As a new year begins, we want to share the good news that U.S. wheat exports to Asian markets are increasing, and the outlook for those markets remains positive, notwithstanding the unique trade dynamics over the past several years.

Yes, the rejection of the Trans-Pacific Partnership (TPP) and the trade dispute with China caused some heartburn for U.S. Wheat Associates (USW), the National Association of Wheat Growers (NAWG) and our Asian customers. Yet U.S. wheat demand in the region weathered the storms in part because USW, NAWG and farmers serving on our Joint International Trade Committee had full access to sympathetic ears at the Office of the U.S. Trade Representative (USTR) and USDA. Those officials understood our concerns and kept them front and center in their negotiations.

Here are some highlights of how U.S. wheat has maintained or increased export volume to key Asian markets.

The main concern about withdrawing from TPP centered on Japan, U.S. wheat’s longest and largest Asian market over the years. Having earned a 50% share of Japan’s wheat market, withdrawal put U.S. wheat imports at a big disadvantage. Japan’s other major wheat suppliers, Canada and Australia, did join the new Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). As a result, competitive wheat would enjoy lower effective tariffs while U.S. wheat tariffs would remain the same.

Drawing on decades of goodwill, USW made the case to Japan’s flour millers and government officials that working to give U.S. wheat equal access again would be good for Japanese industry and consumers. They fully embraced our overtures, and millers very much wanted to maintain their volume of quality U.S. wheat.

During negotiations, Japan continued buying U.S. soft white, hard red spring and hard red winter wheat at its regular pace. Fortunately, the U.S.-Japan agreement that started last January ended that threat to U.S. wheat exports.

Four other wheat importing countries also joined the CPTPP: Malaysia, Myanmar, Singapore and Vietnam. Among them, only Vietnam maintained a tariff of 5% on imported U.S. wheat, until the USTR negotiated a reduction to 3% in 2020. USW has worked very hard to build demand in Vietnam, which imported more than 450,000 metric tons (about 16.5 million bushels) of U.S. wheat in marketing year 2019/20, a new volume record. After five months of the new marketing year, Vietnamese millers have imported 375,000 metric tons, a pace 57% ahead of last year at the same time.

Overall, U.S. wheat sales to CPTPP countries between 2016 and 2020 increased about 20% from 2.9 million metric tons (MMT) to 3.5 MMT. That positive trend held in other Asian markets that are not CPTPP members. Since 2016, U.S. wheat exports to Indonesia, Korea, Philippines and Taiwan have increased 28% from 5.4 MMT to 6.9 MMT.

The big trade story focuses on the dispute with China. Mainly a swing market for U.S. wheat in the past, China had steadily increased its U.S. wheat imports to a peak of 1.8 MMT in marketing year 2016/17. Then in response to U.S. tariffs, China’s retaliation imposed a de facto blockade of U.S. wheat exports in March 2018.

USW put forth a full accounting of the export sales and farm income losses from the retaliatory tariffs, an effort that eventually mitigated some of the losses for U.S. wheat farmers. USW, with NAWG’s support, also worked closely with our negotiators to help shape an outcome that would benefit the farmers we represent.

We were pleased when our 2019/20 Chairman Doug Goyings was invited to the White House to witness the signing of the Phase 1 agreement last January. From that point through May 2020, China purchased almost 800,000 MT of U.S. wheat. And, so far in marketing year 2020/21, China’s commercial purchases of U.S. hard red winter, soft white and hard red spring wheat stand at more than 2.1 million metric tons, with indications that a similar importing pace will continue into 2021.

Thanks to wheat farmers, our 17 state wheat commission members and USDA’s Foreign Agricultural Service export market development programs, USW maintains a high level of trade and technical service around the world. With their continued support, we will do all we can to maintain this positive trend in these crucial Asian markets.

Vince Peterson is president of U.S. Wheat Associates, the export market development organization for the nation’s wheat industry.

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