Last year, the U.S. was dethroned as the world's top exporter of wheat — losing out to the Black Sea and Russia. However, Steve Wirsching, U.S. Wheat Associates vice president and director of USW's West Coast office in Portland, Ore., notes the U.S. is still king when it comes to quality wheat.
"Having quality boosts value," Wirsching says. "Last year, Russia exported more in total quantity than we did, but we certainly outdid them in terms of total value."
However, that can present a challenge for countries where cost is an issue, adds Steve Mercer, vice president of communications at U.S. Wheat Associates' Washington, D.C., office.
"Some might consider it a loss of market share, an indication that U.S. wheat is no longer the big dog. Volume-wise, Russia and the Black Sea have done extremely well," Mercer says. "In markets where we used to have a larger market share, like Egypt and the Middle East, cost has always been a concern. Now they have less expensive wheat from Russia and the Black Sea that's very close by. Over the past two years, its export price has been as much as $50 less per metric ton, or more than $1.36 per bushel."
Going where quality counts
So, the U.S. is shifting its focus to markets where quality is more important, such as Latin America and Southeast Asian countries. These markets are gradually joining established quality buyers like South Korea, Japan and Taiwan — markets that pay $35 to $40 more per metric ton for quality.
"That adds up. That's what we want to promote. We'd like to encourage people to move into being a quality buyer, rather than a price buyer," Wirsching says. "These are highly developed, sophisticated markets, and they see the value associated with the high-quality wheats we produce. They're willing to pay premium prices to get what they want — the right protein, falling number and so on."
Meanwhile, Southeast Asia is home to some emerging high-value markets, where disposable income is rising. This means a higher demand for faster, on-the-go wheat products like instant noodles, cookies and crackers. And that means more demand for high-quality, high-protein wheat from the U.S.
Emerging market of Vietnam
One of these emerging markets is Vietnam. "They make French-style baguettes, and they use 12% protein winter wheat to do it," Wirsching says. "The Vietnamese are experiencing some very good economic growth right now. Their food consumption habits are changing, and they are consuming more bread products. They have a history with the French, and they do have a taste for baguettes. So we have been marketing hard red winter to Vietnam, and I think in the future that will be an area of growth for us."
"One of the challenges now is Vietnam has insisted imported wheat be treated with methyl bromide, which is not standard insect control for stored wheat and grain," Mercer adds. "One of the things TPP [Trans-Pacific Partnership] would have done is provided a base of rules to arbitrate issues like this in a fair, efficient manner. It's one of those things we hope we can take from TPP and improve on in bilateral trade agreements and the renegotiation of NAFTA [North Atlantic Free Trade Agreement]."
Improving quality through research
Coming off of a year of record yields, one of the biggest challenges facing U.S. wheat production is lower prices. In the longer term, lower wheat prices mean less money to invest in research and development, and quality improvement — and quality is a big driver in adding value through U.S. wheat exports.
One way the wheat industry is working toward improving wheat profitability and productivity while increasing public and private wheat research is through the National Association of Wheat Growers and National Wheat Foundation's National Wheat Action Plan. This includes demonstrating the value of using certified seed, announcing the National Wheat Yield Contest in 2015, and studying the profitability benefits of identity preserved programs.
Of course, exports are one way to add value for wheat producers. That's why Wirsching notes U.S. Wheat Associates plans to work closely with the Trump administration moving forward to demonstrate the role free trade plays for U.S. wheat producers. "As agriculture moves forward in the next century, trade is a large component of what we do," he says.