The Way the Wheat Business Works is Changing - USW Working Hard to Stay Ahead of the CurveThu, 10 May 2018 15:03:43 CDT
Radio Oklahoma Ag Network Farm Director Ron Hays caught up with US Wheat Associates President Vince Peterson this week in Kildare, Okla. during a stop on the 2018 Oklahoma State University Extension Wheat Field Day Tour. Peterson offered an overview of the international wheat business and its current state of affairs. Listen to Hays speak with Peterson in the full version of their interview, by clicking or tapping the LISTEN BAR below at the bottom of the page.
“The landscape right now almost is closer to home, because trade and trade policy is driving our attention at the moment,” Peterson began, emphasizing the heavy focus at present on maintaining and gaining market access around the world. “You’ve got NAFTA and TPP on the table, you’ve got trade issues with China - all that stuff is a really big issue combined in a big package for wheat producers. So, what does that mean for us?”
Taking the Chinese issue for example. Peterson explains that in 2017, the US exported approximately 50 million bushels of wheat to China. If China were to follow through on its threat of slapping a 25 percent tariff on US wheat imports - he says American farmers would most likely lose most if not all of that business. That’s a big hit to the industry he says, representing a large chunk of the business done there in the Asia/Pacific Rim theater which accounts for roughly 45 percent of the total US wheat business internationally.
Peterson explains, too, that trade is not just changing and evolving through policy - change is also happening in the way business is conducted for all agricultural commodities and wheat especially. Not long ago, USW was generally meeting with government entities when it came to selling American wheat to foreign customers. Today, he says things have become more privatized and now he and his staff work directly with individual milling companies and bakers - each with their own preferences and goals. No longer are the days of selling bulk commodities to mass customers.
“Frankly, it puts a bigger burden in a certain way on us. Used to there was one buyer - the government of Mexico for example,” he said. “Now, you’ve got six milling syndicates down there. They’re all individually making decisions on imports. They’re in a competitive circumstance and now we have to work with them and probably 100 facilities just to do that business down there. It really puts the task to us to do that.”
That pressure is felt by producers back home as well, who are now more accountable to their customers who expect the best product with the highest quality and are willing to pay for it to keep a steady, stable supply coming.
“It’s a big challenge,” Peterson remarked. “We’ve got production challenges, we’ve got quality challenges, price, logistics - all those things are in our court.”
Realizing that the times are changing, and the market is becoming more competitive, Peterson says USW is working to stay ahead of the curve and is enhancing its resources by investing in more talent from different fields and collecting more data where and whenever possible to help build the best possible case for closing every sale and to better serve their customers.
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