Hard Red Spring Wheat & Durum

U.S. Wheat Associates: Promoting Proven Quality

What a difference a year makes. On the heels of the lowest global wheat supplies and the highest prices in years, farmers around the world produced a record wheat crop for Marketing Year 2008/09 (June-May). Exporting countries that had closed their ports jumped aggressively back into the market. While the altered competitive situation pressured U.S. wheat sales in 2008/09, producer-funded U.S. Wheat Associates (USW) kept its focus on the reliable supply, high quality and value of our wheat, and the U.S. held its position as the world’s leading wheat exporter.Maintaining global markets for the abundance of your harvest would not be possible without generous support from 18 state checkoff programs and the USDA/Foreign Agricultural Service (FAS). Below are excerpts from U.S. Wheat Associates’ Annual Report, providing an overview of USW activities in 2008/09. For more information, please visit the USW Web site at www.uswheat.org.

Hard Red Spring Although harvested acres of high protein U.S. hard red spring (HRS) did not increase much, supply was up with generally good yields. The Canadian Wheat Board also aggressively priced their increased supply of spring wheat. U.S. HRS export sales ultimately ended the year down by 30 percent to 5.7 MMT. Among customers importing HRS in 2008/09, the five largest customers were Japan, the Philippines, EU-27, Taiwan, and South Korea.

Durum - Durum ending stocks for 2008/09 nearly tripled compared to 2007/08 in the face of lower export demand following a much bigger European crop. Among customers importing durum in 2008/09, the five largest customers were: EU-27, Nigeria, Algeria, Costa Rica and Venezuela.

Maintaining Sales in Japan and South Asia In 2008/09, the Japanese Ministry of Agriculture, Fisheries and Forestry (MAFF) again imported just under 1.6 MMT of HRS. This is testimony to U.S. wheat producer commitment to quality—and USW’s ongoing trade service efforts on their behalf—because Japan demands the best food ingredients possible. USW spends a lot of time on trade service with MAFF buyers, frequently brings trade teams to the U.S. with invaluable help from state wheat commissions, and works closely with Japanese millers who purchase our wheat from MAFF.  Indonesian millers are using more HRS in their grist and report that customers are very pleased with these flour products. One milling manager said he has been able to resist corporate pressure to buy Australian wheat because he can justify his preference with quality information and technical support from USW. Another mill credits USW for helping increase its market share by demonstrating the potential return on investment from producing HRS-based flour products.

Customers Analyze U.S. Durum Varieties Pasta manufacturers in the European Union consistently buy more durum than any other overseas customer group, although USW efforts are helping create new demand in Nigeria and Latin America. EU pasta makers are testing U.S. durum varieties under USW’s Overseas Varietal Analysis program, designed to give customers a stake in continually improving U.S. wheat and durum performance characteristics.

Investing Pennies, Returning Millions USW cooperates with USDA’s Foreign Agriculture Service to create, expand and maintain overseas markets for U.S. wheat. By preparing a detailed, annual Unified Export Strategy (UES) and demonstrating state wheat commission support, USW qualifies for USDA market development program funds. This year, USDA committed $2.89 for every $1.00 from producer funds. This allowed wheat growers to invest only ¼ penny per bushel to fund nearly $17 million in foreign market development for their products. Through sound fiscal management and efficiently accessing federal and state funding, USW has the resources to carry out its mission for the U.S. wheat producer.

Overseas Operations -- USDA support accounted for 74 percent of USW’s FY2009 revenue. USW received the following budget allocations from four USDA programs: Foreign Market Development Program, $5,606,526; Market Access Program, $6,818,464; Section 108 Program (PL480), $440,386; and Emerging Markets Program, $59,770. The total available budget from USDA was $12,925,146, which is primarily expended by USW’s 15 overseas offices for foreign market development.

Domestic Operations -- Producer funds generally support the U.S.-based offices of USW in Arlington, Virginia, and Portland, Oregon. Based on a domestic budget, member states are assessed dues determined by wheat production over five years, minus the high and low volume years. Total revenue from membership dues and state-funded special projects for FY2009, ending June 30, 2009, was $4,319,160.

Visiting Wonder Bakery in Solo, Indonesia, last fall, U.S. wheat producers saw a successful, value added business (unusual for Indonesia) offering wheat food snacks, biscuits and cakes produced from “special” flour made exclusively with U.S. HRS by USW customer Sriboga Raturaya Flour Mill. USW has demonstrated the potential ROI to Sriboga in a very competitive market.