 |
| Wheat flour mill, Shanxi province, China. photo
by S. Willis. |
Most Kansas wheat is shipped from ports in Texas via
the Gulf of Mexico. About 58 percent of all U.S. wheat
exports goes through those and other Gulf ports, about
35 percent goes through the Pacific Northwest, and smaller
amounts leave by rail or via the Great Lakes or Atlantic
ports.
Gulf ports traditionally serve markets in Africa, South
America, and other points east and south, and Pacific
Northwest ports serve East Asian markets. This is mostly
a matter of proximity and economics: Those ports that
are closer to the markets they serve are the cheapest
point to ship from. It costs $20 to $25 a metric ton
less to ship to Asia from the Pacific Northwest than
it does from the Gulf of Mexico, meaning a million-dollar
or more savings on every 50,000-ton shipment (Dickerson).
The final destination of Kansas wheat — and 50
percent to 60 percent of it goes overseas, with the rest
used domestically — is often based on where it
is grown in the state. Virtually all wheat is shipped
by rail, and rail lines in much of Kansas flow south
like rivers to the Gulf of Mexico. An exception is
in northwest Kansas where wheat can flow by rail to
either
Gulf ports or ones in the Pacific Northwest. The flexibility
in shipping in northwest Kansas is especially important
because the region grows much of the hard white winter
wheat highly desired in Asian markets (Interview, John
Oades).
Where wheat is grown is not the only factor in where
Kansas wheat will end up. The cleanliness of the grain
itself is a very important factor to Asian countries.
Japan, in particular, through its wheat-buying Japan
Food Agency, has demanded the United States “clean
up” its wheat. The main measure of wheat “cleanliness” is
the amount of dockage, foreign matter that can be removed
using mechanical separators. Dockage includes chaff,
seeds from other plants, straw, stones, and other material.
|
Japan, South Korea, and Taiwan have, over the past
decade, instituted more stringent requirements on how
much dockage they’ll allow. Wheat that exceeds
the maximum amount is either not bought by those nations
or brings a lower price. For Japan and South Korea,
the maximum allowance is now 0.3 percent; for Taiwan,
0.4
percent (U.S. Wheat Associates).
Australia and Canada, where monopolies buy and sell
wheat and control exports, have long used their wheat’s
cleanliness as a selling point. For example, Australian
wheat to Japan averages about 0.2 percent dockage and
Canadian wheat
about 0.15 percent (California Wheat Commission).
To remain competitive and retain Asian customers, exporters in the Pacific
Northwest have installed costly machinery to clean wheat. But shippers in the
Gulf of Mexico
haven’t invested in wheat-cleaning machinery.
“China, Japan, and Korea are as particular buyers as there are,” said
David Frey, administrator of the Kansas Wheat Commission. “We can’t
match the Pacific Northwest for cleanliness. The main reason they’re
cleaning that wheat is because of Japan.”
“The Gulf exporters have not felt they can get an economic return on building
cleaners,” said John Oades, director of the West Coast Office of U.S. Wheat
Associates in Portland, Oregon. “Most of these operations up here put $5
million to $6 million into putting in a cleaner.” Gulf Coast shippers “doubt
they can get a return. Those elevators are much more involved in shipping corn
and soybeans. The Pacific Northwest elevators are almost exclusively involved
in wheat,” he said (Interview, John Oades).
Without cleaning, wheat shipped from the Gulf has dockage of 0.6 percent or
0.7 percent, making it less attractive to big Asian markets. That’s a
major reason why Japan, which once bought much of its wheat through Gulf ports,
now
buys little there.
Next: Future Wheat Exports |
