Rediscover Wheat January 2015

The official publication of the Kansas Association of Wheat Growers and the Kansas Wheat Commission

JANUARY 2015

INSIDE THIS ISSUE

K-State Develops Heat-Tolerant

Wheat Gene NFOB Deadline Approaching Farmers Anticipate Increased Trade with Cuba

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Volume 2 • Number 1 www.rediscoverwheat.org The official publication of

1990 Kimball Avenue Manhattan, Kansas 66502 (785) 539-0255

KAWG MEMBERSHIP $100 per year

EDITOR

Marsha Boswell • mboswell@kswheat.com

ASSISTANT EDITOR/DESIGN Nicole Lane • laneinicole@gmail.com

CONTRIBUTORS

Marsha Boswell • mboswell@kswheat.com Julia Debes • jdebes@kswheat.com Jordan Hildebrand • jhildebrand@kswheat.com

CEO

Justin Gilpin • jgilpin@kswheat.com

KAWG OFFICERS

PRESIDENT Gary Millershaski • Lakin VICE PRESIDENT Michael Jordan • Beloit SECRETARY/TREASURER Kenneth Wood • Chapman IMMEDIATE PAST PRESIDENT David Schemm • Sharon Springs

KWC OFFICERS

CHAIRMAN Scott Van Allen • Clearwater VICE CHAIRMAN Jay Armstrong • Muscotah SECRETARY/TREASURER Brian Linin • Goodland IMMEDIATE PAST CHAIRMAN Ron Suppes • Dighton

Rediscover Wheat is published by the Kansas Association of Wheat Growers (KAWG) and the Kansas Wheat Commission (KWC), 1990 Kimball Avenue, Manhattan, Kansas 66502, twelve times per year.

Contents of this publication may not be reprinted without permission.

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Japan is Largest Buyer of U.S. Wheat Celebrating Women in Agriculture NFOB Deadline Approaching K-State Develops Heat-Tolerant Wheat Gene International Grains Program course schedule No-Till Winter Conference Registration U.S. Farmers Anticipate Increased Trade with Cuba News from the National Association of Wheat Growers News from U.S. Wheat Associates Maltby Market Analysis Upcoming Events

Japan is Largest Buyer of U.S. Wheat

by Julia Debes

Japan may be halfway around the world from Kansas, but the country's status as the largest consistent buyer for U.S. wheat helps underpin global demand and cash price for Kansas hard red winter wheat.

Overall, Japan purchases roughly 10 percent of all U.S. wheat exports each year. That includes imports of three wheat classes - HRW, soft white and hard red spring. In turn, U.S. wheat constitutes 57 percent of Japan's total annual wheat imports.

For HRW wheat, Japan is the fourth largest buyer on average.

In 2013/14, Japan imported 3.3 million bushels of HRW, representing 7 percent of all HRW exports and 4 percent of all HRW production that year.

The Japanese market is highly quality conscious and values the reliability and choices provided by the U.S. wheat supply chain from farm to port. As a result, Japan issues large tenders for U.S. wheat on a consistent basis through its import state-trading enterprise.

The Ministry of Agriculture, Fisheries and Forestry (MAFF) purchases nearly all of Japanese wheat imports and then sell it to Japanese flour mills.

Japanese millers are highly sophisticated and efficient, with the ability to produce up to 500 different products daily. Shawn Campbell, assistant director of the

U.S. Wheat Associates West Coast Office in Portland, OR, explained that Japanese millers primarily use HRW for noodle production.

Blending HRW with Australian noodle specific varieties helps lower costs.

Some HRW imported by Japan is used as feed wheat.

Campbell explained this provides a market for lower protein HRW as Japan has a minimum protein specification of 11.5 percent protein, compared to the 12.0 percent protein minimum specifications of most international HRW buyers.

Today, Japan sources the majority of wheat purchases from ports in the Pacific Northwest.

While a significant portion of the HRW Japan purchases is grown north and west of Kansas, the volume of its imports raises demand, and price, for all HRW farmers.

"Without the Japanese, farmers in states like Montana would be forced to sell HRW at a much discounted price in order to compete in the domestic market," Campbell said.

It is important to note that this successful relationship would not have been possible without the efforts of U.S. wheat farmers.

In 1949, farmers from Oregon traveled to Japan to discover how to expand wheat sales.

The resulting educational and marketing activities included a rural school lunch program called "Kitchen on Wheels." U.S. Wheat Associates, the industry's export market development organization, continues that work today on behalf of all U.S. wheat farmers.

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Celebrating Women in Agriculture

by Marsha Boswell

In an industry traditionally dominated by men, women have a strong and growing presence in U.S. agriculture. In fact, more and more women are choosing to own and manage their own farms. At the 2015 Women Managing the Farm Conference, the ultimate goal is to provide women with the tools they need to remain sustainable.

The conference is designed to give insight to women about managing their farm investment.

Over the course of the two-day conference, approximately 300 women will hear presentations concerning financial tips, estate and tax planning, farm safety, soil and crop rotation, water rights, production agriculture, legal matters, human/personal issues, work ethics, farm bill, nutrition, long-term care insurance and how to get organized.

the KSU Grain Science Complex.

The conference begins February 5 with networking sessions tailored to agricultural partners, independent producers, helpers, absentee landowners, industry career women, business managers and women with family in the military. Thursday will be filled with speakers and breakout sessions on topics ranging from the farm bill to succession planning to marketing. February 6 with begin with a keynote from Judi Adams, president of the Wheat Foods Council. Sessions on Friday will overlap with the Kansas Commodity Classic, giving attendees the opportunity to interact with other producers from around the state.

Optional preconference sessions begin on February 4 with choices of attending "Amazing Grazing II: Meat Processing and Marketing for Optimal Sales" or a tour of

The event will conclude with a luncheon presentation titled, "Lessons Learned from the 3-year Debate on the 2014 Farm Bill" by K-State's Dr. Barry Flinchbaugh.

The 12th annual Women Managing the Farm Conference will be held in Manhattan, Kansas, February 5-6, 2015.

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According to the 2012 Census of Agriculture, the number of women who were the principal operators of a farm or ranch decreased slightly from 2007 to 288,264 operators. A principal operator is termed as the person in charge of the day-to-day decisions for the farm or ranch. Women are 14 percent of principal operators but 30 percent of all operators of the nation’s 2.1 million farms. In Kansas, women are the principal operators of 6,783 farms, and there are 25,611 total women farm operators in the state.

The early bird registration fee for Women Managing the Farm Conference is $145 prior to January 21. After that date, the registration fee will be $170. Registration is available on the Women Managing the Farm website at womenmanagingthefarm.info.

National Festival of Breads Deadline Approaching As the holiday season comes to an end, so does the entry period for the 2015 National Festival of Breads. The festival, sponsored by King Arthur Flour, Red Star Yeast and Kansas Wheat, is a national amateur bread baking competition that hundreds of bakers enter.

The entry deadline for this year's competition is January 16, 2015.

Tom Payne, marketing director for King Arthur Flour says, "King Arthur Flour is proud to sponsor the National Festival of Breads for the third time." He says, "This is the only national, serious fromscratch bread-baking competition out there. It is a celebration of home baking skills and is helping to foster and preserve the venerable tradition of baking bread at home from scratch."

Adult amateur bakers, ages 18 and up, can submit original recipes for ethnic breads, rolls, time-saving and simple breads, and whole grain breads online at nationalfestivalofbreads. com, a newly-redesigned website dedicated to the contest. Youth bakers, ages 12-17, can also submit recipes for yeast breads and quick breads using the same form.

Submissions will only be accepted through the online form.

Judges will evaluate all entries and select eight adult finalists, each of whom will receive airfare and accommodations to participate in the national competition on June 13, 2015, in Manhattan, Kansas. In addition,

each adult finalist will receive a $500 cash award, participate in a wheat harvest tour to a working Kansas wheat farm, flour mill and grain elevator, and take part in other activities.

The Grand Prize Winner will receive $2,000 cash and a trip to attend a baking class of their choice at the King Arthur Flour Baking Education Center in Norwich, Vermont.

One youth grand prize winner will be selected and will receive a $300 scholarship. Two youth entries will receive a runner-up prize of a $100 scholarship.

Special awards are also available for the best recipe using white whole wheat flour, the best recipe using a soy ingredient, and best sweet bread or roll.

More prize packages are detailed in the official contest rules at nationalfestivalofbreads.com.

Cindy Falk, chairperson of the event and nutrition educator for Kansas Wheat, says, "Inspiring youth to bake can foster future generations of home bakers," She says, "These youth bakers can then pass on their baking skills as a service to local schools, communities and clubs."

by Jordan Hildebrand

The Festival of Breads was established 24 years ago by the Kansas WheatHearts, an auxiliary group of the Kansas Association of Wheat Growers. In the original "Festival of Breads" baking competition, hundreds of amateur bakers from Kansas submitted their baked products during the biennial competition.

Falk says, "The National Festival of Breads builds upon a rich tradition of grassroots support and is the nation's only amateur yeast bread baking competition. This contest is a way for amateur bakers to be recognized for their baking skills and creativity."

The National Festival of Breads is sponsored by two of the most trusted brands in baking, King Arthur Flour and Red Star Yeast.

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K-State Develops Heat-Tolerant Wheat Gene

by Julia Debes

If temperatures are too hot in May and June, farmers could lose more than layers.

During this critical grain filling stage, extreme temperatures can lead to shriveled kernels and yield loss.

One gene may be the answer. Dr. Harold Trick, plant pathologist at Kansas State University, and Dr. Allan Fritz, KSU wheat breeder, are working on a transgenic wheat that would tolerate warmer temperatures during this plant development stage. Their research is funded by Kansas wheat farmers. With just a single added gene to boost thermo-tolerance, this wheat could increase yields by up to 35 percent.

Wheat has an optimum temperature range during the grain filling stage of 15 to 18 degrees Celsius (59 to 64.4 degrees Fahrenheit). Trick explained that for every one degree Celsius rise in temperature above that level, 3 to 4 percent of yield could be lost. That is a problem for Kansas, where temperatures often reach 25 to 35 degrees Celsius (86 to 90 degrees Fahrenheit) during this mid-May to mid-June period.

As the grain begins to fill, it accumulates starch. This starch will account for 75 to 85 percent of the grain's dry weight, making it an important part of farmer's final test weight. That starch is converted from sucrose by the enzyme soluble starch synthase (SSS). Trick explained that this 6 Rediscover WHE AT | JANUARY 2015

enzyme appears to be particularly sensitive to elevated temperatures.

At warm temperatures, the protein starts to denature, which causes a shriveled kernel.

Dr. Trick and his team sought out a way to increase the wheat plant's tolerance to these higher than optimal temperatures. They started with rice, a tropical plant grown at higher temperatures that also has grain that fills. They found a single SSS gene that provides more thermo-tolerance when added into the genome. This genetic addition acts as a backup generator for grain fill, taking over starch conversion only when the original wheat protein has maxed out. The result is a steady 30 to 35 percent yield increase.

working to cross this thermotolerance into elite wheat varieties that have their own heat tolerance potential. The goal is to amplify the synergistic effect of doubling down on heat tolerance.

The team is finding even more durable genes in other plant species, including a gene from grapes that is even more heat stable and still demonstrates a 25 to 35 percent yield increase. This gene shows the best yield increase at temperatures of 29.5 to 32.3 degrees Celsius (85 to 90 degrees Fahrenheit).

"We want the technology in hand and validated so when genetically modified wheat is allowed to be grown, the product is there for companies who see its value," said Trick.

With patents filed for these traits, Trick and Fritz are now

Because no genetically modified wheat is currently in the U.S. supply chain, this heat tolerant wheat will eventually need a sponsor that can take it through the strenuous and extensive regulatory process before it can be commercialized and be planted by Kansas farmers.

In the meantime, Trick's team will continue to gather as much data as possible on traits like heat tolerance as well as finding even better genes to help boost production for Kansas wheat farmers.

IGP January Course Schedule IGP-KSU Introduction to Flour Milling The IGP faculty is excited to conduct the annual Introduction to Flour Milling course on Jan. 12-16, 2014 at the IGP Institute Conference Center. This course attracts a broad range of individuals to the program, says Mark Fowler, IGP associate director and milling specialist.

“This course is one of the more diverse in regards to their job responsibilities.

Shift millers, miller assistants, quality assurance managers, general managers, technical service managers have all previously attended,” says Fowler. “The common thread for most of these participants is that they are new to the industry.”

Course participants will hear presentations from industry professionals, experience hands-on workshops and a high level of interaction between other participants and the professionals.

IGP-KSU Grain Elevator Managers The IGP Institute is hosting the semi-annual Grain Elevator Managers course on Jan. 6-10, 2014. The course will be held at the IGP Institute Conference Center at Kansas State University.

“The purpose of this course is to supply grainmanagement information that is not available elsewhere and cannot be learned by on-the-job experiences, information that helps grain managers correctly interpret their experiences so they can avoid errors and become more efficient,” says Carl Reed, course coordinator and IGP grain storage specialist emeritus.

Included in the course will be presentations from Carl Reed and other professionals such as Wes Peterson, Custom Dryer Service LLC, classroom discussion and workshops.

Topics to be covered include grain quality characteristics and grading, psychometrics relating to aeration, operating costs, equipment and fumigation.

“The greatest benefit is an appreciation of the importance of system and documentation in grain management.

I hope they learn this from the formal presentations and from the interaction with grain managers from other companies with other cultures.”

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Early Registration Cut-off Nears for No-till Winter Conference “If you have not registered for the 2015 No-till on the Plains Winter Conference, you will want to go to www.notill.org soon to receive the $175 rate,” said Ryan Speer, president of No-till on the Plains and a farmer from Halstead, Kansas. “The registration jumps to $225 per person as the January 27-28 Conference nears. The 19th Annual Winter Conference will be held at the Bicentennial Center in Salina, Kansas.”

The 2015 Winter Conference features the theme Unlocking the Potential on Your Farm, and is designed to allow farmer-tofarmer interaction and features some the country’s premiere producers, industry experts and researchers on no-till production and soil health. The conference program will help producers understand basic concepts and principles of moving to a no-till system, plus help those long-term no-tillers who are continuing to tweak and manage their program to maximize efficiency and profit.

Featured speakers include Dr. Fred Provenza, animal behavior expert and retired professor from Utah State University; and Joshua Duckart, holistic management trainer and expert from Bismarck, North Dakota. Over 32 speakers in all will fill the agenda over

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the 2-day event. Additionally, attendees will access the industry's best Trade Show, featuring more than 80 exhibitors. Participants will not want to miss the "Industry Morning Marketplace," a chance for you to get the latest information from our conference sponsors and exhibitors. The IMM takes place from 9 -11:30 a.m. on Tuesday, Jan. 27.

Registration costs for the Winter Conference is $175 before Jan. 10; $225 thereafter. Spouses can attend for an additional $90. Go to www.notill.org to register.

Attend the AIM Symposium In addition to the Winter Conference, No-till on the Plains offers the Agriculture's Innovative Minds (AIM) Symposium on Jan. 30, from 8:00-5:00 at the Bicentennial Center. This daylong program features the theme Healthier Soil, Healthier Plants,

Healthier Food. Topics include: How Palates Link Soil and Plants with Herbivores and Humans, Soil quality: The Key to Efficient Crop Production, and The Role of Microbes in Building Better Soil Registration for the AIM Symposium is $199, with preregistration before Jan. 10 required. Spouses can attend for $99. Space is limited, so do not wait!

Coming to the Winter Conference already? Get the Package Deal! That's $324 for both events (registration required before Jan. 10). Spouses can attend both for just $164 extra! Go to www.notill.org to register for AIM as well, or for more information call 785-210-4549.

Find out more on No-till on the Plains by visiting the web at www. notill.org, follow us on Facebook, Twitter, and YouTube.

U.S. Wheat Farmers Anticipate Increased Trade Opportunities with Cuba

by Jordan Hildebrand

While Cuba and the United States have historically had rocky trade relations, President Obama's announcement on December 17 that the United States would renew diplomatic relations could signal more wheat sales for Kansas farmers.

“U.S. wheat farmers are excited about the prospect of exporting more wheat to Cuba,” says National Association of Wheat Growers (NAWG) President Paul Penner, a wheat farmer in Marion County, Kansas. “NAWG has long supported strengthened trade relations with Cuba and sees this as a historic step in that direction.”

Cuba, which does not grow wheat commercially, is the largest wheat market in the Caribbean, purchasing most of its wheat from the European Union (44 percent market share) and Canada (27 percent market share). This is in sharp contrast to many other markets in the Caribbean region, where U.S. wheat farmers enjoy a much larger market share.

"Since we do have an 80% market share in the Caribbean, I think we could have that kind of relationship with Cuba under normalized trade," said Justin Gilpin, Kansas Wheat CEO. Cuba could import at least 500,000 metric tons of wheat from the United States each year but has not purchased U.S. wheat since 2011. Under the current

embargo, the United States can export agricultural products to Cuba through the use of thirdparty banking institutions, which makes facilitating trade burdensome and often more expensive.

If trade were to resume with Cuba, the United States would hold a distinct advantage in shipping wheat to Cuba based on Cuba's geographic proximity to the United States. This results in shorter shipping times and lower freight rates. The United States also has a quality advantage over the European Union.

Kansas Wheat, U.S. Wheat Associates (USW), and U.S. farmers have worked for years to open up the Cuban wheat market, including meetings with Cuban leader Fidel Castro and trade missions to the island nation.

On January 8, 2002, the first shipment of hard red winter (HRW) wheat in more than 40 years left the Port of Galveston, Texas, and began a beneficial trade partnership. That first shipment contained wheat from Kansas, Texas and Oklahoma, and was the beginning of a total first shipment of 2.6 million bushels.

That trade partnership continued until 2010. During those years of trade, Cuba was a dedicated buyer of U.S. wheat, purchasing up to 70 percent of their wheat imports from the United States.

U.S. wheat farmers meeting with Cuban leader Fidel Castro in 2002.

As that first shipment left the dock at Galveston in 2002, an expert flour miller funded by the Kansas Wheat Commission was on his way to demonstrate HRW milling techniques. Elie Posner, a U.S. Wheat Associates milling consultant, provided the technical assistance.

“It was a very interesting experience to work with the Cuban millers,” said Posner. “The HRW wheat performed well after changes were made, and it gave the millers hands-on experience in new approaches to milling technology of which they were isolated from.”

Kansas wheat farmers have much to gain with an improved trade relationship with Cuba.

“The U.S. wheat industry applauds these actions, which take concrete steps away from a policy approach towards Cuba that has accomplished little,” said USW President Alan Tracy.

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News from :

NAWG Weekly Updates December 4, 2014 House Addresses Tax Extenders Issue The House of Representatives overwhelmingly voted to address several expired tax policies affecting farmers and ranchers.

The House-passed legislation provides a one-year extension and includes the following pieces relevant to America’s wheat farmers: Extends the Sec. 179 small business deduction of up to $500,000 for new/used equipment (Sec. 127 of the bill); Extends the 50 percent bonus depreciation for the first year on certain property purchased for business use (Sec. 125); Extends the charitable deduction for certain food donations (Sec. 126); and Extends the 50 percent deduction for landowners who give conservation easements to a 10

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government agency or land trust entity, and includes the enhanced dedication of up to 100 percent (over 16 years) for certain qualified farmers/ranchers (Sec. 106).

NAWG joined a group of agriculture and business groups in a letter to Members of Congress urging them address the tax policies. The letter can be read in its entirety at http://www. wheatworld.org/?attachment_ id=7508.

NAWG Participates in Montana Grain Growers Association Meeting NAWG Treasurer David Schemm participated in the 59th Annual Montana Grain Growers Association Convention and Trade Show in Great Falls, Mt. NAWG Environmental Policy Advisor Keira Franz was also on hand to participate in a panel discussion entitled, “Just Who is Setting Sustainability Standards?” with Bill Harp, General Mills Plant Manager in Great Falls and local

wheat producer Will Roehm.

Franz’s presentation covered an overview of several sustainability efforts and focused in on NAWG’s participation in Field to Market: The Alliance for Sustainable Agriculture. Bill Harp outlined General Mills’ philosophy and commitments to sustainably source 10 key ingredients by 2020. Will Roehm shared his experience becoming certified to supply sustainable wheat for a local company. As wheat growers discuss sustainability, sustainable wheat production and explore the Fieldprint calculator, your feedback is appreciated. You can reach Keira Franz at the NAWG office at Kfranz@wheatworld.org.

Congress Prepares for New Food Label Fight The Coalition for Safe Affordable Food, which consists of 37 trade groups, including the National Association of Wheat Growers, is gearing up to push for a federal labeling bill introduced earlier in

2014 by Rep. Mike Pompeo, R-Kan. The bill would require that all new foods containing GMO ingredients being brought to the market must first undergo a review by the Food and Drug Administration (FDA). It would preempt any mandatory state labeling law, because foods would not need to be labeled if FDA deems them to be safe. The House Energy and Commerce Committee, on which Pompeo serves, held a hearing on the legislation in December.

Legislation has been introduced in more than 20 states and more states are gathering signatures for mandatory GMO labeling initiatives next fall.

“This is going to continue until we get federal solution,” says coalition consultant Randy Russell. “It’s not going to be easy, but the alternative is a patchwork of state laws that will have a major economic cost and be a threat to the technology itself.” Read the full story at http://www.agri-pulse. com/Coming-soon-nationalGMO-label-law-fight-11252014. asp.

Senate Ag Committee Meets to Discuss Water Conservation U.S. Senate Agriculture Committee Chairwoman Senator Debbie Stabenow convened a Committee hearing regarding water conservation. The hearing, “Farmers and Fresh Water: Voluntary Conservation to Protect our Land and Waters” examined different ways farmers and ranchers can help improve water quality in American lakes and rivers through voluntary conservation practices. Testimony

by panel witnesses focused on farming’s effects on the health of the nation’s lakes and rivers, and how to avoid such externalities in the future. USDA Natural Resources Conservation Service (NRCS) Chief Jason Weller testified regarding the importance of voluntary conservation for protecting and improving our nation’s land and water resources and in particular, NRCS programs’ role in improving water quality.

“The voluntary, incentives-based approach is achieving conservation goals across the nation,” said Weller.

Questions from many of the Senators attending the hearing focused on the Administration’s Waters of the U.S. proposal and NRCS’s role in the Interpretive Rule released earlier in 2014.

NAWG supports federal funding of cooperative programs for voluntary water quality projects.

However, NAWG opposes any quality standard that is not scientifically based and economically viable to achieve.

The Democrat Senator Stabenow lost her chairwomanship of the committee when Republicans take up their seats as the new majority in the U.S. Senate on January 3, 2015. The recently reelected Senator Pat Roberts of Kansas now chairs the committee.

WheatPAC Event Scheduled for 2015 Commodity Classic WheatPAC, the political action committee of the National Association of Wheat Growers (NAWG), will be conducting its annual fundraising event at the 2015 Commodity Classic

in Phoenix. The WheatPAC Reception & Auction will be held on Wednesday evening, February 25, from 7:00 – 9:30pm.

Participation is restricted to members, staff and industry partners of NAWG and state wheat organizations affiliated with NAWG and their family members. WheatPAC is requesting donations of items by both state wheat organizations and industry partners for both the silent and live auctions. Tickets for the WheatPAC Reception & Auction will be available for purchase through the NAWG Annual Meeting registration webpage (http://www.wheatworld.org/ meetings-events/commodityclassic/)and onsite in Phoenix.

Administration Delays Decision on Renewable Fuels Just prior to Thanksgiving, EPA acknowledged that they would not be releasing the final Renewable Volumetric Obligations (RVO) for 2014 prior to the end of the calendar year. EPA released the proposal linked to the Renewable Fuels Standard over a year ago and NAWG filed comments in January 2014 expressing concern over the proposal.

In November, NAWG joined several commodity groups in asking that the President become involved in the decisions on the RVO. The delay announced

by EPA is seen as a good sign that they are reconsidering the proposal and will hopefully make changes to address our concerns.

The revised proposal will also include additional years, setting requirements for 2014-2016.

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December 11, 2014 Cromnibus Conquers At just before 10:00 p.m. on December 10, after a week of frantic negotiations and strange bedfellows, the House of Representatives passed its $1.1 trillion continuing resolution omnibus package (CRomnibus), which will fund the government through September and the Department of Homeland Security until February. Passed by a thin margin of 219-206, the bill’s victory was due in large part to the successful partnership of President Barack Obama, Speaker John Boehner, and House Minority Whip Steny Hoyer against an equally strange coalition of convenience opposing the package, made up of Minority Leader Nancy Pelosi’s House Democrats, Senator Elizabeth Warren, and Tea Party Republicans. The battle to avoid a government shutdown now moves to the Senate, where Majority Leader Harry Reid is expected to expedite its passage.

President Obama is also expected to sign the bill.

NAWG President participates in CFTC Ag Advisory Committee Meetings NAWG President Paul Penner represented wheat growers at a meeting of the Commodity Futures Trading Commission’s Agricultural Advisory Committee in Washington, D.C. The meeting focused on issues related to deliverable supplies of agricultural commodities as they pertain to position limits and the agricultural economy.

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“I would like to thank the Commission for putting this Advisory Committee together and inviting the National Association of Wheat Growers to participate,” Penner said.

“This committee gives wheat growers, as well as other concerned stakeholders across our industry, the opportunity to voice their concerns regarding the commodity futures industry directly to the regulating body that oversees it.”

Committee Examines FDA’s Role in the Regulation of Genetically Modified Food NAWG attended the U.S. House of Representatives Energy & Commerce Committee hearing to examine the FDA’s Role in the Regulation of genetically modified food ingredients. The hearing, chaired by Representative Fred Upton (R-MI), examined a proposed federal bill that would ban states from requiring labels to flag food containing genetically modified organisms.

The chairman stated that forcing businesses to comply with a potential myriad of differing and contradictory labeling laws, one for each state, would be undue, stating that it is the job of Congress to regulate interstate commerce and create a universal GMO labeling policy.

The bill was proposed by Representative Mark Pompeo (R-KS), and if passed, would strike a major blow to the multistate effort to make producers label GMO-containing products.

NAWG is in favor of the voluntary labeling of products by their producer, but is against mandated GMO labeling, as the preponderance of research shows that GMOs have no adverse effect on consumers. The hearing’s panelists included Michael M. Landa from USFDA, Dr. Allison Van Eenennaam from UC Davis, Scott Faber of the Environmental Working Group, Rep. Kate Webb of the Vermont House of Representatives, Stacey Forshee from Kansas Farm Bureau, and Tom Dempsey of the Snack Food Association.

USDA Releases Conservation Regulation The Natural Resources Conservation Service (NRCS) released another regulation, implementing the changes from the 2014 Farm Bill. The Environmental Quality Incentives Program (EQIP) regulation is printed in the Federal Register (https://www.federalregister.gov/ articles/2014/12/12/2014-28941/ environmental-quality-incentivesprogram-eqip). The most significant change to the EQIP program in the 2014 Farm Bill is the merging of the Wildlife Habitat Incentives Program (WHIP) into EQIP with the inclusion of the a five percent set-aside of funding for wildlife practices. The changes to EQIP will be effective once the regulation is published and NRCS will accept comments for 60 days.

NRCS is also currently accepting comments on the Conservation Stewardship Program regulation released in November. NAWG

will be working through the Environment and Renewable Resources Committee to prepare comments on both regulations.

NAWG Attends Farm Journal Forum in Washington, D.C. NAWG attended the Farm Journal Forum 2014 in Washington, D.C. Sponsored

by Monsanto, DuPont and Verdesian, the forum featured a day of panel discussions and expert Q&A portions. Senator Debbie Stabenow, who currently chairs the Senate Committee on Agriculture, opened the forum on an optimistic note by referencing the successful passing of a bipartisan Farm Bill by the Senate.

She was followed by a panel on global agricultural economic outlook provided by Bruce Scherr of Informa Economics, who stated that American agriculture is poised to control global food prices like Saudi Arabia controls oil. A panel titled “The Youth Quotient” focused on how young farmers can change the way farmers connect with consumers, and featured Anna Sumi of GW Planet Forward, Greg Peterson of The Peterson Family Farm Brothers YouTube channel, Amelia Woods of Tyson’s Food Ambassador program, and Mallory Weber of HungerU. The forum also featured a trade policy panel titled “Is Doha Dead?” and a demonstration of new ag drone technology. Secretary Tom Vilsack was in attendance and gave a very passionate and forceful assessment of USDA’s recent successes, as well as a favorable future outlook. He assured attendees that, while people complain that Washington

isn’t working and that there is too much partisan gridlock, he can promise farmers that the USDA is not only working, but working hard and getting results.

New Republican House Agriculture Committee Membership Named Incoming House Agriculture Committee Chairman Michael Conaway (R-TX) named the new Republican house members who will be seated on the House Agriculture Committee. They are listed below.

Rep. Jackie Walorski (IN-2) Rep. Ralph Abraham (LA-5) Rep. Rick Allen (GA-12) Rep. Mike Bost (IL-12) Rep. Tom Emmer (MN-6) Rep. John Moolenaar (MI-4) Rep. Dan Newhouse (WA-4) Rep. David Rouzer (NC-12)

House Agriculture Committee Reorganizes Subcommittees for 114thCongress Incoming House Agriculture Committee Chairman Michael Conaway (R-TX) announced a reorganization of subcommittees to the House Agriculture Committee. In the 114th Congress there will be six subcommittees under the Committee, whereas previously they have had five subcommittees.

To note, commodity exchanges has been separated out of the General Farm Commodities and Risk Management Subcommittee into a subcommittee in charge of energy and credit issues, nutrition has been given its own subcommittee and livestock

and foreign agriculture have been combined. The full subcommittees list is: • General Farm Commodities and Risk Management • Commodity Exchanges, Energy, and Credit • Conservation and Forestry • Nutrition • Biotechnology, Horticulture, and Research • Livestock and Foreign Agriculture

USDA Chief Economist Retires The USDA Chief Economist Dr. Joe Glauber announced his retirement on December 11. The current USDA Deputy Chief Economist Dr. Robert Johansson, who has held this position since 2012, will serve as Acting Chief Economist starting on January 1. He has a Ph. D. in agriculture economics from University of Minnesota.

In a press statement Agriculture Secretary Vilsack said, “No one has a higher level of credibility on issues impacting the agricultural economy than Dr. Glauber. Farm country and, truly, the country as a whole have been extraordinarily well served by Joe throughout his 30 years of federal service. I will miss Joe’s expertise and wise counsel, and wish him well as he begins the next phase of his distinguished career.”

December 18, 2014 President Signs Cromnibus On December 16, the President signed the Consolidated Appropriations Act of 2015 into law, otherwise known as Rediscover WHE AT | JANUARY 2015 13

the “cromnibus.” The Act was passed December 13 by the Senate in a 56-40 vote, and in the House by a vote of 219-206.

The cromnibus funds most of the government through fiscal year 2015 and includes $20.6 billion in discretionary funding under the Agriculture, Rural Development and FDA portion of the Act. This is $305 million below the fiscal year 2014 enacted level.

The bill provides $2.7 billion in agricultural research programs, including the Agricultural Research Service at $1.1 billion, and the National Institute of Food and Agriculture was funded at $786 million. The Agriculture and Food Research Initiative received $325 million which funds are used for research, education and extension grants for National, regional and multistate concerns in all agriculture sectors. The Farm Service Agency (FSA) was funded at $1.5 billion, which is $22 million above fiscal year 2014 and allows $6 billion in loan authorizations for farm, conservation and emergency loan programs. The bill directs the Market Access Programs (MAP) and the Foreign Market Development (FMD) be funded at $200 million and $34.5 million, the same as fiscal year 2014.

The Natural Resources Conservation Service received $859 million to help farmers, ranchers and private forest landowners conserve and protect their land. The bill reduces the conservation program spending that was approved in the 2014 Farm Bill, providing $253 million less for the Environmental Quality Incentives Program and decreasing annual enrollment in the Conservation Stewardship 14 Rediscover WHE AT | JANUARY 2015

Program by 2.26 million acres.

There were additional provisions in the bill that restrict the Administration from moving forward on the Interpretive Rule related to USDA conservation practices and the proposed Waters of the U.S. regulation, and listing of the sage grouse on the endangered species list.

You can view the full summary of agriculture appropriations at http://appropriations.house.gov/ uploadedfiles/ag_press_summary. pdf.

Tax Extenders Passed the Senate On evening of December 16, the Senate voted and passed the tax extender bill, HR 5771, a bill the House passed earlier in December.

This includes extending Sec. 179, the small business deduction of up to $500,000 for new/used equipment. Also included in the Bill was an increase to barge diesel fuel user fee, which was supported by many agricultural groups including NAWG. The provision, which was a part of in the “ABLE” Act that was combined with the tax extenders language, increases the user fee by 9 cents, from 20 cents to 29 cents.

It will raise an estimated $260 million over the next 10 years to make improvements and repairs to America’s waterway system.

Senate and House Conclude 113th Congress The Senate and House have officially concluded the 113th Congress. The 114th Congress will be back when their first session begins on January 6, 2015, and the freshman class

will be sworn in that same day.

You can view the House (http:// www.majorityleader.gov/wpcontent/loads/2014/11/114th CongressFirstSession.pdf) and Senate (http://www.senate.gov/ pagelayout/legislative/one_item_ and_teasers/2015_schedule.htm) calendars online for the first session.

EPA Sends Pesticide Consultation Report to Capitol Hill The 2014 Farm Bill required the Environmental Protection Agency (EPA), the U.S. Department of Agriculture, the Department of Commerce and the Department of Interior (DOI) to report to the House and Senate Agriculture Committees regarding pesticide registration and consultation on endangered species. The EPA is required to consult with DOI’s Fish and Wildlife Service (FWS) and Commerce’s National Marine Fisheries (NMF) regarding the potential impact of pesticides on endangered species, but consultation process has not worked well for close to 30 years due to a lack of clarity of data the FWS and NMF were using to assess impacts to endangered species.

In 2013 the National Academy of Sciences’ National Research Council issued a report on the scientific and technical issues regarding pesticide consultations.

The Farm Bill required the agencies involved to report on how they were implementing the recommendation of the 2013 report. In the submission to the Agriculture Committees, the EPA highlighted joint meetings and a new process to improve

stakeholder involvement and transparency in the review process. NAWG supports greater clarity in endangered species consultation process for registration, and reregistration, of pesticides and a process that is streamlined, transparent, open to stakeholder input and, most importantly, based on the best available science.

Senate Agriculture and Appropriations Committee Members Announced The Senate announced their 114th Congress committee memberships this week.

Committee assignments for the Senate Committee on Agriculture Nutrition and Forestry and the Senate Appropriations Committee include:

Senate Committee on Appropriations Republicans (16) Thad Cochran, Mississippi, Chairman Mitch McConnell, Kentucky Richard Shelby, Alabama Lamar Alexander, Tennessee Susan Collins, Maine Lisa Murkowski, Alaska Lindsey Graham, South Carolina Mark Kirk, Illinois Roy Blunt, Missouri Jerry Moran, Kansas John Hoeven, North Dakota John Boozman, Arkansas Shelley Moore Capito, West Virginia Bill Cassidy, Louisiana James Lankford, Oklahoma Steve Daines, Montana

Democrats (14) Barbara Mikulski, Maryland, Ranking Patrick Leahy, Vermont Patty Murray, Washington Diane Feinstein, California Richard Durbin, Illinois Jack Reed, Rhode Island Jon Tester, Montana Tom Udall, New Mexico Jeane Shaheen, New Hampshire Jeff Merkley, Oregon Chris Coons, Delaware Brian Schatz, Hawaii Tammy Baldwin, Wisconsin Chris Murphy, Connecticut

Senate Committee on Agriculture Nutrition and Forestry Republicans (11) Pat Roberts, Kansas, Chairman Thad Cochran, Mississippi Mitch McConnell, Kentucky John Boozman, Arkansas John Hoeven, North Dakota David Perdue, Georgia Joni Ernst, Iowa Thom Tillis, North Carolina Ben Sasse, Nebraska Chuck Grassley, Iowa John Thune, South Dakota Democrats (9) Debbie Stabenow, Michigan, Ranking Patrick Leahy, Vermont Sherrod Brown, Ohio Amy Klobuchar, Minnesota Michael Bennet, Colorado Kirsten Gillibrand, New York Joe Donnelly, Indiana Heidi Heitkamp, North Dakota Bob Casey, Pennsylvania

Rediscover WHE AT | JANUARY 2015 15

News from : December 4, 2014 Wheat Prices Rebound on Speculative Factors; Quality Supply Remains a Concern

By Casey Chumrau, USW Market Analyst Since USDA released its first 2014/15 World Agricultural Supply and Demand Estimates in May, projections for record global wheat supply have severely depressed prices. Even in the face of quality issues in wheat from all of the major Northern Hemisphere suppliers, U.S. futures prices hit a five-year low in late September. Yet new information suggests exportable supply may be tighter than previously expected and looking ahead, poor weather conditions threaten newly planted winter wheat in several countries.

While the headlines certainly move markets and are worth following, it is too early to say to what extent these factors will affect supply.

As has often been the case over the past decade, what is happening in the Black Sea region seems to be a major factor moving global wheat prices. Uncertainty there appears just as influential as facts and fundamentals. This year, Russia, Kazakhstan and 16

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Ukraine each produced their second consecutive bumper crop, contributing to abundant world supply. However, renewed fears of regional conflict have helped support global wheat prices in recent weeks. Then, last week, Russia’s governmental Veterinary and Phytosanitary Surveillance Service announced new regulations that the agency said could trim grain exports.

The announcement came after weeks of speculation that Russia might restrict exports to protect its domestic market; U.S. and European futures prices spiked even at this hint of reduced exportable supply.

As the 2014/15 Australian wheat harvest enters its final stages, it is clear that production will fall short of earlier estimates. USDA expects Australia to account for 11 percent of global exports this year so a reduction would change the landscape and add to concerns.

In June, the Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) predicted production would reach 24.6 MMT but minimal rainfall after July greatly reduced prospects.

ABARES this week downgraded its official 2014/15 projection to 23.2 million metric tons (MMT).

If realized, it would be a 14 percent drop from last year.

Although futures markets mostly ignored quality concerns in the Northern Hemisphere’s 2014/15 crop, less than ideal conditions for newly planted winter wheat in the U.S. and Russia are now lending some support. Cold weather in Russia in October slowed planting but warmer temperatures in November boosted crop development and conditions before dormancy. In the U.S., the winter crop and emerged earlier than average thanks to mostly adequate soil moisture.

However, abrupt and extremely cold temperatures stopped plant growth earlier than normal in the Northern and Central Plains, causing some concern. In its final report of the season, USDA estimated 58 percent of the winter wheat was in good or excellent condition, compared to 62 percent last year. It rated only 6 percent poor or very poor, down from 8 percent last year on the same date.

Realistically, though, the risk to Russian and U.S. winter wheat crops is speculative and it is far too early to predict a final impact.

These production and political factors have helped U.S. futures markets rebound from the September low and reach a fivemonth high. The market will eventually show whether these current bullish factors have long-term influence. However,

USW has cautioned buyers for months that record world supply does not automatically equate to availability of wheat with adequate quality. Basis levels confirm that the supply of high protein, strong gluten wheat is tight and the market is trying to extract that wheat from global supplies.

USW Presents Global Wheat Food Security Initiative to International Millers Citing the inadequacy of past, centrally planned food security policies, U.S. Wheat Associates (USW) President Alan Tracy today proposed an initiative to provide “genuine food security to the world’s wheat importers” by fully liberalizing global wheat trade. Tracy presented the concept of a global wheat food security initiative at the 25th Annual International Association of Operative Millers (IAOM) Mideast & Africa Conference & Expo in Cape Town, South Africa.

“Wheat is the most important food grain in the world,” Tracy said. “It provides 20 percent of the calories consumed every day on earth and 20 percent of the protein for the poorest half of human population. Demand is growing, but not every country that consumes wheat can produce wheat. Thus, wheat is both the world's most planted grain and the most traded. Creating a government-to-government sectoral trade agreement, similar to the current initiative to achieve global free trade in environmental goods under the World Trade Organization (WTO), that eliminates trade barriers would

assure importing countries of guaranteed access to the world's exportable wheat supplies.”

Tracy said real food security is possible when markets are allowed to work and governments invest to improve infrastructure that supports local production and improves access to world food supplies through trade.

Policies that intervene in market dynamics, while implemented with good intentions, have only distorted trade and encouraged unsustainable investments.

Tracy noted that the call in 2011 by the G20 under the leadership of French President Sarkozy for internationally controlled emergency wheat stockpiles and other measures largely proved unworkable. He also criticized India’s food security demands that appeared to derail hopes for a WTO trade facilitation agreement in Bali, Indonesia, earlier this year.

"India's demand for an exemption from WTO subsidy rules was not really about food security," he said.

Admitting that such an initiative faces many challenges, Tracy said government trade officials and industry representatives from several countries have expressed an interest in exploring this concept.

“Given a fair chance, we can compete very well because we produce the highest quality wheat in the world,” said Paul Penner, a Hillsboro, Kan., wheat farmer and president of the National Association of Wheat Growers.

“We agree that lower tariffs, less government intervention and freer global wheat trade would expand

opportunity for farmers and their customers and we are eager to see how stakeholders respond to this idea.”

Tracy also asked flour millers at the IAOM meeting for their support within their own governments if the idea takes root.

“In exchange for eliminating tariffs, licenses and other trade barriers, the world’s wheat buyers would have guaranteed access to exportable wheat supplies even when world supplies are down,” Tracy said. “It also would encourage sound investment in wheat production and create a more level playing field on which exporting countries can compete. I believe, with your support, we can genuinely boost food security that is so critical to peace and justice in this growing world.”

Philippine Millers Helped Toward Fair Competition with Turkish Flour

By Shannon Schlecht, USW Vice President of Policy The Philippine government recently set permanent antidumping duties on unfairly priced flour from key exporting companies based in Turkey.

The decision marks the end of a thorough investigation by the Philippine Tariff Commission to determine dumping margins, injury or threat of injury to the industry. The Philippine government had placed provisional anti-dumping duties on Turkish flour earlier this year.

The Philippine Association of Flour Millers petitioned the Rediscover WHE AT | JANUARY 2015 17

government to place anti-dumping duties on Turkish flour after seeing this as a growing threat.

According to import data, Turkish flour exports to the Philippines grew from nearly 55,000 metric tons (MT) in 2009 to a high of 178,000 MT in 2012.

The permanent anti-dumping duties will reach up to 16.19 percent and remain in place for a five-year period. The 2014 investigation that determined these dumping margins is a step forward in providing a fair and competitive playing field in this market.

Yet the Philippines is just one of many export markets where Turkish flour sells at suspect prices. Turkey has grown to become the second largest flour exporter in the world with volumes reaching nearly 2 million MT in recent years. These first anti-dumping duties to be permanently placed on Turkish flour send a clear signal that further investigation is needed into the policies, incentives and systems that exist within Turkey that have contributed to such explosive growth in flour exports.

It is a necessary step to ensure that flour millers around the world are competing in the spirit of fair competition and international cooperation.

Additionally, the Turkish government has not provided required annual notifications to the World Trade Organization on its wheat or flour export subsidies or the domestic support provided to its wheat producers for more than 10 years. It also maintains extremely high tariffs on wheat and flour of more than 18

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100 percent, which results in the need to use a complex inward processing and duty drawback system to export flour — yet another practice with insufficient transparency.

Foreign Agricultural Service Announces Export Development Funding The U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) has awarded funding to more than 60 U.S. agricultural organizations, including USW, to help expand commercial export markets for U.S. farm commodities and agricultural products. Each of these organizations must receive funding from members to qualify for participation in these programs — and then they must compete each fiscal year with other applicants for a portion of the total funding allocated to each program.

Through the Market Access Program (MAP), FAS is a partner with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities.

For fiscal 2015, 62 nonprofit organizations like USW and farmer cooperatives will share a total MAP allocation of $173.2 million. The Foreign Market Development (FMD) program focuses on trade servicing and trade capacity building by helping to create, expand and maintain long-term export markets for U.S. agricultural products. Under FMD, also known as the Cooperator

Program, 22 trade organizations like USW that represent U.S. agricultural producers will share a total allocation of $26.7 million by FAS. USDA's international market development programs have had a significant and positive impact on U.S. agricultural exports. U.S. farm exports in fiscal year 2014 reached a record $152.5 billion and supported one million jobs in the United States. USW believes its customers also benefit from its work, funded through MAP, FMD and other programs, providing wheat market, quality and price information as well as technical support to the world’s millers and bakers. For more information, contact your local USW office or visit www.fas.usda.gov.

December 18, 2014 USDA Raises World Wheat Estimates But Does Not Comment on Russian Rumors

By Casey Chumrau, USW Market Analyst There will be even more wheat produced and traded around the world in 2014/15, according to USDA. While it did not make substantial changes to U.S. or Russian estimates, USDA did add another 2.32 million metric tons of global wheat production over last month’s estimates in its monthly World Agricultural Supply and Demand Estimates report released on December 10, 2014.

World Production Increased.

Overall, USDA upped its world production estimate to 722 MMT, 7.41 MMT larger than last year’s

record crop. Slight decreases in both beginning stocks and global consumption did not offset the production increase, resulting in a 2.0 MMT increase in estimated ending stocks of 195 MMT. A 1.8 MMT increase in estimated Canadian production accounted for most of the global increase. USDA matched the Canadian government’s current projection of 29.3 MMT, which would still fall well short of last year’s record 37.5 MMT. Cool, wet weather there did not affect yields as drastically as expected but greatly diminished quality.

Statistics Canada reports high quality durum is in particularly short supply.

USDA also adjusted production in Kazakhstan to match official governmental statistics, up 500,000 MT to 12.5 MMT. USDA left its projection for Australian production unchanged at 24.0 MMT despite serious drought conditions that prompted the Australian Bureau of Agricultural and Resource Economics and Sciences to lower its official estimate to 23.2 MMT in December.

World Trade Estimates Also Up. USDA increased expected world trade by 3.12 MMT to 158 MMT, which would be 5 percent lower than last year but exceed the five-year average of 147 MMT. EU’s export forecast increased 1.0 MMT from November to 29.0 MMT based on the pace of shipments so far this year.

Canadian exports should reach an estimated 22.5 MMT, up 500,000 metric tons from November due to the larger crop size. USDA increased projected exports from

Kazakhstan and Ukraine to 5.8 MMT and 10.3 MMT, respectively.

Russian Rumors. The WASDE update did not reflect growing rumors that the Russian government will curb wheat exports to protect domestic supply. Instead, USDA decreased its Russian export projection by 500,000 MT to 22.0 MMT, citing increased competition.

Russia’s 2014/15 grain exports are at a record pace, lifted by two consecutive bumper crops and a plummeting ruble. However, the government could still restrict exports. Government officials, traders and news media have discussed the possibility that the Russian government might implement tariffs, tighten export rules or halt issuing phytosanitary certificates to customers. As a result, Russian exporters recently dropped prices in an effort to push sales ahead of any such restrictions.

A Busy Year for Trade Policy

By Shannon Schlecht, USW Vice President of Policy It was an active trade policy year with many worldwide policy negotiations and discussions to track. Following is a recap of major events: Two major trade negotiations continue that will ultimately benefit consumers, customers and producers. The 12 TransPacific Partnership member countries conducted several negotiating rounds in 2014, but agriculture and auto trade issues with Japan slowed the pace. It will take a high level of ambition

in these difficult areas to meet the original TPP objective of a comprehensive, ambitious and forward-looking 21st century trade deal. The TransAtlantic Trade and Investment Partnership talks with the European Commission are much further behind and there are several long-standing agriculture issues that cloud optimism for a quick deal. In both these negotiations, USW is specifically watching for eventual tariff elimination and enforceable WTO plus sanitary-phytosanitary measures.

The World Trade Organization started the year with optimism and momentum to achieve more outcomes on the multilateral front.

Unfortunately, India quashed this momentum when it refused to stick to its December 2013 commitment to implement the Trade Facilitation Agreement (TFA) package in July 2014. As a result, the TFA did not move forward as planned, delaying up to $1 trillion in economic benefits to both developing and developed countries. It also put back into question WTO members’ ability to reach any new trade deal.

In November 2014, WTO members clarified India’s use of a peace clause for its trade distorting support program to fund expensive public stockholding programs and moved up the timeframe to work on a permanent public stockholding solution. The clarification for India allowed the TFA to move forward toward implementation.

However, the move essentially weakened the 20-year-old Agreement on Agriculture commitments and cut against the Rediscover WHE AT | JANUARY 2015 19

WTO's long-term objective of fair and market oriented trading for agricultural products. Ironically, while India was pushing for greater allowances in its public stockholding programs for domestic food security in 2014, especially for wheat and rice, it also became the world’s largest rice exporter in 2012 and 2013.

In December 2014, USW introduced a wheat food security sectoral concept that WTO members could consider that encompasses a more holistic food security approach. Domestic production and holding stocks are elements of food security to the world's consumers. However, an initiative that eliminates import tariffs and export restrictions, increases the transparency of agricultural programs and limits trade distorting support would guarantee importing nations access to exportable wheat supplies and allow markets to work and provide more consistent and affordable wheat food supplies to the world's consumers. Read more on USW's website (http:// www.uswheat.org/newsRelease/ doc/3E38549B42BE169A85257 DA4005A8BE1?Open).

Advanced developing country domestic support also continued its trend upward in 2014, which is a major change in agricultural policy over the past decade.

The trend has been largely unnoticed until recent years and is an important factor for the prospects of any new multilateral trade effort. While the artificial signals from minimum price support programs, arguably the most trade distorting form of agricultural support, increase, 20

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so has agricultural production in these countries. This negatively affects trade opportunities as well as world commodity prices.

Additionally, over production often results in the need to export excess supplies since adequate storage facilities do not exist. The result is a double hit on the world’s farmers in the vast majority of countries that faithfully abide by their WTO commitments.

Work on these negotiations and issues that will affect wheat trade for many years to come will continue in 2015 and hopefully lead to policies that develop a more market oriented trading system that benefits trade, and ultimately your customers, consumers and the world's wheat farmers.

Celebrating Wheat Food Education in China and Taiwan

By Steve Mercer, USW Vice President of Communications I have just returned from a very rewarding trip to celebrate old and new educational partnerships between U.S. wheat farmers and the people of China and Taiwan.

Washington wheat farmer and USW director Mike Miller joined several USW colleagues and me as guests at a 30th anniversary event for the Sino-American Baking School Dec. 12 in Guangzhou, China. From there, Miller and I also travelled to Yilan, Taiwan, to represent wheat farmers at a Chinese baked product seminar Dec. 15 at St. Mary’s Junior College of Medicine, Nursing and Management.

Retired USW colleagues Fred Schneiter, Rick Callies and Pansy Lam, many current colleagues and several state wheat commissions worked with Chinese officials to help establish the Sino-American Baking School (SABS) in 1984.The school grew significantly through the early years and, more recently, expanded to two campuses serving nearly 2,000 students annually from Guangdong.

Because USW has sponsored many short courses over the years and maintained close ties to the school through the years, SABS honored us with special recognition among more than 300 guests celebrating at the central Guangzhou campus.

After greetings by SABS Director Philip Zhou, U.S. Consul General for Guangdong Jennifer Galt addressed the guests, noting the important connection between U.S. wheat farmers and the school.

“Your collaboration serves as a model for the U.S. agricultural sector and China’s food industry and educational institutions,” Galt said. “Your partnership also reflects how U.S. wheat farmers and the Chinese food industry are committed to deepening U.S.-Chinese trade and cultural relations more generally.”

Regional Vice President Matt Weimar, USW/Hong Kong, also offered formal remarks.

“Through the training of bakery personnel from all over China and the use of wheat produced by Chinese and American farmers, either alone or blended together, the wheat foods processing and flour milling industry in China

has a bright future,” he said. “We wish SABS many more successful years for the next generation and for generations to come.”

Weimar noted later that those generations would create new demand for imported wheat. Even though China grows more wheat than any other country, wheat use for milling in Guangdong province grew from about 500,000 MT 30 years ago to about four MMT today, which represents about 80 percent of China's imports.

In his address to the guests, Miller said U.S. farmers understand “we must cultivate a reliable, safe and consistent product that not only my children can enjoy, but also your children can enjoy. I am confident that our wheat can help produce more and more high quality baked and processed wheat foods here in Guangdong Province and across China.” As the fourth generation of his family to farm near Ritzville in eastern Washington, Mike grows soft white (SW), hard red winter (HRW), hard red spring (HRS) and hard white (HW) wheat.

Moving on to Taiwan, we learned from bakery visits that the industry sees increasing demand for premium quality baked goods, but there are challenges finding employees. Fortunately, St. Mary’s, a large Catholic vocational “junior college” teaches hospitality management and has excellent cooking and bakery training facilities for students to complete these required sections of the curriculum.

To take advantage of increased demand for new bakery products, Top Food Industry Corporation, a large Taiwan flour miller, and USW sponsored a seminar that we attended at the school. Miller, Weimar and I made brief remarks to about 35 bakers and many St. Mary’s students who participated in the seminar.

Baking consultant Hung-Wen Chen and St. Mary’s lecturer Hsin Tien Cheng demonstrated production of three products using medium protein flour that originated in China. First was “hu jiao bing,” or pepper biscuit, with a crunchy baked bun around a seasoned pork and onion filling.

Next was “song yu bing,” a flaky pastry made from thin dough rolled with green onions and pan fried. Last was “ma lai gou,” an individual, steamed sponge cake made with flour from soft white wheat, healthy nuts and berries.

This treat used to be made with rice flour.

“Our market is very competitive,” a Top Food sales manager told me. “We want to sponsor more seminars like this as a way to help expand the entire wheat foods market and position us as a leader. We are happy to partner with USW and with a facility like St. Mary’s.”

USW Country Manager Ron Lu, who has represented U.S. wheat farmers in Taiwan for many years, said the 23 million Taiwanese now eat more wheat than rice. Nico Wu, St. Mary’s head bakery instructor, confirmed Lu’s point that families and young

people are eating more often out of the home, are looking for new products and remain concerned about food safety.

“Now we are helping the flour milling and baking industries introduce healthy, more nutritious wheat foods so we can continue to see increased demand for imported wheat,” Lu said. USW works closely with the Taiwan Flour Mills Association (TFMA), which cooperatively imports wheat for its members. We met with three TFMA members and staff wheat buyers in its new office in Taipei on Dec. 16 to discuss how they might adjust their purchase specifications based on this year’s U.S. HRW, HRS and SW crop quality.

“I learn so much from meeting with our customers face-to-face on visits like this,” Miller said.

“This is very important to me in managing my farm because, as I told the guests at the SABS anniversary event, wheat farmers cannot survive without them.

This helps me adjust what I’m doing at home to better meet their needs in the future.”

To see more photos from our trip, visit the USW Facebook page (http://www.facebook.com/ uswheat).

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Hello Kansas Wheat.

Maltby Market Analysis

by Dan Maltby

The New Year’s celebration wasn’t very fun for wheat, and now it looks like it’s nursing the flu. Yuk. Here’s an old crop KC March daily wheat chart…sickly, in my opinion.

But it’s hard to predict the future… as this weekly continuous KC wheat chart proves…

Last year at this time, KC wheat at $6.43 had already dropped a buck from October, and continued dropping throughout January, before staging an incredible “Russian invasion” $2.00 rally.

Who knows when the next invasion or drought comes…in the meantime, with crude oil, gold and sugar all at multi-year lows, the appetite for “commodities” seems lacking. Maybe wheat noticed.

Charts and discussions follow, with the goal of giving you useful information to help you with your business. My disclaimer remains the same: these are my sometimes rapidly changing opinions; the markets are quite treacherous; and past performance is no guarantee…dm

Kansas Wheat market update #151 danmaltby.riskmgmt@gmail.com 01/02/15 pg. 1 22

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Just to finish the “commodities” thought, of these selected ones, live cattle, coffee, cocoa and sugar (meats and softs) finished noticeably in the black. Hogs are about unchanged. The stock market (S&P 500) was solidly higher, and certainly so was the “dollar index”.

COMMODITY 1/2/2015 1/3/2014 % CHANGE CRUDE OIL 88.48 52.81 -40.3% NAT. GAS 4.42 2.96 -33.0% GOLD 1240 1186 -4.4% SILVER 20.15 15.75 -21.8% COFFEE 130.1 161.05 23.8% COCOA 2617 2927 11.8% SUGAR 22.36 25.12 12.3% LEAN HOGS 81.2 81.4 0.2% LIVE CATTLE 132 166 25.8% CHGO WHEAT 6.06 5.81 -4.1% KC WHEAT 6.43 6.17 -4.0% CORN 4.65 3.96 -14.8% SOYBEANS 11.35 10.07 -11.3% S&P 500 1830 2060 12.6% DOLLAR INDEX 80.955 91.383 12.9%

How will these be different (or the same) this year? Which would you buy? Which would you sell?

For wheat specifically, particularly troubling this week was wheat shrugged off good news, as Iraq bought 200,000 of mainly North American hard wheat. USA or Canadian, hard winter or hard spring, or even Australian…the wheat team was shunned by “outside investors”.

I suspect Iraq needs 200,000 tonnes a month, which will almost certainly not be Russian, but this was not a good week for wheat longs. Will have to assume the market thinks enough wheat exists to get us to new crop, and then we’ll see if the Russian re-considers.

And unfortunately, suddenly, corn is of no help either. March corn shown here…

Kansas Wheat market update #151 danmaltby.riskmgmt@gmail.com 01/02/15 pg. 2

Rediscover WHE AT | JANUARY 2015 23

Soybeans acted the same way as corn and wheat. A very similar chart here. March beans…

At this time, we should assume weather in South America is relatively benign.

If you figure we’re not going to find comfort in the weekly futures table, you are correct.

CLOSE

KWH15

KWN15

KWZ15

CH15

CN15

CZ15

WH15

MWH15

MWN15

SH15

SN15

01/02

$6.17

$6.24

$6.50

$3.96

$4.11

$4.20

$5.81

$6.11

$6.27

$10.08

$10.21

12/26

$6.44

$6.54

$6.75

$4.15

$4.30

$4.39

$6.11

$6.32

$6.48

$10.54

$10.66

12/19

$6.66

$6.72

$6.91

$4.11

$4.26

$4.35

$6.32

$6.48

$6.61

$10.39

$10.52

12/12

$6.34

$6.40

$6.64

$4.08

$4.22

$4.32

$6.07

$6.21

$6.34

$10.54

$10.65

12/05

$6.39

$6.43

$6.67

$3.95

$4.10

$4.23

$5.94

$6.23

$6.37

$10.42

$10.54

11/28

$6.40

$6.36

$6.60

$3.89

$4.04

$4.17

$5.77

$6.16

$6.30

$10.23

$10.33

11/21

$6.07

$6.09

$6.35

$3.85

$4.01

$4.16

$5.54

$5.92

$6.08

$10.46

$10.56

11/14

$6.08

$6.10

$6.36

$3.94

$4.10

$4.24

$5.63

$5.97

$6.13

$10.30

$10.42

11/07

$5.74

$5.73

$6.00

$3.81

$3.96

$4.13

$5.26

$5.60

$5.80

$10.40

$10.48

10/31

$5.99

$5.98

$6.21

$3.89

$4.04

$4.19

$5.46

$5.85

$6.02

$10.53

$10.63

10/24

$5.96

$5.91

$6.20

$3.67

$3.83

$4.00

$5.31

$5.78

$5.94

$9.90

$10.02

10/17

$6.02

$5.88

$6.14

$3.61

$3.78

$3.94

$5.28

$5.76

$5.91

$9.68

$9.84

Wheat is going to see how it handles a dime lower. $6.07 in KC looks big, but even worse, 43c lower and we’ll be looking at the $5.74 “eleven week closing lows”. Sell-stops below there will be brutal. Corn faces a similar prospect 35c lower, and beans, almost exactly as corn.

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Technically, grains are in trouble.

Fundamentally, would have to assume the focus is already shifting towards new crop, even in corn. The USDA will issue their January WASDE update Jan.12, but most adjustments will probably be minor tweaks. Ethanol demand might be bumping into a demand wall with cheap crude, but I don’t expect corn exports to drop, especially since China approved the MIR 162 GMO variety. I saw China is now inquiring about USA DDGS, although as it appears corn is cheaper, it should be interesting to see if China takes cheaper corn. And as far as new crop, most analysts expect a decline in USA corn planted acres, which is a widely held belief, thus summer weather will be key As wheat’s focus becomes new crop, then it’s hard to think winter wheat isn’t currently in at least fair shape. I know it’s been cold, but we’ve had some moisture with it…

And if you like throwing darts, then this 90 day forecast of above normal precipitation looks good, but frankly, I’ll believe it when I see it…

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The rainy season should be coming though. And the same thing applies to Russia. Today’s weather is important, kinda, but what really matters is what happens in March and April.

SO, we enter the new calendar year with a bit of a negative price outlook, knowing that the unsold old crop’s price potential is somewhat limited, admittedly feeling quite heavy.

Current prices were not posted by the USDA this Friday, but I’m guessing these prices are close…

Date 01/02* 12/26* 12/19 12/12 12/05 Date 01/02* 12/26* 12/19 12/12

Dodge $5.77 $6.04 $6.26 $5.94 $5.93 Concordia $5.82 $6.09 $6.31 $6.04

Colby $5.79 $6.06 $6.31 $6.02 $6.09 Salina $5.92-$5.97 $6.19-$6.24 $6.41-$6.46 $6.19-$6.24

Goodland $5.81 $6.08 $6.31 $6.06 $6.11 Hutchinson $5.89-$6.07 $6.16-$6.34 $6.38-$6.56 $6.06-$6.24

Protection $5.77 $6.04 $6.26 $5.89 $5.94 Wichita $5.93-$6.07 $6.20-$6.34 $6.42-$6.56 $6.10-$6.24

Scott City $5.79 $6.06 $6.28 $5.96 $6.01 Ark City $5.91 $6.18 $6.40 $6.08

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Sublette $5.74-$5.82 $6.01-$6.09 $6.23-$6.31 $5.94-$5.99 $5.99-$6.04

12/05 BASIS 01/02* 12/26* 12/19 12/12 12/05 Date 01/02* 12/26* 12/19 12/12 12/05

$6.09 Dodge -40 -40 -40 -40 -46 Concordia -35 -35 -35 -30 -30

$6.24-$6.29 Colby -38 -38 -35 -32 -30 Salina -25, -20 -25, -20 -25, -20 -15, -10 -15, -10

$6.11-$6.29 Goodland -36 -36 -35 -28 -28 Hutchinson -28, -10 -28, -10 -28, -10 -28, -10 -28, -10

$6.15-$6.26 Protection -40 -40 -40 -45 -45 Wichita -24, -10 -24, -10 -24, -10 -24, -10 -24, -13

$6.13 Scott City -38 -38 -38 -38 -38 Ark City -26 -26 -26 -26 -26

Sublette -43, -35 -43, -35 -43, -35 -40, -35 -40, -35

The average (expected) price is $5.87, now less than 94% of what I consider the average cost of wheat production in Kansas.

SO one might ask me “if I’m thinking the price outlook is negative, why wouldn’t I sell the rest of my wheat and be done with it?”

Hmm. I’m trying to come up with a good answer for that question, but maybe it’s because I’d like to see how the rest of the Iraqi business will play out (I think they need another million tonnes) and I admit I am gambling, but as Russian spring weather and USA summer corn weather hold the potential for major upside moves… here I sit on my remaining 30% of this year’s wheat crop.

And while I might like to think that means I’ve sold most of my wheat, as I have only sold 10% of next year’s wheat crop too, the reality is I’ve got plenty.

Hmm. Well, let’s see how the next round of Iraq goes.

Maltby Market Analysis is provided weekly to members of the Kansas Association of Wheat Growers via email. To become a KAWG member and subscribe, please contact Dalton Henry at dhenry@kswheat.com.

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JANUARY 2015

Upcoming Events

• IGP–KSU Grain Elevator Managers Course, January 5-9 • IGP–KSU Introduction to Flour Milling Course, January 12-16 • Wheat Foods Council board meeting, January 13-14, Phoenix, AZ • NAWG/USW D.C. Meeting, January 27-31, Washington D.C. FEBRUARY 2015 • Kansas Wheat board meetings, February 5, Kansas Wheat Innovation Center, Manhattan • Women Managing the Farm Conference, February 5-6, Hilton Garden Inn, Manhattan, KS, womenmanagingthefarm.info 28

Rediscover WHE AT | JANUARY 2015

• Kansas Commodity Classic, February 6, Hilton Garden Inn, Manhattan, KS, www.kswheat.com/ events/kansas-commodity-classic • Research Review Committee, February 16-17, Kansas Wheat Innovation Center, Manhattan • Wheat Quality Council annual meeting, February 17-19, Kansas City, MO • Commodity Classic (national), February 25-28, Phoenix, AZ

MARCH 2015 • Bake and Take Month • K-State's Wheat Drought Policy Conference, March 10, Wichita Marriott, www.kswheat.com/ events/k-states-wheat-drought-policy-conference • National Agriculture Day, March 18