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Vince Peterson Vice President of Overseas Operations

XVI Annual International Conference “Black Sea Grain and Oilseeds 2010/11” . Moscow, Russia 9 September 2010. Vince Peterson Vice President of Overseas Operations. World Wheat Situation – A look into the Future . and the Role of Governments in the Grain Industry.

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Vince Peterson Vice President of Overseas Operations

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  1. XVI Annual International Conference “Black Sea Grain and Oilseeds 2010/11” .Moscow, Russia9 September 2010 Vince Peterson Vice President of Overseas Operations

  2. World Wheat Situation – A look into the Future.and theRole of Governments in the Grain Industry.

  3. A note about 2010-11…US Wheat Situation…as of July, 2010 A note about 2010-11…US Wheat Situation…as of August, 2010 A note about 2010-11…US Wheat Situation…as of June, 2010 Will the US profit from the situation in Russia?

  4. U.S. Crop Planted Area ComparisonCompetition for Land Area

  5. World Wheat Consumption vs. Land Area Million MT __ Harvested Area (MHA) (without scale) __ Wheat Consumption (MMT)

  6. Harvested Land Area by Crop World Total 1960 to 2010 1,000 HA Wheat Land Area 1968 = 2010 33.2 MHA 31.8 MHA Corn Land Area +57% 16.1 MHA 7.2 MHA Soybean Land Area +300% ---- ----Russia/Ukraine Wheat Corn/Oilseeds (without scale)

  7. Production by Crop World Total 1960 to 2010 1,000 MT

  8. World Wheat Prodution Belts Northern and Southern Hemispheres World wheat production occurs between approx. the 25th and 55th degrees, N & S latitudes

  9. FAO World Hunger Map Northern Hemisphere Wheat Belt Mid-Latitude Hunger Concentration Southern Hemisphere Wheat Belt World wheat production occurs between approx. the 25th and 55th degrees, N & S latitudes

  10. +/- 900 MMT Demand in 35 years 660+ MMT 239 MHA 202MHA 30 year trend 212 MHA 353 MMT 229 MMT World wheat consumption World wheat harvested area

  11. Projected World Population Growth 2010 to 2050 (From 6.9 to 9.5 billion?) Northern Hemisphere Wheat Belt Mid-Latitude Demand Concentration Southern Hemisphere Wheat Belt World wheat production occurs between approx. the 25th and 55th degrees, N & S latitudes

  12. World Wheat Trade

  13. World Wheat Trade

  14. World Wheat Trade X

  15. World Wheat Trade X

  16. World Wheat Trade X

  17. World Wheat Trade World trade to all “others” has grown to 250% of 1980 levels 125 MMT 50 MMT Trend in “other” importers denoted ( )

  18. World Wheat Trade 250 MMT ... WHAT IF only 50% of the 240 MMT increased demand is traded internationally? 125 MMT ? 50 MMT 2020 2030 2040 2050 Trend in “other” importers denoted ( )

  19. History… is a very good teacher "Those who cannot remember the past are condemned to repeat it.” George Santayana, 20th C. Philosopher Reason in Common Sense, 1905

  20. History: US Government Helps Put Brazil in the Soybean Business In 1973, President Nixon suspended soybean export sales because of short US domestic supply. MMT MHA

  21. History: US Government Primes EU Exports 1980-1985 Huge $$$ US government spending for stocks and reserve ownership; and land set asides January 4, 1980 US President Carter embargos 17 MMT in open sales to USSR 51.8 MMT 1974 and 1975 US President Ford effectively slows exports to USSR; Ist Grain Agreement 25.0 MMT 1985-1995 $ Billion/year US government spending on export subsidies ___European Union Wheat Exports US Wheat Stocks (without scale)

  22. Governmental Distortion of Markets: WTO Agreement Negotiations Doha Round B. SCHEDULED EXPORT SUBSIDY COMMITMENTS 162. Developed country Members shall eliminate their remaining scheduled export subsidy entitlements by the end of 2013. 163. Developing country Members shall eliminate their export subsidy entitlements… by the end of 2016.

  23. 1970’s Wheat Import & Export STE’s“State (authorized) Trading Enterprises” Norwegian & Finnish Grain Boards Canadian Wheat Board Poland Rolimpex Soviet Union Exportkhleb Japan Food Agency Turkey TMO Portugal EPAC China Ceroilfood Iraq IGB Iran GTC N. Africa ONIC India STC Mexico CONASUPO Egypt GASC Cuba ALIMPORT Philippines NGA Sri Lanka CWE Sudan CIDCO Ecuador Ecuagran Brazilian Wheat Board Indonesia Bulog Peru ENCI Australian Wheat Board S. African Wheat Board Argentina Junta EXPORT STE IMPORT STE

  24. 2000 Wheat Import & Export STE’s“State (authorized) Trading Enterprises” Canadian Wheat Board Japan MAFF China COFCO Turkey TMO Iraq IGB Iran GTC N. Africa ONIC Egypt GASC Cuba ALIMPORT India STC Australian Wheat Board EXPORT STE IMPORT STE

  25. 2010 Wheat Export STE’s“State (authorized) Trading Enterprises” Russia United Grain Company Canadian Wheat Board Turkey TMO China COFCO

  26. WTO Agreement Negotiations • Doha Round • 3. In order to ensure the elimination of trade-distorting practices with respect to agricultural exporting state trading enterprises…Membersshall: • Eliminate…all forms of export subsidies including those related to food aid and export credits: • (ii) government financing of agricultural exporting state trading enterprises, preferential access to capital… with respect to government financing or re-financing facilities… • (iii) government underwriting of losses…byagricultural exporting state trading enterprises on their export sales. • (iv) by 2013, the use of agricultural export monopoly powers for such enterprises.

  27. Governmental Intervention in the Markets Importers natural fear: Export restrictions…due to short supplies … export license controls? … … imposed export levies and taxes? … … administratively restricted supplies? … Will I have access to the market?

  28. Agricultural Embargoes and Contract Sanctity THE UNITED STATES CONSTITUTION Article. I., Section 9., Clause 5: “No Tax or Duty shall be laid on Articles exported from any State.” The Food and Agriculture Act of 1977: If export sales are suspended for reasons of short supply, domestic wheat price support would by mandate be raised to $533/MT (today’s calculation).

  29. Agricultural Embargoes and Contract Sanctity Food Security Act of 1985: Declares it U.S. policy to encourage agricultural exports and not to restrict exports except under the most compelling circumstances. The Food, Agriculture, Conservation, and Trade Act of 1990: Contracts to export agricultural commodities, which were agreed upon before any prohibition, should not be abrogated. Export Administration Act of 1999: Prohibition on agricultural exports can only be imposed when the President declares a national emergency. (high prices do not qualify as an emergency)

  30. Thank you for your invitation to speak and share some topics of vital importance to the wheat industries in both Russia and the United States.

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