research organization headquartered in Mexico.  It works with agricultural research institutions worldwide to improve maize and wheat systems for poor farmers in developing countries, Braun says 21st century wheat research has a daunting challenge: By 2025, farmers will need to produce 3 billion tons of cereals to feed a human population of 8 billion against a backdrop of:

• Declining water availability for agriculture
• Increasing temperature
• Degraded lands in much of the developing world
• New very virulent rust races
• The exploding trend of producing grain for biofuel

NAWG Board Elects New Officers, Adopts TPA Measure
During meetings in the run-up to the 2007 Commodity Classic, NAWG policy committees and the NAWG Board of Directors met and passed a number of key resolutions.  One resolution opposes any effort to re-direct a portion of direct payments to market development programs.  Another supports government and private programs for crops with marketable characteristics beyond traditional commodity markets that focus on achieving critical mass by area.

The NAWG Board also adopted a resolution approved by NAWG and U.S. Wheat Associates’ Joint Trade Policy Committee on Trade Promotion Authority that reads: “USW/NAWG support the continuation of Trade Promotion Authority (TPA) to get a successful Doha Round, provided that U.S. negotiators protect domestic farm policies from being negotiated away. We would not support a Doha Round Proposal from the U.S. if it is less than the October 2005 U.S. offer.”

In addition, the Board elected a new officer corps, headed by new NAWG President John Thaemert of Sylvan Grove, Kan. Other officers elected to new positions by the Board include:

• David Cleavinger, first vice president, Wildorado, Texas.
• Karl Scronce, second vice president, Klamath Falls, Ore.
• Jerry McReynolds, secretary-treasurer, Woodston, Kan.
• Dale Schuler, immediate past president, Carter, Mont.

More information about NAWG Board meeting proceedings, resolutions and issues can be found online at www.wheatworld.org.