Issue 25
January 2000

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.

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Prairie Grains Magazine
January 2000

U.S. makes progress in cracking tough EU wheat market

Already, international trade reforms under GATT are opening up renewed opportunities for U.S. wheat trade in Europe.

Northern Europe is among the most promising wheat markets for the U.S., along with Italy and Spain. EU import tax reforms have increased imports from an all-time low of less than 1 million metric tons in 1992-93. "U.S. export sales to the EU last year topped 1.5 million metric tons — three times what they were just five years ago," says Vince Peterson, in U.S.
Wheat Associates' Amsterdam office.

Since the 1970s, European wheat production has nearly doubled, while U.S. production remained static. After dramatic production climbs in the 1980s and 1990s, EU set aside provisions established in 1993 have curbed expansion.

Danish grain yields are robust, up to 146 bushels/acre on wheat, and 128 bu/acre on barley, says Fritz Hansen, director, KFK, Denmark's largest private feed and grain company. But the milling quality is low. About 60% of farmland is used for growing grains, mostly winter wheat and spring barley. Since the 1980s, Danish environmental regulation has required farmers to keep 65% of farmland in cultivation during the winter, boosting winter wheat acreage.

Even with favorable yields and prices, including EU subsidies on exports, most of the wheat and other grains are used as feed for livestock. Farmers are diversified, and feeding grain is seen as a fundamental way to add value to it. Farmers in grain surplus areas can offset their feed prices by providing their own grain for feed rations.

While nearly self-sufficient, Denmark does import soybeans from the U.S. along with high-protein spring wheat and durum, which is used to improve bread flour production from the domestic crop. When selling grain beyond the 11 EU member countries, Danish exporters apply for EU subsidization through a competitive bidding process. World grain prices are about $3-$4/metric ton lower than European common market prices. "When you want to export outside of the Common Market, to say Poland, the Baltic or Russia, we have a policy that you must have a license to export, and you must ask the European Commission how big of a subsidy you can be compensated for," Hansen says.