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XVI Annual International Conference “Black Sea Grain and Oilseeds 2010/11”
.Moscow, Russia
9 September 2010
Vince PetersonVice President
of Overseas Operations
World Wheat Situation – A look into the Future.
and the
Role of Governments in the Grain Industry.
A note about 2010-11…US Wheat Situation…as of June, 2010
A note about 2010-11…US Wheat Situation…as of July, 2010
A note about 2010-11…US Wheat Situation…as of August, 2010
Will the US profit from the situation in Russia?
U.S. Crop Planted Area ComparisonCompetition for Land Area
World Wheat Consumption vs. Land Area
Million MT
__ Harvested Area (MHA)
(without scale)
__ Wheat Consumption (MMT)
Harvested Land Area by CropWorld Total 1960 to 2010
1,000 HA
Corn Land Area +57%
Wheat Land Area 1968 = 2010
Soybean Land Area +300%
---- ---- Russia/Ukraine
Wheat Corn/Oilseeds (without scale)
33.2 MHA31.8 MHA
7.2 MHA
16.1 MHA
Production by Crop World Total 1960 to 2010
1,000 MT
World Wheat Prodution Belts Northern and Southern Hemispheres
World wheat production occurs between approx. the 25 th and 55th degrees, N & S latitudes
FAO World Hunger Map
Mid-Latitude Hunger Concentration
Northern Hemisphere Wheat Belt
Southern Hemisphere Wheat Belt
World wheat production occurs between approx. the 25 th and 55th degrees, N & S latitudes
World wheat consumption World wheat harvested area
660+ MMT
30 year trend
+/- 900 MMTDemand in35 years
229 MMT
353 MMT 212 MHA
239 MHA
202MHA
Projected World Population Growth2010 to 2050 (From 6.9 to 9.5 billion?)
Southern Hemisphere Wheat Belt
Northern Hemisphere Wheat Belt
Mid-Latitude Demand Concentration
World wheat production occurs between approx. the 25 th and 55th degrees, N & S latitudes
World Wheat Trade
World Wheat Trade
World Wheat Trade
X
World Wheat Trade
X
World Wheat Trade
X
World Wheat Trade World trade to all
“others” has grown to 250% of 1980 levels
50 MMT
125 MMT
Trend in “other” importers denoted ( )
World Wheat Trade
... WHAT IF only 50% of the 240 MMT increased demand is traded internationally?
125 MMT
250 MMT
Trend in “other” importers denoted ( )
2020 2030 2040 2050
50 MMT
?
History… is a very good teacher
"Those who cannot remember the past are condemned to
repeat it.”
George Santayana, 20th C. PhilosopherReason in Common Sense, 1905
History: US Government Helps Put Brazil in the Soybean Business
In 1973, President Nixon suspended soybean export sales because of short US domestic supply.
MMTMHA
History: US Government Primes EU Exports
January 4, 1980 US President Carter embargos 17 MMT in open sales to USSR
51.8 MMT
25.0 MMT
1980-1985 Huge $$$ US government
spending for stocks and reserve ownership; and land set asides
1985-1995 $ Billion/year US government spending on export subsidies
___ European Union Wheat Exports US Wheat Stocks (without scale)
1974 and 1975 US President Ford
effectively slows exports to USSR; Ist
Grain Agreement
Governmental Distortion of Markets:WTO Agreement Negotiations
Doha Round
B. SCHEDULED EXPORT SUBSIDY COMMITMENTS
162. Developed country Members shall eliminate their remaining scheduled export subsidy entitlements by the end of 2013.
163. Developing country Members shall eliminate their export subsidy entitlements… by the end of 2016.
1970’s Wheat Import & Export STE’s“State (authorized) Trading Enterprises”
JapanFood Agency
PhilippinesNGA
ChinaCeroilfood
IndiaSTC
Soviet UnionExportkhleb
EgyptGASC
IndonesiaBulog
S. African Wheat Board
PeruENCI
MexicoCONASUPO
Brazilian Wheat Board
Sri LankaCWE
N. AfricaONICCuba
ALIMPORT
PolandRolimpex
PortugalEPAC
EcuadorEcuagran
IranGTC
IraqIGB
SudanCIDCO
Norwegian & Finnish Grain Boards
TurkeyTMO
Canadian Wheat Board
Australian Wheat Board
ArgentinaJunta
EXPORT STE IMPORT STE
2000 Wheat Import & Export STE’s“State (authorized) Trading Enterprises”
JapanMAFF
CubaALIMPORT
IranGTC
IraqIGB
Canadian Wheat Board
Australian Wheat Board
EXPORT STE IMPORT STE
ChinaCOFCO
TurkeyTMO
N. AfricaONIC Egypt
GASCIndiaSTC
2010 Wheat Export STE’s“State (authorized) Trading Enterprises”
Canadian Wheat Board
Russia United Grain
Company
ChinaCOFCO
TurkeyTMO
WTO Agreement NegotiationsDoha Round
3. In order to ensure the elimination of trade-distorting practices with respect to agricultural exporting state trading enterprises…Members shall:
(a) Eliminate…all forms of export subsidies including those related to food aid and export credits:
(ii) government financing of agricultural exporting state trading enterprises, preferential access to capital… with respect to government financing or re-financing facilities…
(iii) government underwriting of losses…by agricultural exporting state trading enterprises on their export sales.
(iv) by 2013, the use of agricultural export monopoly powers for such enterprises.
Will I have access to the market?
Importers natural fear:
Export restrictions…due to short supplies
… export license controls? …
… imposed export levies and taxes? …
… administratively restricted supplies? …
Governmental Intervention in the Markets
Agricultural Embargoes and Contract Sanctity
THE UNITED STATES CONSTITUTION Article. I., Section 9., Clause 5:
“No Tax or Duty shall be laid on Articles exported from any State.”
The Food and Agriculture Act of 1977:
If export sales are suspended for reasons of short supply, domestic wheat price support would by mandate be raised to $533/MT (today’s calculation).
Agricultural Embargoes and Contract Sanctity
Food Security Act of 1985:
Declares it U.S. policy to encourage agricultural exports and not to restrict exports except under
the most compelling circumstances.
The Food, Agriculture, Conservation, and Trade Act of 1990:
Contracts to export agricultural commodities, which were agreed upon before any prohibition, should not be abrogated.
Export Administration Act of 1999:
Prohibition on agricultural exports can only be imposed when the President declares a national emergency. (high prices do not qualify as an emergency)
Thank you for your invitation to speak and share some topics of vital importance to the wheat industries in both Russia and
the United States.