These days, with terrorism, anti- Americanism, SARS and the aftermath of war dominating the headlines, it’s understandable to want to think locally, act locally. But that is impractical when it comes to the grain trade.
Because
the U.S. exports about half of the wheat it produces, as well as
about one-third of its soybeans and close to one-fourth of its corn,
the American ag sector has no choice but to think globally and act
globally.
Communicating with overseas grain buyers and educating them about the U.S. grain system is a key part of that mission. National commodity promotion groups such as U.S. Wheat Associates, the U.S. Grains Council and the American Soybean Association have field offices around the world to develop markets for American grain by providing information, education and assistance to overseas grain buyers and end-users.
These overseas trade promotion efforts are funded by the U.S. Department of Agriculture’s Foreign Ag Service and by American farmers themselves through a small tax, usually no more than a penny or two per bushel, on grain at the point of sale. This tax, commonly called the “check-off,” exists in most grain-producing states and is directed by farmers who serve on state commodity promotion groups.
The Northern Crops Institute is one unique educational program collab-oratively funded by grain checkoffs in North Dakota, Minnesota, Montana and South Dakota. The NCI (www.northern-crops.com) is essentially an international learning center for overseas grain users and processors to learn how to trade and process northern-grown grain. Just recently, crop buyers from 14 countries learned strategies for making better grain purchases. Included was a computerized risk management exercise, allowing buyers to simulate management strategies for purchasing American grain.
Commodity groups in the region also host overseas trade teams to educate foreign buyers about the American grain system. Typically, these visits are scheduled during the growing season, so overseas grain buyers and users can see first-hand how American grain is grown, shipped and marketed. A typical trade team itinerary in the Northern Plains region includes at least one on-farm visit, as well as stops at a country elevator, the Minneapolis Grain Exchange and the Port of Duluth-Superior.
In business, it is said that “it’s not what you know, but who you know,” and the global grain business is no different. While price and quality are two key determinants to overseas grain purchasing, there is no doubt that building relationships with overseas grain buyers and users is important to overseas market-share.
Take South Korea, for example: In 1945, there were only four flour mills in the south part of Korea, and they were completely destroyed during the Korean War. The U.S. government and American wheat industry made the first wheat donation (under Public Law or PL 480) in 1956 and helped rebuild South Korea’s grain milling infrastructure. Now the South Korean market is one of the most sophisticated in the world. U.S. farmers supply over 50 percent of its wheat import needs, much of it northern-grown hard red spring wheat, mostly cash sales.
This spring, in an affirmation of the relationship between Korean mills and the U.S. wheat industry, wheat groups in the Northern Plains hosted a trade delegation representing the Korean Flour Mills Industrial Association.
The need for education and communication about the American grain system is important these days, given the fact that fewer governments and more private companies are buying grain. Ten to 15 years ago, about 80 percent of global wheat purchases were government-controlled and 20 percent were private. Today that figure is reversed.
