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RESEARCH
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MARKETING
WGC allocates $1 million plus to promote wheat sales
By Scott A. Yates, July 2012
For the first time in the 54-year history of the Washington Grain Commission (and its precursor, the Washington Wheat Commission), funds dedicated to marketing efforts exceeded $1 million in the 2012/13 budget.
The exact figure commissioners assigned to market development during their May 16 meeting was $1,033,822, or 18 percent of the budget. It is a total that has been steadily rising the last 10 years. In 2002/03, $677,700 went toward various initiatives intended to help sell Eastern Washington’s wheat production around the world. Five years ago, $807,000 was earmarked for marketing.
Tom Zwainz, chairman of the Washington Grain Commission (WGC), said although research still takes the lion’s share of the total budget (see story on page 56), marketing Washington grain overseas is ultimately how growers are paid for the crop they produce.
“Marketing is really about educating our customers and teaching them how to use our wheat more effectively. Thanks to research the WGC has funded which has uncovered specific advantages to blending soft white into hard red classes, we believe the time is ripe to push this concept harder in regions where it will work,” he said.
This effort involves an $80,000 line item to fund a soft white wheat technician through U.S. Wheat Associates (USW) who will work with mills in Central and South America to demonstrate how blending can save them money and produce a more desirable pan bread product. Another $9,000 is earmarked for a baking consultant to Ecuador where blends will also be promoted along with soft white’s superior performance in confectionery items.
“The Latin American markets have already seen strong growth in imports of wheat from the Pacific Northwest. As recently as the 2002/03 marketing year, just 2 percent of U.S. wheat to Latin America was exported from PNW ports. In 2010/11, that figure was 20.6 percent,” Zwainz said. “When you consider the expansion of production in the Black Sea area of the world and how that is affecting some of our traditional markets, it is important for us to aggressively pursue markets in our backyard.”
Which doesn’t mean the WGC is ignoring markets that have served as Eastern Washington’s wheat foundation. Far from it. For the first time ever, the WGC is helping sponsor a North Asian Buyers Conference, pitching $62,000 into the effort. Another $30,000 is set aside for regular trade servicing in the region.
As opposed to South Asia, which is largely composed of developing countries like the Philippines, Vietnam and Thailand, North Asia comprises developed markets such as Japan, Korea and Taiwan. In 2011/12, 1.75 mmt of soft white was exported to those three countries alone.
“As a result of the pioneering efforts of those that came before us, these developed nations— once developing nations in their own right— represent the base demand for our flagship commodity, soft white. We cannot, however, take these markets for granted. In partnership with multi-national grain corporations, Russia has plans to build additional ports to export wheat from their East Coast, which puts them on the doorstep of our traditional markets,” Zwainz said.
But the Reardan farmer said Washington growers have an ace up their sleeve.
“As competition among grain exporting nations heats up, I believe we will really begin to reap the rewards of the WGC’s more-than-decade-long emphasis on growing quality varieties,” he said. “This is particular true for those export markets that depend on both quality and consistency to operate their highly automated mills.”
Other market development initiatives budgeted in 2012/13 includes the WGC’s $375,000 membership in USW, an $18,000 increase over the prior year. Billed as the “export arm of the U.S. wheat producer” USW is funded by 19 wheat commissions across the nation. State assessments are based on an Olympic average of production over the last five years. But this year’s figure also represents a 5 percent increase in the assessment USW uses to calculate membership.
“With the devaluation of the dollar against other overseas currencies where USW works, the monetary pressure to keep offices open has increased. There is also increased stress on the federal budget which helps underwrite various USW projects through Foreign Market Development (FMD) and the Market Access Program (MAP). Along with belt tightening, the assessment increase was seen as the best way to keep USW relevant,” Zwainz said.
Another big ticket item under the market development category is the WGC’s $262,980 contribution to the Wheat Marketing Center (WMC) based in Portland. The WMC hosts miller and baker teams from around the world to help them learn new procedures and refine their existing protocols. The funding level is a hefty increase from the $156,000 budgeted the previous year, a factor Zwainz said relates to the purchase of a new piece of equipment, a doubling in the cost of doing full milling and baking tests and the WGC’s sponsorship of a visiting scientist.
Zwainz said the WGC—like the farmers it serves—has had a remarkable few years, and it only made sense to add to the organization’s marketing efforts as a way of cushioning the blow when prices and assessment income falls.
“We can be sure of one thing: people will continue to eat, and with wheat supplying more than 20 percent of the world’s calories, we know our crop will continue to be in demand. But we cannot ignore the storm clouds. Competitors, world economic conditions, monetary policy—they all affect us, and we can’t control them. What we can control is the quality of the wheat we produce, our partnerships within the export grain chain and our relationships with those who buy our product,” he said. “Market development, along with research and education, is one of three legs of a stool that are essential to Eastern Washington wheat farmers’ success.” Here's a full listing of the WGC 2012-2013 budget