Creating a More Competitive Advantage For U.S. Wheat,  From an R&D Perspective

By Dr. Jochum Wiersma, University of Minnesota small grains specialist wiers002@tc.umn.edu

Last spring, I had the opportunity to visit Mexico, Venezuela, Columbia, and Peru and meet first-hand with end-users of U.S. wheat in these key Latin American markets.  U.S. Wheat Associates and the Minnesota Wheat Research and Promotion Council sponsored this mission for myself and other U.S. wheat breeders and agronomists, to help us develop a greater appreciation for end-use concerns about U.S. wheat, as well as common goals in variety development and recommendations to producers. Visiting with U.S. breeders and agronomists in turn helps educate end-users in these markets about the U.S. system of variety development. In effect, it’s communication between the first and final links of the wheat chain.

Generally, wheat buyers in these countries wanted cleaner wheat from the U.S., with less dockage. Absorption and loaf volume are key quality characteristics that they need to make the quality of bread they want. Consistent functionality (milling and baking characteristics) of the wheat they import and use is important.

While the quality is generally important to these Latin American wheat users, so too is price, which includes the cost of the wheat and the cost to ship it. Even though Canada is further from these markets than the U.S., Latin American buyers often noted price advantages of Canadian wheat over U.S. wheat. There is also a perception that Canadian wheat is cleaner and of higher quality compared to U.S. wheat, and a key reason for this is the Canadian Wheat Board.  In Mexico, for example, it is interesting to note that most Canadian Western Red Spring Wheat is ordered with a grain protein specification of 12.5%, but the CWB consistently over-delivers, giving higher protein wheat than specified. 

Many of the requests and complaints we heard can be addressed through
the marketplace.  Educating and helping these wheat buyers to write the
specifications of wheat that they want in their purchase contracts can solve many of their problems and address many of their needs.  Obviously, however, these same buyers are not very interested in tendering at tighter specifications and thus at a higher price if our Canadian counterparts deliver the same for less.  

Consequently, as an industry we need to better exploit or at least develop other competitive advantages.  A large share of the wheat market will likely continue to be commodity-based for the foreseeable future. But as markets (both domestic and foreign) develop further and become more sophisticated, millers and bakers likely will identify and differentiate functional qualities that fit their products and processes best. Some of these needs will be addressed through identity preservation.  

This variation in functional quality is our Achilles heel as well as our strength.  The predictability of our current supply for functionality is not as great as the Canadian system.  This is simply a function of the less stringent variety release policy in the U.S. in comparison to Canada.  On the other hand, we have more genetic variability available, which provides opportunities for useful identity preservation.

In my humble opinion, breeders within each U.S. wheat class need to set very clear functional quality goals and have relatively narrow ranges for each of these. Only then can we address the consistency of functionality effectively for the commodity stream.

This would create myriad problems, however, as many breeding programs would likely need to give up some of their yield potential in favor of quality.  Current farm programs as well as the marketplace itself does not provide enough incentive to give up bushels in favor of quality.  It may be useful to change the current wheat grading system and class structure by adding a feed wheat class and eliminating the bottom two grades in each class.

It is important to recognize that we position and market each class with a set of unique parameters, including functional quality parameters. The Australians are well-adept at this already, and even have logos and brands for the different types of wheat they produce.  

Providing blends of different U.S. wheat classes (or even blends with CWRS) may provide a solution for contract specifications that differ from the quality target within each class.  

While more innovative approaches should be considered, caution should be noted in systematic changes in wheat breeding and grading that would be too aggressive, resulting in a confused marketplace that could move away from U.S. wheat.

Identity preservation is only viable if useful partnerships and long-term relationships are developed between those who create wheat varieties—the breeders—and those who use them—the end-users. Thus, we need to continue to communicate or in short, be on the same page.  An extension of this is the need to harmonize the way breeders and end-users analyze wheat quality. Indeed, there are differences in the way U.S. wheat breeding programs test milling and baking functionality of varieties compared to foreign buyers.  Here again, U.S. wheat breeding programs need to get on the same page as U.S. wheat users.