NAWG Discusses Global Position of U.S. Wheat Farmer
U.S. farmers produce roughly twice the demand to supply export markets
- Argentina increased its export tax from 20% to 28% in November 2007. The government then issued a variable tax in March 2008 that had the potential to increase taxes to 46%. The variable tax structure ended and export taxes were set at 23%.
- Russia has used export tariffs off and on for several years; a 10% tax implemented in November 2007 increased to 40% in January 2008 or a minimum $155/MT to decrease export flows, increase domestic supplies and lower domestic prices.
- Kazakhstan implemented a tax scheme in March 2008.
- China also issued export tariffs ranging from 5 to 25% in January 2008 on certain grains.
Export State Trading Enterprises: Export STEs, such as the Canadian Wheat Board (CWB), manipulate prices and can choose to simply not offer wheat to some customers as they did in 2007/08.
Purchasing wheat involves risk. It is increasingly important to consider not just price and quality, but also contract sanctity, political stability, transparency and the ability of a supplier to meet your increasing business demands. A contract with an unreliable supplier is no guarantee the wheat will be delivered. The U.S. wheat industry realizes that customers have many options for sourcing their supplies and a diversified purchasing strategy that includes U.S. origin can help avoid some purchasing problems that arise in a volatile market situation.
Export Taxes: Export tariffs on U.S. products are forbidden by Article I, Section 9, Clause 5 of the U.S. Constitution.
U.S. Contract Sanctity: Several legislative acts throughout the history of the United States protect the sanctity of all export contracts to assure that registered purchases for export are honored.
Market Competition: USDA currently lists over 120 U.S. private agricultural commodity exporters, including at least 25 companies involved in wheat trading, providing assurances to customers that the competitive environment and not a monopoly seller, like the CWB, will decide their ability to import during difficult times.
Transparent Pricing: Price discovery through futures exchanges results in transparent prices to the entire world so customers know the price U.S. wheat is available to them at any time.
Price Assurance: U.S. exporters use sound risk management practices allowing them to honor sales contracts often made months in advance of vessel loading, giving buyers assurance that they will receive their cargo at the price agreed upon, regardless of market movement.
Quality Assurance: Customers know U.S. quality will meet their expectations because thorough, well documented and uniform grain inspection procedures exist across the country. U.S. wheat is inspected at several points along the supply chain to ensure quality, including:
- Country elevators inspect for basic quality and provide discounts or premiums to wheat farmers based on the quality delivered, which encourages delivery of a quality product.
- Export elevators often conduct an inspection on each truck, rail car or barge delivered to their facility to know the wheat quality and segregate to meet each vessel’s requirements.
- The Federal Grain Inspection Service (FGIS) inspects wheat again at vessel loading to ensure that the quality loaded matches the quality stated in the customer’s contract.
- FGIS uses a well-established sublot (1,000 MT) inspection system including diverter sampling and documented inspections, providing buyers with uniformity and consistency.
The U.S. wheat industry is proud of its position as the world’s most reliable choice, and will continue to operate a transparent and open market to maintain that valued reputation. Both our domestic and export customers can depend on the integrity of our supply chain, the quality of U.S. wheat and our unmatched reliability as a supplier.
- « Previous Page
- 1
- 2
- Next Page »
