While the Pacific Northwest spent 60 years building a grain export system founded on government supports, Canada and Australia were preparing for the wide-open, unsubsidized trade of the 1990s.
That has put the $1.5 billion Northwest wheat industry at a disadvantage. These wheat-producing nations are offering foreign buyers up to 45 different types of segregated grain, officials warned the annual meeting of the Pacific Northwest Feed & Grain Association Tuesday.
“I know all the excuses you can give to ship average wheat, but what’s wrong with being a little proactive?” Tom Mick, executive director of the Washington Wheat Commission, told 100 members of the Portland-based association of grain exporters and elevator companies.
Mick and others chastised the industry for its slow response to demand from Asia and South America for quality-specific wheat. Canada and Australia have eroded the U.S. share of those markets in recent years by guaranteeing delivery of particular wheat varieties, quality and milling characteristics.
“Folks, being a Wal-Mart is no longer good enough,” said Ken Beswick, former commissioner of the Canadian Wheat Board. “This is a boutique, specialty world and being a Wal-Mart supplier just won’t cut it.”
Speakers at the convention agreed that it would be a costly task to begin cleaning wheat at the farm, segregating it in multiple bins at the country elevator and shipping it according to quality characteristics out to port.
“I feel sorry for you, I really do, because it’s going to be expensive,” Mick said.
In Canada, the wheat board restricts farmers to growing specific wheat varieties that can be segregated for export. In Australia, handling authorities reject grain if it is not cleaned.
But in the United States, the system is largely based on volume, not quality. Decades of federal price supports have encouraged farmers to produce higher yields, while grain elevators and exporters turned a greater profit on volume shipments.
That system works well for sales to Egypt, Yemen and a few other nations whose only concern is price. But more than half the Asian nations buying Northwest wheat currently are demanding specific grain qualities, Mick said.
The demand for quality also is gaining favor south of the border, where government officials are rapidly turning over buying authority to private flour mills. These mills are far more particular about what grain they will buy.
Mitchell Payne, president of the PNWFGA and manager of the Johnson Union Warehouse in Colton, Wash., said Northwest grain elevators and exporters are quietly changing how they handle their grain to meet the demand for quality.
“There’s a lot more going on than most want to let on,” he said. “It’s a necessity to stay in business.”