Written by Jonathan Eisenthal
How important are export markets to Minnesota farmers?
- $539.5 million in annual sales of grain and grain products
- $1.2 billion in total economic output generated
- $381.7 million of the Gross State Product (GSP)
- 3,988 Minnesota jobs supported by export sales
(source: Value of Trade Study, 2014, US Grains Council)
“We have grown a tremendous crop this year, and in several of the recent years we have grown tremendous crops, so we need exports to use the surplus that we have grown, not only in Minnesota, but nationwide,” said Harold Wolle, a farmer in St. James, and president of Minnesota Corn Growers Association.
Wolle serves as a delegate to the U.S. Grains Council (USGC), a private non-profit corporation created in 1960 to help market U.S. corn and other grains. In the last handful of years USGC has expanded its focus to include ethanol and distillers grains as well.
Farmers like Wolle, along with representatives from 170 agribusinesses, meet twice a year as delegates to help set the direction for USGC’s trade promoting activities. Delegates also serve on action teams, which dig deep into particular topics, such as biotechnology. Wolle serves on the Asia action team.
“The USGC is out there promoting our product worldwide every day,” Wolle said. “They have staff around the world, working every day to export our products. It’s said, ‘How do you eat an Elephant? One bite at a time.’ Every day, USGC staff is working in southeast Asia, and that helps us take another bite of the elephant. We’re going to increase exports. We have a good product and we’ve got to promote it.”
USGC operates programs in 50 countries, according to Lyndsey Erb, director of Industry Relations for the organization. Across the continents and time zones, in each country with its own work-week, USGC has a staff person working every day of the year, every hour of the day, Erb reports.
One of its key missions is assessment of market opportunities. Ethanol is one of them.
“The U.S. Grains Council is making significant efforts to increase the export of ethanol worldwide,” Wolle reports. “Asia is one of the areas of the world that USGC is targeting. Some countries there have mandates working towards 20 percent ethanol blending. Until they get their country’s infrastructure in place to fulfill that demand, they are going to need imports from our country.”
Personal contact is an incredibly powerful way to solidify trade relationships, and Wolle has himself hosted trade teams, showing his farm operation to grain buyers and animal feeders from Vietnam and Taiwan.
“I do believe these visits are useful,” Wolle said. “It’s my general impression that the individuals who are willing to go on these trade missions are very interested in learning. They want to know how our system operates, from the farm on up through our production facilities. The Taiwanese trade team were mostly hog producers, and they were interested in corn imports and distillers dried grains imports. So they wanted to see ethanol plants and how the grain was grown on the farm. All of the participants seemed to me to be hungry for knowledge, so we are glad to help educate them any way we can.”
USGC representatives in the field offer technical education to existing and potential customers for U.S. farm products.
“We help customers understand how contracts work, or answer questions about how the grading process works in the U.S.,” Erb said. “We are constantly working to educate foreign buyers to get them to push inclusion rates on these products we represent. Also, we keep them updated on changes in products. For instance, over the past few years, distillers’ grains have changed, as more plants extract oil. We want to make sure the end users understand that and that they are using it in the most effective way possible. That helps our exports, which helps the bottom line for our farmers here at home.”
The Council doesn’t lobby, but they do provide fact sheets and background information to help Minnesota farm leaders like Wolle go to Washington to argue on behalf of important trade treaties like the Trans-Pacific Partnership (TPP). The Peterson Institute for International Economics, which studied the deal in depth, determined a one-year delay in TPP would cost the US economy $94 billion including in value-added farm products like meat and ethanol, Erb reports.
As important as the actual sales that TPP will make possible, Erb says provisions in the agreement would add stability to the system. When a problem like an insect infestation in a compartment of a cargo ship happens, TPP would institute a process for government agencies to sit down and work together on solutions, rather than making unilateral trade prohibitive moves like requiring all shipments to be fumigated, or forcing entire cargos to be re-exported.
The reliability of buying from the U.S. is one of the main attractions to buyers.
“We have seen increased competition from South America and the Black Sea region, but one of the things that neither of those regions can ever outdo America on is in being a reliable supply,” Erb said. “Year after year, America can be relied on. It will never put in place an export ban or put in place prohibitive export taxes. It is not our position as a country, and certainly it is not the position of U.S. farmers. We are the most reliable supply of those ag products in the world.”