Wednesday, March 26, 2008

Our day in D.C.

Our first day in Washington, D.C. was packed with information. We started our day at the offices of U.S. Wheat, where Alan Tracy, president of USW, met us to begin our orientation. Tracy explained the value of this trip is in the relationships made between our foreign customers and U.S. producers. In choosing the four countries of Colombia, Peru, Costa Rica and Mexico, USW wanted to give producers an understanding of the opportunities available to U.S. wheat in those markets.
Tracy also discussed the supply and demand situation in the world wheat market, and the recent price concerns of millers.

"Wheat prices are down, and the market works," Tracy said. "Spring wheat prices are down $10 and the price has dropped more than the price we were at one year ago." Tracy explained there should be a 20 percent increase in wheat acreage in the United States this year, and increases in overseas plantings as well. This will help to correct the market.

"The worst thing would be to have the government involved at this point," Tracy explained, in response to the recent millers picketing of D.C. to protest high wheat prices. "Decreases in wheat itself is not important in food inflation in the U.S.," Tracy said. He added that if the price of wheat were to increase by $1, then that would end up translating into an increase of one cent per day to the average consumer.

While at USW we also discussed the Latin America market situation and the USW market development efforts with Vince Peterson, and an update on the negotiated trade agreements with Peru and Colombia from Rebecca Bratter.

Then, it was off to U.S. Department of Agriculture, for even more dicussions on the Colombian and Peruvian trade agreements, and overviews of the world supply and demand and U.S. supply and demand of wheat.

The overall message for the day was clear. If Congress doesn't act on the negotiated Colombian trade agreement before the end of this session, the agreement will expire and the U.S. stands to lose opportunity for trade into Colombia to Canada, which is negotiating its own agreement.

And, by all accounts, this is a lot of wheat trade. Bratter explained that Colombia is a large U.S. wheat export market and if Argentina and Canada wind up with preferential trade agreements before the United States, growers will find themselved out of the Colombian market.

So, what's the hold up on the Colombian agreement? Bratter explained that it really is a political issue. A Democratic Congress does not want to pass the agreement because it has humaninatarian concerns with Colombia's treatment of its labor officials. Also, there's added pressure because of the presidential election cycle and how passing or not passing the agreement would help or hinder either the Democratic or Republican party.

Colombia, Bratter added, is a longtime ally of the U.S. "Not signing the agreement doesn't send a good signal," she said. And, if the agreement expires? It will be a long time, if not nearly impossible to negotiate another. (Journal photos by Jennifer M. Latzke.)

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