By Mike Carstensen

Clearing customs in Beijing, a half world away from my center of the universe 10 miles north of Almira, I found myself face-to-face with a Chinese policeman carrying an automatic rifle and a stern expression. We may not have spoken the same language, but his message was clear: “No photos!”

Although I’ve only served on the Washington Grain Commission since January, I’ve already had numerous opportunities to ask myself what have I  gotten into?  I traveled from March 22 to April 11 as part of a  U.S. Wheat Associates (USW) opportunity called the 2018 North Asia Board Team Travel tour. As a USW board member, my job is to strengthen the relationship between wheat farmers and our customers by learning about the wheat quality characteristics our markets prioritize. Simultaneously, I observed how USW spends grower dollars with the goal of bringing value back to farmers.

To understand a board tour, you start with understanding USW. The overseas market development organization represents wheat producers in the United States. USW encourages the growth of world wheat consumption through a variety of activities and programs including market analysis, trade servicing, technical assistance and consumer promotion. The organization is supported by wheat producers through their respective state organizations in 18 states, as well as funding from the Market Access Program and Foreign Market Development Program, both administered by the U.S. Department of Agriculture (USDA) Foreign Agriculture Service (FAS).

 USW has 15 offices overseas and two in the U.S. Headquarters is in Arlington, Virginia and there’s a West coast office in Portland. Through the WGC, Washington farmers contributed roughly $430,000 in 2017/2018 toward the operations of USW. Total membership assessment is pegged at $5.5 million which is leveraged at a 3 to 1 ratio with those MAP and FMD funds. The total return to the U.S. economy can be as high 28 to 1.

I was traveling with four others including Clark Hamilton, a wheat farmer from Ririe, ID and a current USW director representing the Idaho Wheat Commission; Gordon Stoner, a wheat farmer from Outlook, MT, and past president of the National Association of Wheat Growers (NAWG); Scott Swenson, a wheat farmer from Elbow Lake, MN, and the treasurer of the Minnesota Wheat Research and Promotion Council.  Our tour leader was Stephanie Bryant-Erdmann, USW’s market analyst. Team travel started in Portland, passed through the Qingdao area of northern China and ended in Taiwan.

USW Portland office Director Steve Wirsching and Deputy Director Shawn Campbell gave us the low down on China and Taiwan demographics, politics and markets as well as visiting do’s and don’t’s. An oversight perhaps: They didn’t mention the rule about no photos of armed security forces with automatic weapons.

Portland was included on the itinerary for participants to gain a sense of where our wheat originates in the value chain, under what conditions and parameters it is traded and how it is handled and shipped to our overseas customers. We are fortunate to have a complete system from breeding to segregation focused on maintaining the highest quality grain in the world. Thank your fathers and grandfathers for that.

But today’s wheat buyers have changed from the days of our fathers. In 1985, 30 percent of our exports went to the Middle East and North Africa, 25 percent to East and South Asia, 13 percent to China, 14 percent to Latin America, 8 percent to the Indian sub-continent and 5 percent each to sub-Saharan Africa and Europe.

In the 2017/2018 timeframe, 43 percent of our exports will go to Latin America with another 43 percent to Asia. Combined European and Middle East/North Africa sales are pegged at 14 percent.

At Portland’s Wheat Marketing Center (WMC), Gary Hou hosted a tour of the facility. A technical crossroads of the international wheat industry, the WMC provides technical training and grower workshops, innovative research, product development, and crop quality testing services. The focus is on promoting U.S. wheat by demonstrating its quality and functionality in an array of products.

During a trip to the Federal Grain Inspection Service (FGIS), Kim Harper, the location’s quality assurance specialist, demonstrated how the agency helps move our grain into the marketplace by providing farmers, handlers, processors, exporters, and international buyers with sampling, inspection, process verification, weighing and stowage examination services that accurately and consistently describe the quality and quantity of the commodities being bought and sold.

Rounding out the Portland briefing was a visit to United Grain’s Vancouver export facility. United Grain merchant James Wu hosted a facility tour, explaining what goes on between receiving grain and loading a ship. In addition, we observed Washington State Department of Agriculture employees grading grain under contract to FGIS.

Mike Carstensen and Qingdao Weiliang

Mike Carstensen and Qingdao Weiliang

From Portland, it was on to Qingdao, China, in the northern part of the country and a visit organized by USW Regional Vice President Jeff Coey along with marketing specialist, Shirley Lu . Qingdao is a city in eastern Shandong Province on the east coast of China near a wheat growing region. It is the largest city in its province. with an urban population of 6.2 million.

In 2016/17about 1.65 million metric tons of U.S. wheat was shipped to China. In the 2017/18 marketing year through December, about 520,000 metric tons of U.S. grain had been shipped. China is currently the PNW’s fifth largest customer for soft white wheat.

We toured three bakeries ranging in size and structure, including one franchised artisan bakery. The bakeries may have been different, but the quality and pride they took in their products was identical. Your local Duncan Donuts or Rosauers’ Bakery cannot compare.

Next, we met with a selection of millers and food companies. One, Qingdao Weiliang Food Co., Ltd., is an advanced flour researcher, developer, and processor of award winning high-end products. Four Garden Flour Mill, a top  five of more than 30 grain importers, reported 30 percent of all their milled wheat is U.S. origin including high-protein hard red spring and soft white.

We made another stop at Four Garden Flour Mill., where a 100 TMT flour mill uses one-third U.S. wheat. Four Garden plans to build a 250 TMT flour mill and wants to use up to 40 percent U.S. wheat with favorable tariff rates. An additional tour stop was a Korean venture, Qingdao Nongshim Foods Company where American wheat is used to make a shrimp puff snack.

Our Chinese customers are focused on milling yield, flour quality, consistency, food safety, and enhancing profitability through differentiation. Yet, it appears they spend as much time responding to state policy as to milling wheat.

Chinese millers are advocates for expansion of the international wheat trade. But China’s policy makers view imports of grains as more a threat to food security than a backup supply. Rural income enhancement is so important that wheat farmers get about $9.50 per bushel for their grain. The government, meanwhile, has little concern for processors and consumers.

The take home message from northern China was simple: From the Chinese miller to the baker and on to the customer, quality matters, quality matters, quality matters!

Taiwan

While clearing customs in Taiwan I looked, but could not find any security forces with automatic weapons to take photos of.

Taipei served as the base for our Taiwan visit, again organized by USW’s Coey and Taiwan Country Director, Taipei office, Bo-Yuan Chen,  along with Asia Product/ Nutrition Specialist, Shu-ying (Sophia) Yang.

Taiwan has more than 23 million people; one of the most densely populated places on earth. Taiwan has also emerged as one of Asia’s most vibrant democracies. The opposite of mainland China, freedom of expression is a part of Taiwanese culture and very evident when visiting different regions.Taiwan Mill

Meeting with the Taiwan Flour Millers Association (TFMA), we learned how the group imports wheat on behalf of 26 flour mills in the country and has been a longtime loyal customer of U.S. wheat. Flour millers there prefer U.S. wheat and buy an average of about 80 percent of their imports from the U.S. Eight years ago in 2010, wheat consumption surpassed rice.

In the Yilan district we toured R. Den Dessert factory featuring high-quality cakes, bread, and pastries, as well as the first Taiwanese whisky distillery (Ka Va Lan) by the King Car Group.  In the Tainan area we toured Hong Ming Flour Mills a large U.S. wheat customer that values U.S. grain milling yield, flour quality, and consistency as well as our food safety record. The Chimei Frozen Food Company’s Happy Factory location is a public tourist factory showcasing processed steam products, cakes, various pastries, food education, food safety, and quality product differentiation.  Chimei is a large user of U.S. wheat flour from Hong Ming.

Not to be repetitive, but the take home message from Taiwan was the same as China’s: Quality matters.

My farm is my center of the universe, but the universe is vast and it must also include my customers half a world away. We may have different ideologies, but the grain trade chain connects us in a complementary association that’s good for everyone.

Two last points: 1. Quality matters and, 2. When in China, don’t take pictures of armed police carrying automatic weapons.