By Joe Bippert

More than 400 Latin American millers, and those who support them, gathered in Cartagena, Colombia in late November to discuss the current state of the region’s milling markets, discover new and innovative technology, network with colleagues and receive updates from world’s wheat suppliers.

Participents in the US Wheat ALIM conference

From left to right: Mitch Skalicky; Mark Fowler; Casey Chumrau; Joe Bippert; Darren Padget; Vince Peterson; Mike Miller; Alvaro de la Fuente; Osvaldo Seco

The 35th annual Latin American Wheat Milling Industry (ALIM) conference has changed a lot since its first meeting in 1982, a point alluded to during a presentation by U.S. Wheat Associates president, Vince Peterson. That year, all of Central and South America represented less than 15 percent of U.S. imports. At the time, the marketplace for U.S. wheat was globally more diverse with a significant share being allocated to the Middle East and Africa.

Increased competition coming from the Black Sea particularly has changed our world and now 86 percent of U.S. wheat exports are split almost equally between Asia and Latin America, with the remainder going to the European Union. Latin America, and in particular Mexico, has seen tremendous growth in wheat imports with mills and industrial bakeries becoming as sophisticated as any other region in the world.

This growth has not come without challenges both for Latin America millers and the U.S. wheat industry. With much of the focus now on the North America Free Trade Agreement (NAFTA), Mexico is looking at contingencies to offset potential unfavorable trade conditions. Mexico was the No. 1 market for U.S. wheat in the 2016/2017 marketing year.

“Mexico is not NAFTA,” said Jose Luis Fuentes, Mexico’s milling representative at ALIM, “We are diversifying our trade through Free Trade Agreements with Europe and the remaining [Trans-Pacific Partnership] countries.”

To that end, Fuentes announced that Mexico will buy wheat from Argentina whose agricultural sector is experiencing more favorable trade conditions since the election of a new government. The Mexican representative also said the country is seeking out other grain suppliers to meet its needs, including Germany.

Comments like these didn’t go unnoticed by the U.S. wheat industry in attendance. Although the primary concern was lost market share from our largest customer, there was also worry about a ripple effect which could hinder growth in markets where the PNW is currently placing a strong emphasis.

Political constraints in Latin America are not isolated to Mexico. Venezuela is also facing significant challenges as they are unable to secure a steady supply of wheat from a government controlled purchasing system. One mill owner said her plant has been out of commission for 15 days as they have no wheat to mill. Many Venezuelan mills have already closed permanently and there has been a brain drain of milling expertise to Chile and Colombia among others.

Additional challenges facing the milling and baking industries of Chile, Peru and Uruguay are increasingly restrictive labeling laws which require black stickers on packages of high caloric treats deemed unhealthy by governments interested in curbing obesity. A gluten-free movement is also starting to gather steam in the region. These and other initiatives proves the importance of the ALIM conference as a forum to discuss how to leap the hurdles ahead.

But not all challenges are political. As I write this, 50 percent of Puerto Rico is still without electricity in the aftermath of Hurricane Irma. This has caused some mills there to cease operation. In addition, an estimated 140,000 people have left the island. Representatives from Puerto Rican mills speculated whether the weather event will cause long-term shifts in consumption even when the country recovers.

But the future is not completely bleak. Despite the difficulties, there are many opportunities. Customers are pleased with the overall quality of the U.S. wheat crop, especially the wheat coming out of the PNW. Mark Fowler, USW vice president of overseas operations, shared the organization’s plans to increase technical services in the Latin America region, a move that is already paying off. A Chilean customer who visited the PNW as part of a recent trade team, told me his mill is very close to buying soft white wheat.

Although some countries have challenging government regimes, others such as Costa Rica are reporting improvements in their political landscape. Meanwhile, Uruguay as well as other countries, are increasing their automation technology. A Colombian representative said his milling industry grew six percent in 2016.

The key takeaway from this year’s ALIM conference is that business as usual is no longer feasible. With competition from around the world, it’s important we continue to look for new and innovative ways to continue to provide excellent service to meet our customer needs and increase our market share in the region.

Opportunities continue to arise for PNW wheat, especially in Chile, Colombia and Peru. Funds provided by the PNW commissions are helping these markets improve their flour formulations through blending soft white and hard red winter wheat.

Thanks to the hard work and expertise of USW staff based in Mexico City and Santiago, Chile, I’m hopeful we will grow a strong—and mutually beneficial—relationship with our customers in the region.