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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 representatives from offices in Moscow, Russia, and Rotterdam, the Netherlands, traveled to various parts of the Former Soviet Union (FSU) late last year to assess market conditions. In November, the U.S. Department of Agriculture announced a 3.1 million ton (mt) food aid package to Russia that included 1.7 million tons of wheat. Russia is expected to experience some wheat shortages this year due to decreased production. In addition, the difficult economic situation in the country and other parts of the FSU and related infrastructure problems have complicated the ability to buy and move the grain throughout the region.

In far east areas of Russia, where the majority of the milling capacity in this region is concentrated, most of the wheat is procured from stocks outside the region. The flour milling situation has worsened in recent years. Debts accumulated by the mills have left them with little capital to purchase wheat, even though the devaluation of the ruble left the price of domestic wheat about three times lower than the world price.

In St. Petersburg in western Russia, USW representatives visited three area mills, where they were informed that flour and bread products consumption in the city and region remain high, as bread prices have not increased as much as other staples. Mills in the city have accumulated some domestic wheat stocks, which should keep them operating at least short-term. Mills and traders continue buying from Russian producers, but have experienced difficulties receiving payments and in- sourcing and moving wheat in larger quantities. Inconsistent quality and unpredictable supplies from domestic sources have prompted millers to consider alternative suppliers, however the devaluation of the ruble currently makes this a non-affordable option.

In Georgia, annual wheat milling requirements are estimated at 500,000 mt, most of which is imported, with the U.S. supplying about 35% of this amount in recent years. Current domestic production is estimated at 200,000 mt, although only 10 % is procured for milling purposes due to its poor quality. Instead, most of it is utilized in the countryside as feed wheat. The situation in the milling sector continues to be difficult, due to lack of finances to purchase wheat and other problems. Flour imports are increasing and are expected to reach about 300,000 mt in 1998, further disrupting milling operations. Although the quality of the imported flour does not necessarily satisfy the requirements of the bakers, it is cheaper than that produced locally, especially when sold in small lots to bakeries and households in the rural areas.

USW, State Commissions donate flour To Cuba

U.S. Wheat Associates (USW), the North Dakota Wheat Commission, North Carolina Small Grain Growers and the Kansas Wheat Commission recently funded the donation of a 20-ton container of wheat flour to Cuba. The flour was milled from U.S. hard red spring, soft red winter and hard red winter wheats and was delivered to Caritas, a Catholic charitable organization in Cuba in early December. This is the second donation that USW supported last year.

Commercial exports of food and other products from the U.S. to Cuba are not allowed due to long-time U.S. government-imposed economic sanctions against Cuba. However, some charitable donations of food are allowed. It is estimated that Cuba, which has no domestic wheat production, represents a one million metric ton market for wheat and flour each year. Paul Dickerson, USW Vice President of Overseas Operations, and Mitch Skalicky, USW Regional Vice President based in Mexico City, visited Cuba late last year, during which they met with various government officials involved in imports and the milling industry.

Cuba is by far the biggest consumer in the Caribbean region. The European Union is currently the largest wheat and flour supplier to Cuba, followed by Canada. A bill introduced in the U.S. Congress in 1998 to ease the trade embargo by allowing food and medical sales was blocked, but is expected to be resumed in the next Congressional session. "It’s an evolutionary process that’s gaining momentum," said Dickerson.