U.S. Wheat Associates

Serving Wheat Producers

North Dakota Wheat Commission

County Representatives Meeting

John Oades, Vice President

U.S. Wheat Associates

U.S. Wheat Associates

•The USW Mission: -”Develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers.”

•USW-NDWC partnership -USW is an extension of the NDWC and 18 other state wheat commissions for conducting overseas market development

Technical Assistance

Product Demonstrations

Serving Your International Customers

• As wheat growers you know the importance of your international markets– On average 57% of U.S. HRS production is annually exported

• Average HRS production is 13.0 MMT (478 mb) annually• Average HRS exports are 7.42 MMT (273 mb) annually

Columbia Grain

Investing to Grow Overseas Markets

• Increasing sophisticated buyers

• Extremely competitive marketplace

• Like you, our customers are seeking “VALUE”– They want the best possible quality and service

for the lowest possible cost– U.S. are frequently “price challenged”

• USW delivers programsthat demonstrate thesuperior value of U.S. wheats

Selling Value to Your Customers

• USW operates programs in more than 90 countries worldwide from a base of 15 international and two stateside offices

Arlington, VAPortland

Mexico City

SantiagoCapetown

Lagos

CasablancaCairo

RotterdamMoscow

Singapore

Manila

Taipei

Seoul

Tokyo

Hong Kong

Beijing

Headquarters Regional or Country Office Sub-regional Office Reporting lines

Selling Value to Your Customers• U.S. Wheat Associates funding

– 19 member states contributing $4.785 million• NDWC contributing $857,800

– USDA FAS contributing $12.250 million• USW provides 2.6:1 leverage on producer funding

• U.S. Wheat Associates activities– Market analysis

UNITED EXPORT STRATEGIES AND APPLICATION FOR FISCAL YEAR 2011

Selling Value to Your Customers

• U.S. Wheat Associates Activities:

– Trade Servicing• Relationship dev.• Problem solving• Trade teams

– Technical Assistance• Information sharing• Technical training• “Coaching”

Selling Value to Your Customers

• U.S. Wheat Associates Activities

– Consumer education• Promotions• Product branding

– Policy development• Trade agreements• Credit facilities• Food Aid• SPS issues

What Is The USW Program Costing You?

•Producer cost is $0.0028 per bushel*

•Is this a good investment? (value)

–The same questions your commissions ask themselves during NDWC budget prep

•Let’s look at some examples of USW value delivery for your producers

*U.S. Wheat Associates 2009/10 Financial Report

Nigerian Effort Proves Valuable

• USW identified Nigerian opportunity in 1990s

• Provided focused, hands-on service and training

• Great results:– Exceptionally loyal buyer (90%

U.S market share)– #1 buyer of U.S. wheat last two

years at 3.5 MMT (130 mb)– Imports all six U.S. wheat

classes– Flour milling, 2nd largest industry

in Nigeria

What if USW Had Not Done This Work?

• We might sell 30 million bu. less per year

• Stocks grow by around 100 million bu.

• The gap = 15¢ per bu. less* (all classes)

• Multiply that times your production...

20,000 bu x $0.15 = $3,000• That is the impact of just one market!

* “Price Determination for Corn and Wheat: The Role of Market Factors and Government Programs” USDA/Economic Research Service

V

Market Development: Saudi Arabia

• Saudi market remerged in 2009 – 100 mb potential

• Educated the buyer– Middle East Buyers

Conference– Crop Quality Seminar– Trade Team visit

• 6 million bushels HRS and HRW sold so far ($40 million)

Heads Up Builds HRS Wheat Sales

• USW advice to South Asian buyers: “Book 14% protein HRS”

• Option to buy at contract price for 14% or pay less lower protein

• Helping Philippine millers test low protein HRS

• South Asian HRS sales YTD are 67% ahead of 2009/10

Keeping the Durum Moving to the EU

• Durum sales to the EU at risk from incorrectly applied $25/MT tariff

• Demonstrated a resolution and EU officials drop tariff

• Prevented $3 million cost on committed durum sales

• U.S. durum stayed in the EU market

EU Headquarters, Brussels

World Turns to U.S. Wheat

21.2

8.317.9

26.6

43.768.0

60.460.1

27.6

24.0

34.0

0

10

20

30

40

50

60

70

80

90

100

92/93 95/96 98/99 01/02 04/05 07/08 10/11

MM

T

Beginning stocks Production Imports Exports Domestic Use

1st Forecast: Flat at 24 MMT

Current Forecast: 34 MMT

U.S. Supply & Demand Estimate (USDA)

Export Sales Tracking Much Higher

Export sales as of November 25

HRW HRS White SRW Durum0.0

2.0

4.0

6.0

8.0

10.0

12.0

2010/11 2009/10

MM

T

+98%

+84%

+25%

-18%-17%

Total sales +57%

Net Return to the Producer per $1 Invested*

*Producer Net Return on Producer Investment, 2000 to 2007An Economic Analysis of U.S. Wheat Export Promotion, Dr. Harry M. Kaiser, Cornell University January 2010

Gross Return to the U.S. Economy per $1 Invested*

*Industry Gross Return on Total Investment, 2000 - 2007“An Economic Analysis of U.S. Wheat Export Promotion”Dr. Harry M. Kaiser, Cornell University January 2010

Learn More at www.uswheat.org

Keep the Wheat Flowing and Prices Strong

From your farm

To the world