USA compete with Argentina and Russia wheat
Argentina, Brazil’s neighbour to the south and fellow member of the Mercosur trading bloc, is by far the largest supplier of wheat to Brazil, but its grip on the Brazilian market is far from complete.
So U.S. Farmers, are ramping up efforts to take business away from Argentine exporters and other suppliers like Russia.
Brazil is the third largest wheat-importing country in the world, and while it’s already a strong customer of the U.S., representatives of American farmers say there’s plenty of room for more business as they continue a campaign to win over more Brazilian millers and bakers, who make the country’s bread, cookies, cakes and pasta.
U.S. wheat growers, has been working for years to get Brazil to increase access to its market, but it was in November 2018 — just months before Brazil finally followed through on a 24-year-old promise to fill a yearly tariff rate quota for U.S. and other non-Mercosur wheat — that the U.S. group began taking its case about the benefits of U.S. wheat directly to Brazilian millers and bakers.
Brazilian bakers at two of the country’s leading schools baked bread for an entire week with only U.S. hard red winter wheat in an event coordinated by the U.S. embassy and the Brazilian association for millers.
One of the lessons was that U.S. hard red winter wheat is much more suited to making “pãozinho,” a staple of the Brazilian diet that is basically a shorter version of a French baguette, with a firm crust and split at the top.
That split is very important to Brazilian bakers, says USDA top representative in South America, and it’s not possible without using additives when bakers are relying on the equivalent of U.S. HRW that comes from Argentina or Russia.
So, the one-week seminar held in São Paulo was essentially a showcase to demonstrate how HRW from the U.S. outperforms all others with its higher protein content, allowing the gluten to better absorb water and produce a more stable dough, says USDA spokesman.
U.S. HRW ships with less moisture so the miller is actually receiving more potential flour in every load.
But events like the baking seminar and others are aimed more at promoting U.S. wheat over competing imports from countries other as Argentina and Russia.
In fact, while U.S. quality is superior to the Argentine grain, however, it just can’t compete most of the time with the plentiful supplies from Brazil’s southern neighbour.
Brazil consumes about 12 million metric tons of wheat every year, but the country’s farmers only produce about 5-6 million tons, making millers there highly dependent on imports.
Argentina, as usual, supplied about 80% of those imports in the 2019-20 marketing year, but the other 20% is up for grabs.
That was the case in 2019-20 when the U.S. shipped about 708,000 metric tons for about 10% of the Brazilian market, according to data from USDA.
But Russia, which only accounted for 2.4% of Brazil’s market share, is expanding its exports in recent time,
At first, Brazil implemented the 750,000-ton TRQ to allow non-Mercosur wheat to enter tariff free, but high bread prices and tight Argentine supplies spurred the Brazilian government to open up a second TRQ for 450,000 tons.
Brazil imported about 1 million tons under the two TRQs — just shy of the 1.2 million possible — and U.S. farmers got about 80% of that business.
It’s a performance the U.S. wants to repeat, which is why growers Association’s, has been educating Brazilian millers on how to get exactly what they need when they commit to buying U.S. wheat.
One area where the U.S. can “steal” business directly from Argentina is the wheat used to make cookies and crackers.
While many Brazilian companies use a formulation of Argentina’s equivalent of hard red winter wheat — locally called “trigo pan” — to make the sweet treats, it is soft red winter wheat that comes only from the U.S. that provides the best quality.
The U.S. exports an average of about 72,000 tons of SRW to Brazil annually, but those sales have spiked as high as 200,000 tons before, and the goal is to make that the new normal.
It’s why growers Association is itching to hold new seminars for Brazilian cookie and cracker companies, but the COVID-19 pandemic is holding up those plans.
Argentine trigo pan, together with additives, a lot of sugar, chocolate and other ingredients is commonly used, but the highest quality cookies and crackers sold in Brazil are made with American SRW.
The largest cookie and cracker companies already rely on SRW, but a lot of medium-sized companies do not, and growers Association, is already targeting them.
Brazil is just one country in South America, but it is by far the largest, and it consumes the most cookies.
USDA estimates that Brazil accounts for nearly 70% of all cookie production on the continent.
And it’s not just the size of the country.
Per capita cookie consumption in Brazil is 6.5 kilograms per year.
Colombia weighs in at second place with 4.5 kilograms per capita consumption.