By Ben Potter and Alison Rice
When Japan Demands Quality, the U.S. Delivers
Japan is halfway around the world from the U.S. but continues to be a critical customer of American-made wheat. The U.S. supplies 57% of Japan’s total annual wheat imports. That adds up to 10% of total U.S. wheat exports for hard red winter (HRW), soft white and hard red spring.
For HRW wheat, Japan is the fourth-largest buyer, on average. This past year, the country imported 3.3 million bushels of HRW, or 1⁄25th of the entire U.S. crop.
According to the Kansas Wheat Scoop newsletter, the Japanese market is quality conscious and values the reliability and choices provided by the U.S. wheat supply chain from farm to port. As a result, Japan issues large tenders for U.S. wheat on a consistent basis through its import state-trading enterprise.
The Ministry of Agriculture, Fisheries and Forestry purchases nearly all of Japan’s wheat imports and then sells to Japanese flour mills. Japanese millers are highly sophisticated and efficient with the ability to produce up to 500 different products daily. Japanese millers primarily use HRW for noodle production.
While most of the wheat Japan purchases comes from targeted geographies, the total volume of imports raises the demand and price for all HRW farmers, says Shawn Campbell, assistant director of the U.S. Wheat Associates West Coast office.
“Without the Japanese, farmers in states like Montana would be forced to sell HRW at a much discounted price in order to compete in the domestic market,” he adds.
Cuba Could Be a Significant New Market
U.S. farmers might soon have a new market for their products, thanks to the White House’s decision to begin normalizing relationships with Cuba.
“I do believe we can keep doing the same thing for over five decades and expect a different result,” says President Barack Obama. “Moreover, it does not serve America’s interests, or the Cuban people, to try to push Cuba toward collapse ... We should not allow U.S. sanctions to add to the burden of Cuban citizens that we seek to help.”
The new approach includes an expansion in trade with Cuba, which represents a relatively untapped market of 11 million people for rice, wheat and other agricultural products.
Betsy Ward, president and CEO of the USDA Rice Federation, says the economic embargo on Cuba has long been problematic for U.S. rice farmers. She notes her organization observed “the embargo was not on Cuba, as they could source rice and other products from around the world, but rather on the rice growers in the U.S., whose own government cut them out of one of the world’s top markets, just 90 miles from our shores.”
Wheat farmers are also excited at the prospect of a new market.
“If Cuba resumes purchases of U.S. wheat, we believe our market share could grow from its current level of zero to 80% or 90%, as it is in other Caribbean nations,” says Alan Tracy, president of U.S. Wheat Associates.
Cuba, which does not grow wheat commercially, could potentially import a half-million metric tons of American wheat annually, according to a joint statement from the U.S. Wheat Associates and the National
Association of Wheat Growers.