Market Development Focus: USW Helps Open Latin American Milling School
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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 provided equipment for use in the school's four laboratories and also provided project consultants and coordination. The mill was a joint venture with USW, the Latin American millers association, and the Venezuelan wheat millers association.
ESLAMO is the first such school of its kind in Latin America and fulfills a need for a formal milling training facility in the Latin American region, which has a shortage of experienced millers.
Winston Wilson, president of USW, says that wheat consumption patterns in the Latin American region are strong, and improving processing capacity in the region will facilitate wheat market expansion.
"U.S. presence in the school will broaden familiarization with U.S. wheat, and maintain relations with Latin American milling industry representatives in the face of aggressive competition from Canada and other world suppliers," says Wilson.
USW is funded in part with wheat checkoff dollars administered by the Minnesota Wheat Research and Promotion Council.
USW ASSISTANCE IN PHILIPPINES LEADS TO INCREASED U.S. WHEAT IMPORTS
USW has operated market development programs in the Philippines since 1962 and has helped to solidify an impressive market relationship, particularly for U.S. spring wheat.
Between 1990 and 1991, four new flour millers entered the Philippine market, creating new market opportunities for U.S. wheat.
USW offered technical assistance and trade servicing to the new millers and the flour milling association they formed. USW also sponsored a trade team comprised of the association's wheat buying committee, which visited the U.S. to familiarize itself with the U.S. wheat industry.
Since the entry of the new flour mills, the Philippine market for wheat has grown by almost 27 percent. In 1993, the new millers imported 400,000 metric tons of wheat, all from the U.S. The millers' combined flour production now represents 22 percent of the total flour market in the Philippines.
USW MARKETING EFFORTS CAPITALIZE ON ECONOMIC CHANGES IN KENYA AND TANZANIA
For the past decade, Kenya has depended on foreign aid for most of its wheat needs with the government controlling imports. A similar situation existed in Tanzania, which had not made a commercial purchase of U.S. wheat in over twelve years.
During the last two years, the Kenyan and Tanzanian governments began to allow private companies to import wheat. During this time, USW, along with the Foreign Agricultural Service Agricultural Attache in Nairobi, Kenya, began conducting activities to build personal relations and to educate Kenyan and Tanzanian millers on procurement issues.
Activities included a trade conference in Nairobi, which allowed Kenyan and Tanzanian millers to meet with U.S. government and private trade decision makers. In addition, USW sponsored Kenyan and Tanzanian millers' attendance at a wheat procurement short course in the U.S.
The results speak for themselves. From June 1992 to May 1993, Kenyan millers purchased over 450,000 metric tons (MT) of U.S. wheat, and the U.S. wheat market share in Kenya increased from approximately five percent to over 70 percent.
In Tanzania, commercial purchases in the spring of 1994 totaled nearly 50,000 MT, with approximately half of the purchases coming from the U.S.
USW TRADE SERVICING RESULTS IN REVISED DOCAKGE SPECIFICATION
The Philippines and Taiwan are leading export markets for U.S. spring wheat. In recent years, U.S. Wheat Associates (USW) became concerned when some U.S. wheat buyers in these countries complained about high dockage levels in U.S. wheat imports.
Unlike Canada and Australia, U.S. competitors in these markets, the U.S. does not have a grain board to mandate the cleaning of wheat. Consequently, Canadian and Australian wheat shipments generally have lower dockage levels.
To address buyers' concerns, USW staff in the Philippines and Taiwan encouraged buyers to change dockage specifications for U.S. wheat. USW met with success in both countries. In the Philippines, the specification was changed from "0.5 percent non-deductible" to "all dockage deductible." In Taiwan, buyers now specify maximum dockage limits for all four classes of wheat being imported.
As a result, U.S. wheat exporters are now in a better position to compete with Canadian and Australian wheat and to maintain and increase their market share in the Philippines and Taiwan.
JAPAN CHANGES SPECIFICATIONS FOLLOWING USW URGING
As well as being a top U.S. spring wheat buyer, Japan is also a major market for U.S. soft white wheat grown in the Pacific Northwest. This type of wheat is used in Japan primarily for making cakes, cookies, and other products requiring low protein flour.
In recent years, the protein levels in imported U.S. wheat have been higher than usual, causing problems for Japanese millers and end users. To help resolve the problem, USW met with Japanese Food Agency officials and convinced them to impose a maximum protein specification on soft white wheat.
USW also worked with U.S. farmers and trade members to segregate protein levels. Following USW suggestion, the Agency imposed the specification in October 1993. As a result, flour millers are much happier with U.S. soft white wheat, which will help to keep them from looking for alternative supply sources.