March 12, 2019
The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) signed recently by Japan, Canada, Australia and eight other countries — but not the U.S. — could cost U.S. wheat producers market share in Japan, according to the North Dakota Wheat Commission
On April 1, the U.S. will be at a $0.38 per bushel price disadvantage in Japan, says Greg Svenningsen, a NDWC board member from Valley City who recently participated in a trade trip to Japan. That price disadvantage has the potential to grow to nearly $2 per bushel by 2026, as each year provides for an incremental decrease in tariffs on wheat for member countries, he says.
The U.S. used to be part of the trade agreement, but the U.S. dropped out in 2017 when the Trump Administration said it wanted a bilateral agreement with Japan instead.
Japan is currently the No. 2 buyer of U.S. hard red spring wheat but has often been No. 1.
The success in the Japanese market is the result of over 60 years of export market
development work, and the fact that wheat millers, bakers, noodle manufacturers and other end-users have worked directly with U.S. wheat breeders, researchers and producers to sync wheat quality traits with their demand needs, Svenningsen says.
Over the past five years, average U.S. hard red spring wheat exports to Japan have been 38 million bushels, or roughly 15% of total hard red spring wheat exports.
Any market share loss there cannot be equally offset in other markets at comparable price levels, Svenningsen says. “It is paramount that we secure a bilateral agreement that keeps us on an equal price position with Canada and Australia, so that we can continue to win sales on customer service strengths and delivery of quality wheat,” he says.
The NDWC says it commends the administration for making a bilateral agreement with Japan a priority and is encouraging them to accelerate negotiations where possible. The administration is seeking to achieve similar tariff terms as the CPTPP for U.S. wheat in any bilateral agreement. The NDWC says it will continue to press for a quick resolution.
“Obviously we need the trade environment to improve soon,” Svenningsen says. “Japan is a large, high-value market, and we need to preserve our share of that market for the benefit it brings to local prices.”
Source: NDWC, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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