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Wheat Letter
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March 3, 2011
USW is the industry’s market development organization working in more than 100 countries on behalf of America’s wheat producers. The activities of USW are made possible by producer checkoff dollars managed by 19 state wheat commissions and through cost-share funding provided by USDA’s Foreign Agricultural Service. For more information, visit www.uswheat.org or contact your state wheat commission. Original articles from Wheat Letter may be reprinted without permission; source attribution is requested.
1. Another Biotech Record in 2010
2. Senator Baucus Leads Trade Mission to Brazil and Colombia
3. USDA Says U.S Wheat Production and Stocks to Fall
4. Spotlight on Eastern Wheat
5. Wheat Export Market Development Benefits Wheat Producers and Our Customers
6. Grassroots Policy Set to Take Shape at NAWG Policy Meetings
7. Wheat Industry News
Online Edition: Wheat Letter – March 3, 2011 (http://bit.ly/hKL532)
PDF Edition:
1. Another Biotech Record in 2010
The International Service for the Acquisition of Agri-biotech Applications (ISAAA) reports that a record 29 countries planted biotech crops on 148 million hectares (366 million acres) in 2010, a strong increase from the first commercial acreage of 1.7 million hectares (4.2 million acres) 15 years ago. Of the 29 countries, 19 were developing countries that accounted for 48 percent of all biotech acreage. In addition, 90 percent of the 15.4 million producers growing biotech crops were classified as small resource-poor farmers. These numbers illustrate that biotech crops are the fastest-adopted crop technology in the history of modern agriculture.
In 2010, 12 commercialized biotech crops ranging from soybeans to sweet peppers were planted around the world, but wheat is not yet on this list. The complexity of the wheat genome compared to other crops like corn and soybeans is one factor that has limited biotech research efforts. Because biotech traits have helped other crops achieve peak potential yields, crops like wheat without biotech advancements are less competitive. As producers have identified more profitable alternatives, wheat planted area has trended lower for many years.
The good news for producers and wheat buyers concerned about maintaining an adequate supply in a future with rising demand is that public and private researchers are actively developing new varieties of wheat, utilizing conventional breeding methods and are increasingly exploring biotechnology advancements to increase productivity. Renewed interest in wheat stems from an agreement in 2008 among the wheat industry to support the potential benefits of biotechnology. In 2009, a trilateral statement among producer and industry groups in Australia, Canada and the United States reinforced the message of support to private companies, nonprofit organizations and universities to invest in biotech wheat research.
Research and development has increased at a rapid pace, but full commercialization of biotech wheat is not expected for up to ten years. Traits benefiting producers and consumers are under development and field trials are underway in several countries around the world.
Population growth is projected to outpace food production and biotechnology is a key factor to ensure sufficient food supplies. The United Nations Food and Agriculture Organization (FAO) projects food demand will double by 2050 and an independent analysis by U.S. Wheat Associates (USW) concludes that world wheat trade must double by 2050 to feed the world’s growing population. Increasing production with scarce land and water resources will be a challenge and the adoption of biotechnology is one key factor th
at will be examined closely in the effort to meet the world’s nutritional needs.
The U.S. wheat industry remains strongly committed to being the world’s most reliable supplier of safe, high quality wheat. In 2008, USW and the National Association of Wheat Growers (NAWG) adopted a set of principles for the eventual commercialization of biotech wheat. These principles express support for biotech wheat, but also remain committed to offering choices to the domestic and export market. USW looks forward to working with our international customers to ensure market choice while also allowing the market to benefit from investment in biotechnology.
2. Senator Baucus Leads Trade Mission to Brazil and Colombiaby Lola Raska, Montana Grain Growers Association
On Feb. 19, 2011, Senator Max Baucus (D-Mont) led a group of Montanans on a trade mission to Brazil and Colombia. The importance of U.S. wheat trade was a key focus of our visits.
Brazil’s agricultural production is well diversified and they export many commodities, but they are a net importer of wheat, supplementing what they do not grow themselves largely with imports from Argentina. Expansion of their agricultural export industry has been hampered by a lack of infrastructure to efficiently transport their crops to port terminals. While Brazil is investing heavily in infrastructure development for city roads, airports and ports, I was informed that very little money is being invested to improve roads and rail for agricultural use.
An agreement on the World Trade Organization (WTO) decision that U.S. cotton subsidies violated global trade rules was reached last year in an effort to hold off Brazilian trade retaliation in exchange for several U.S. concessions. Agricultural leaders I spoke with are closely watching development of the 2012 Farm Bill for continued U.S. compliance to WTO rules. Senator Baucus cautioned the Brazilians that, as the United States is asked to reduce agricultural subsidies, we must receive more market access on both agricultural and industrial products before further concessions are made. The Senator also asked specifically about phytosanitary objections Brazil has used to restrict wheat imports and he received assurances that the issue would be reexamined to ensure scientific standards are applied.
In Bogota, Colombia, the dominant topic was the United States’ inability to finalize the U.S.-Colombia Free Trade Agreement (FTA). This agreement has stalled in the United States mainly due to concerns about a history of violence against labor union members and human rights in Colombia. In the meantime, U.S. wheat exports have lost significant market share as Colombia establishes free trade agreements with our competitors.
Currently the largest market in South America for U.S. agricultural exports, Colombia imports 97 percent of the wheat they consume. Though they value the high quality of our wheat, our share of the Colombian wheat market has dropped from 73 percent in 2008 to 43 percent in 2010 and we risk losing the entire market to Argentina and Canada if we do not act soon on the pending FTA. Based on direct input from Colombia’s milling industry, at current prices, U.S. wheat producers, especially hard red winter producers, stand to lose up to $100 million in wheat sales every year we must compete without a free trade agreement.
Approval of the U.S.-Colombia FTA is the highest trade priority of the U.S. wheat industry and we are very pleased that Senator Baucus is working hard for its passage. This trade mission was a tremendous opportunity to support his efforts and assure the Colombian people that we will do our part to encourage our government to ratify and implement the FTA.
3. USDA Says U.S Wheat Production and Stocks to Fall
by Chad Weigand, USW Market Analyst
U.S. wheat acreage will increase this year, according to Michael Jewison of the Foreign Agricultural Service. The U.S. Department of Agriculture held its annual Agricultural Outlook Forum this week where Jewison presented the 2011 Grain and Oilseeds outlook. USDA currently estimates 2011/12 wheat acreage at 57.0 million acres, a six percent increase from last year.
USDA noted that the increase in demand for U.S. wheat due to limited supplies of high quality milling wheat from other origins will boost plantings. Winter wheat plantings are up 10 percent according to USDA, with the soft red winter (SRW) crop having the largest increase. SRW plantings are up by 47 percent following last year’s record low, to 7.8 million acres. Hard red winter plantings increased by 1.0 million acres to 29.6 million acres. USDA anticipates a slight reduction in spring wheat plantings due to more favorable returns for oilseeds such as canola and soybeans. USDA’s spring wheat acreage projection currently stands at 16.0 million acres, down from 16.3 million acres last year.
Production is expected to decrease despite an increase in wheat acreage. Based on trend yields, USDA is projecting the national average yield to decline from last year’s record by 2.6 bushels, to 43.8 bushels per acre. USDA also warned of an increase in abandoned acres due to the persistent dry conditions in the central and southern Plains. Current crop conditions for many hard red winter (HRW)-producing states are down significantly from last year, with 24 percent of the total HRW crop in either good or excellent condition compared to 50 percent last year. USDA projects the wheat harvested-to-planted ratio to fall to 0.83 because of increased abandonment, down seven percent from last year’s 0.89, but just under the 10-year average of 0.84.
A decline in both carryover stocks and production will push total U.S. supplies down this year. USDA forecasts U.S. supplies at 81.9 MMT, down nine percent from 2010/11. However, supplies will still be at their second h
ighest level in the past 10 years and five percent above the five-year average of 78.1 MMT.
Demand in the U.S. is expected to grow in 2011/12, with USDA anticipating a two percent increase in domestic use, from 32.0 MMT to 32.5 MMT. U.S. exports will remain relatively strong due to tight carryover stocks from most major exporters. Additionally, exports from the Black Sea region will likely remain below average as governments in the region replenish stocks. USDA currently projects 2011/12 U.S. exports at 31.3 MMT, down from 35.4 MMT in 2010/11, but seven percent above the five-year average.
To read more from the event or download presentations, please visit http://www.usda.gov/oce/forum/.
4. Spotlight on Soft Red Winter Wheat
by Julia Debes, USW Communications Specialist
Editor’s Note: The generous financial support from U.S. wheat producer check-off dollars managed by 19 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service ensure that USW has the resources needed to help overseas buyers understand the reliability and functional benefits of U.S. milling wheat. This is the fourth in a series of articles focusing on USW member state wheat commissions.
Doug Goyings knows exactly where his wheat goes after leaving his farm. Goyings, who farms about 800 acres of soft red winter (SRW) wheat in addition to corn and soybeans in Paulding, OH, dropped his cell phone in a semi-load of wheat during harvest. To his surprise, he received a call from a facility in Georgia weeks later where his wheat was being cleaned.
From the farm to the elevator, SRW farmers like Goyings in Ohio, Maryland, Virginia, Arkansas and several other states in the eastern United States have access to both domestic and international markets.. Ohio leads the region by producing 45.8 million bushels of SRW in 2010, according to USDA’s National Agricultural Statistics Service. Maryland and Virginia produced 8.1 million bushels and 8.16 million bushels respectively.
Goyings explained that in addition to planting wheat as part of a rotation with corn and soybeans, he takes advantage of regional needs to increase his income per acre of wheat. Goyings also bales wheat straw and sells it as bedding for Kentucky racehorses or as mulch to the nursery industry.
Robert Hutchinson, who grows SRW on the eastern shore of Maryland in Cordova, also plants SRW as a part of a rotation. He explained that he is far enough south to plant soybeans behind his wheat, but timing is critical.
“With wheat, you have to get crops planted and harvested within a short window of time,” Hutchinson said. “It is twice the work to plant two crops, but you have twice the chance to hit a home run.”
Maryland faces additional challenges with rainfall and runoff into the Chesapeake Bay. Runoff into the bay is strictly managed, and many wheat farmers have implemented management practices like no-till tillage, broadcast seeding using vertical tillage and slow release fertilizer as part of an inter-industry effort to restore Bay waters to sustainably healthy levels.
As part of that effort, Hutchinson explained Maryland has a cover crop program that pays farmers to plant crops like wheat or barley. The crop can be harvested, but no fall fertilizer can be applied and no spring fertilizers can be applied before March 1, reducing the yield output of the crop.
An additional challenge east of the Mississippi River is crop competition — and not just with corn and soybeans. Hutchinson explained that barley is an increasing competitor to wheat on the eastern shore, but the market is not as steady as for wheat.
“Wheat has a better bang for its buck,” he said.
John Hoffman, who farms about 400 to 500 acres of SRW with his father in Circleville, OH, agreed that the diversity of crops that can be grown in Ohio’s fertile soil can make planting decisions difficult.
“You have to enjoy growing wheat, because it is hard to compete with corn and soybeans,” Hoffman said.
Hoffman also double-crops soybeans behind his wheat. In addition to a short timeframe to harvest wheat and plant soybeans, he explained that high levels of humidity and rainfall can make disease management difficult.
However, Hoffman explained that advances in technology have helped make management easier and better for the environment. For example, global positioning satellite technology allows him to more accurately apply fertilizer and crop protection products where they are needed.
Wheat researchers in the eastern United States at Ohio State University, the University of Maryland and Virginia Polytechnic Institute and State University (Virginia Tech) are working to further improve wheat quality, disease resistance and yield for SRW.
In November 2010, Virginia Tech was the second public university to sign a public-private collaborative agreement with Monsanto to advance their wheat breeding programs and generate superior varieties. The agreement will initially focus on improving yield and increasing resistance to Fusarium head blight (scab).
From the shores of the Chesapeake Bay to the shores of Lake Erie, farmers east of the Mississippi River will continue to grow high quality SRW wheat ideal for both international and domestic customers. Goyings said he expects there will always be wheat around, but that agriculture will continue to find ways to be more efficient.
“If it wasn’t for the innovative farmer, we wouldn’t be growing what we do today,” Goyings said. “Innovation…that’s agriculture.”
5. Wheat Export Market Development Benefits Wheat Producers and Our Customers
by Steve Mercer, USW Director of Communications
I am currently traveling with wheat industry leaders from California and Oklahoma to visit export customers in Mexico, Chile and Peru as part of a USW Board Team trip. Larry Hunn, a third-generation farmer from Clarksburg, CA, and chairman of the California Wheat Commission and Mike Schulte, CEO of the Oklahoma Wheat Commission, just spent our first full day overseas in Guadalajara, Mexico, with USW Regional Vice President Mitch Skalicky.
USW Board Teams are intense, regional visits arranged per the organization’s bylaws to give Board members the chance to review the work of local USW offices, to learn about local milling wheat needs and to thank milling and baking customers for their business.
At our first stop, we learned that there are nearly 200 centers for industrial training throughout Mexico that are supported by federal and state government agencies and private industries, known by their Spanish acronym, CECATI’s. Ms. Rebeca Porras Zarate is Director of CECATI #56 in Guadalajara where 5,000 mostly young adults from the state of Jalisco receive training in a wide variety of trades. In addition to information technology and computer repair, English and French language classes, and hospitality services, CECATI #56 trains about 500 students in baking arts.
“U.S. Wheat Associates first provided support for baking training here in 1982, soon after this center was founded,” Skalicky said. Today, such well-known organizations a Microsoft, the Organization of American States and Inter-American Development Bank provide funding and resources to help train Mexicans for job opportunities.
Larry, Mike and I met USW Technical Specialist Marcelo Mitre at CECATI #56 where he was helping direct a bread baking seminar for local independent bakery workers. USW had hired Juan Manuel Tiznado, a baking consultant with AIB International, to lead the seminar focused on helping the participants recognize how artisan baking processes can be used to improve the quality and value of bread for independent Mexican bakeries.
“While programs like this demonstrate the benefits of using flour made from high-quality U.S. wheat, in the process we are also helping small Mexican bakeries improve their products and profitability,” Mike Schulte said.
“It is impressive to see all the work behind the programs that wheat producers support through USW,” Larry noted.
I think each of us left with at least some extra sense of accomplishment and new admiration for efforts like CECATI #56 to improve the lives of the Mexican people.
After such an enjoyable visit, the team expanded its knowledge of the Mexican wheat food industry over lunch with flour milling executives with Grupo Kasto and Harinera Guadalupe. Much of our discussion centered on the outlook for the 2011/12 U.S. wheat crop and longer-term perspective on world wheat supplies.
Larry, Mike, Mitch and I shared our belief that U.S. and world wheat supplies will be adequate for 2011/12, weather and government policies may yet play a role. For example, Mike expressed some caution about the continuing dry conditions in parts of the HRW production region, but said he was encouraged by recent rains and in the crop’s ability to withstand harsh conditions.
We expressed our thanks to these customers for their continued loyalty to U.S. wheat producers and promised to help them stay informed about our crop.
An early morning flight on March 3 will take us next to Mexico City for nearly two days of meetings with customers and a visit to the USW regional office for Mexico, Central America and the Caribbean.
You can read more about the Board Team by logging on to the USW Facebook page at www.facebook.com/uswheat and opening the Discussion tab. I am also posting some photos on the page.
6. Grassroots Policy Set to Take Shape at NAWG Policy Meetings
Wheat growers who volunteer to represent their state producer organizations on the NAWG Board of Directors are in Tampa, Fla., this week to meet as part of the 2011 Commodity Classic.
Commodity Classic is a large convention and trade show for growers of wheat, corn, soybeans and sorghum. It is also NAWG’s annual meeting, and the last time the growers who make up NAWG’s Board will meet before their focus turns to the busy harvest and planting seasons.
At the 2011 Classic, members of NAWG’s Board of Directors will hold a full complement of policy meetings. These sessions allow Board members from around the country to bring their states’ ideas to the national association for consideration, setting the policy that will guide NAWG’s activities for much of 2011.
In addition, USW and the Wheat Foods Council are participating with NAWG in an exhibit in the Commodity Classic’s major trade show. The exhibit focuses on the bright future of wheat based on significant increases in research on new wheat varieties and its profit opportunities.
For more about NAWG’s activities at the 2011 Classic, please visit here or www.wheatworld.org/2011Classic.
7. Wheat Industry News
National Agriculture Day Heads to DC. On March 15, 2011, the Agriculture Council of America will host three major events in Washington, DC: a coffee with Secretary of Agriculture Tom Vilsack, a luncheon at the U.S. Capitol, and a National Celebration of Agriculture Dinner. For more information, visit http://www.agday.org.
NCI Announces Grain Procurement Short Course. The Northern Crops Institute will hold an Advanced Grain Procurement Strategies Short Course from May 16 to 20, 2011 in Fargo, ND. The registration deadline is April 25. For more information, visit http://bit.ly/hJJmnN.
Congratulations to Phua Lock Yang, Biscuit/Bakery and Noodle Technologist in USW’s Singapore Office, and his wife Tracey on the birth of their son Avens.
Condolences to Mr. Alwin Arifin on the recent death of his father, Mr. Bustanil Arifin, former Minister of Cooperation for the government of Indonesia and the owner of Sriboga Flour Mill in Semarang, Indonesia. USW President Alan Tracy first met Mr. Arifin in 1981 when Tracy was General Sales Manager of USDA. “He was a larger than life figure, already a legend in the grain trade at that time, yet he took time with me and was very kind,” Tracy said.
Follow USW Online! Like our page at www.facebook.com/uswheat for the latest updates and discussions of what is going on in the world of wheat. Also, find breaking news on twitter at www.twitter.com/uswheatassoc, photos of our activities at www.flickr.com/photos/uswheat and video stories at http://www.youtube.com/uswheatassociates.
Nondiscrimination and Alternate Means of Communications
U.S. Wheat Associates prohibits discrimination in all its programs and activities on the basis of race, color, religion, national origin, gender, marital or family status, age, disability, political beliefs or sexual orientation. Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact U.S. Wheat Associates at 202-463-0999 (TDD/TTY – 800-877-8339, or from outside the U.S.- 605-331-4923). To file a complaint of discrimination, write to Vice President of Finance, U.S. Wheat Associates, 3103 10th Street, North, Arlington, VA 22201, or call 202-463-0999. U.S. Wheat Associates is an equal opportunity provider and employer.
