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.

Vital wheat gluten is the natural protein portion of wheat that is extracted after wheat is milled into flour. In its finished form, wheat gluten is a fine, tan powder consisting of 75 to 80% protein. Wheat gluten is a popular ingredient in multi-grain and high-fiber breads and other bakery goods. Wheat starch is produced as a co-product of wheat gluten, and is used as is or in modified forms in numerous food formulations and various industrial applications, including paper production. Starches and gluten are also key ingredients in many new markets such as biodegradable plastics and films.

Tariffs made it possible in the past for wheat processors in the EU to protect their starch markets and sell wheat starch within the EU for twice the world price. They then used their starch profits to subsidize the sale of the co-product—wheat gluten—in world markets at prices below the cost of production.

This practice not only hurt premiums paid for high protein wheat produced by U.S. farmers, but also handicapped wheat gluten R&D in the United States, as investors have been unwilling to create markets merely to serve European gluten. It has been a threat as well to U.S. gluten processors; if driven out of business by heavily subsidized gluten imported from the EU, a domestic market for 50 million bushels of U.S. wheat would be eliminated.

From 1983 through 1995, U.S. imports of wheat gluten from the EU increased at a 47% annual rate, according to Kyle Stiegert, assistant professor of agricultural economics at Kansas State University. In 1996 alone, EU wheat gluten shipments to the U.S. increased nearly 162% above 1993 shipments, according to the Wheat Gluten Industry Council (WGIC). The ratio of EU imports to U.S. production rose from 34% in 1993 to almost 75% in 1997, according to the Kansas Wheat Commission. Stiegert says increased imports were noted in declining U.S. capacity utilization (below 50% in 1997), decreased profitability of U.S. firms, and lower imports from other nations.

The WGIC won a small victory last year in its attempt to correct the trade imbalance. The WGIC filed a 201 petition with the International Trade Commission in September 1997, to establish a quota on gluten imported into the U.S. The ITC determined in a 3-0 vote that increased imports of wheat gluten are "a substantial cause of serious injury" to the U.S. wheat gluten industry.

Responding to the ITC report, President Clinton on June 1, 1998 approved a three-year quota on wheat gluten imports from the EU and all other nonexcluded countries. The quota went into effect immediately, and includes an annual import gluten cap of 54 million pounds from the EU. The quota will increase 6% annually for the duration of the three-year relief period, with possible extension for up to five additional years.

Presuming EU gluten imports are reined in, and imports don’t increase from countries excluded from the quota, the ITC estimated that the quota initially will raise domestic wheat gluten prices to between 3.2% and 8.3% over 1997 levels. U.S. producers’ domestic sales volume would increase by 14% to 19.8%, and sales revenues would increase by 20.8% to 27%.

How is the quota working out? According to the Kansas Wheat Commission, U.S. Department of Commerce official records indicate that from June 1 through Nov. 30, 1998, the EU shipped approximately 26% more gluten into the U.S. than is allowed for the full quota year, which ends May 31.

"Published data indicates that shipments from the EU have stopped since November; however, violations have stalled the relief that the U.S. wheat gluten industry expected during the first year of the quota," says Ladd Seaberg, President of Midwest Grain, the largest U.S. gluten manufacturer.

As a result, Seaberg says U.S. Customs officials are investigating apparent EU violations, and the Office of the U.S. Trade Representative is considering the imposition of sanctions, which could provide the industry with the kind of relief intended by the quota.

"Although the tilt in the playing field was not corrected in the first half of the fiscal year, we are now experiencing indications of strengthened demand for our wheat gluten and continue to realize gradual but steady growth in sales of our specialty wheat proteins, especially in the cosmetics and personal care markets," Seaberg says.

KSU’s Stiegert is studying the gluten issue in a multi-phase project funded by the Wheat Utilization Committee, comprised of members from U.S. Wheat Associates and the National Association of Wheat Growers Foundation. Stiegert is analyzing the effects of imported gluten, the import quota, and the impact of EU policies on world wheat protein premiums.

He says that although the U.S. gluten industry was successful in obtaining a short-term reprieve against imports, whether the gluten quota will provide much long-term economic relief is not apparent. One key reason: Canada, a major producer and exporter of gluten, was excluded from the quota. Canada recently has added considerable new capacity, and a weaker Canadian dollar may encourage exports into the U.S., Stiegert says. Mexico is also exempt from the quota. Although it is not a gluten exporter, its exclusion from the quota makes it a possible conduit for illegal transshipments of gluten into the U.S.

Further, Stiegert says the U.S. industry has significant excess capacity to produce gluten. Only 52% of U.S. capacity is being used in the domestic gluten production process; most U.S. industries typically operate between 75% and 95% of capacity. Increasing domestic production capacity will lessen the quota’s impact.

These factors are likely to limit the quota’s effectiveness, but may give the industry time to develop value-added products that use their primary outputs, says Stiegert.

"One of the reasons that the WGIC wanted a gluten quota was to give the industry time to develop its value-added processing sector. Without locally adequate supplies of starch and gluten from wheat, such investments and product development would be unlikely," says Stiegert, in the first phase of his gluten study. "With more value-added options available for these raw outputs, the U.S. wheat starch-gluten industry could generate a more profitable environment. Without success in developing value-added products or somehow getting the EU to restructure its policies, consolidation within the industry seems inevitable."

Stiegert’s study may be found on his web site: www.agecon.ksu.edu/stiegert.

Potential Products from Wheat Gluten

Hard red spring wheat is a primary source for gluten, the natural protein portion of wheat that is extracted after wheat is milled into flour. In its finished form, wheat gluten is a fine, tan powder consisting of 75 to 80% protein. Gluten has many potential uses:
Films — Gluten-based packaging films and coatings can be excellent edible, renewable, and biodegradable air barriers with good mechanical properties.
Coatings — Gluten coatings may protect flavor and shelf-life of foods.Polymers, resins and plastics-Modified gluten hydrolyzates give flexibility and elasticity to certain polymers and resins. Gluten, as well as starch, can be grafted into polymers.
Inks — Gluten in water-thinned inks can reduce drying of pen tips, while speeding drying on some surfaces.
Laundry detergents — Modified gluten hydrolyzates may stabilize enzymes added to detergents to remove stains.
Cosmetics and hair care products — Gluten hydrolyzates act as moisturizers, foaming agents, and conditioners in cosmetics and hair care products.
Adhesives — Modified gluten hydrolyzates are useful in pressure-sensitive adhesives.
Rubber products — Modified cereal flours can reinforce certain types of non-tire rubber.
Milk replacers — Partially-hydrolyzed gluten has potential as a milk replacer in animal nutrition.
Functional food products — Acid or enzymatic hydrolysis of gluten improves its emulsifying, foaming, and solubility properties for foods.
Medical products — Biodegradable elastic products containing gluten can be prepared by extrusion or coagulation. Gluten can encapsulate medicines for slow-release.Shaped food containers-Gluten can be an ingredient and water-repellent coating in shaped biodegradable food containers.
Paper products — Gluten can be a whitener in repulping newspaper, and modified glutens are useful for paper sizing.
Materials — Gluten can entrain air in concrete, can be incorporated into biodegradable packings, and can be used in ceramics.
Environmental applications — Gluten is useful for heavy metal recovery, to solidify waste oils, and in biodegradable hydrating cat litter.
Agriculture — Gluten-encapsulated agricultural agents provide slow release. Gluten hydrolyzates give preemergence weed control.

(Compiled by USDA-ARS researchers G. L. Lookhart, Manhattan, Kan.; and J.A. Bietz, Peoria, Ill.)