Peruvian Wheat Buyers Look at U.S. Wheat Marketing System

ARLINGTON, Virginia — Peru is one the few countries in South America that purchases almost all classes of U.S. wheat, which is one reason why three Peruvian wheat buyers are visiting the United States July 19 to 25, 2015. They are connecting with U.S. grain traders to learn more about the advantages of the U.S. wheat marketing system. The team’s visit focuses specifically on hard red winter (HRW) and soft red winter (SRW) production in Maryland, Virginia, Colorado and Kansas. U.S. Wheat Associates (USW) worked with the Maryland Grain Producers Utilization Board (MGPUB), the Virginia Small Grains Board, the Colorado Wheat Commission and the Kansas Wheat Commission to organize this team.

“Our goal for this trade team is to encourage the practice of blending different wheat classes or protein levels to minimize input costs, so we can compete better with wheat from other sources,” said USW South American Regional Vice President Alvaro de la Fuente, who is traveling with the team. “On this tour, they have the opportunity to see the quality of the new U.S. wheat crop and how its versatility can meet their multiple end-use needs.”

Peru produces an average of 240,000 metric tons (MT) of wheat per year, most of which is a soft variety that is not properly suited for baking, meaning only an average of 10,000 MT of their wheat is purchased by the milling industry. In 2014, U.S. wheat represented 20.9 percent of Peru’s total wheat imports with 1.95 million metric tons (MMT) led by HRW (193,000 MT) and SRW (139,000 MT). The team members represent Peru’s major wheat importing groups, accounting for more than 40 percent of the country’s annual wheat purchases and are directly responsible for evaluating and importing wheat for their companies.

The trip began with a visit to the USW Headquarters Office in Arlington, VA, for a briefing with President Alan Tracy and Vice President of Overseas Operations Vince Peterson. They also visited USW Vice Chairman and MGPUB Commissioner Jason Scott at his farm in Hurlock, MD and toured Perdue’s export grain terminal and Federal Grain Inspection Service (FGIS) office in Norfolk, VA. The team then traveled to Colorado and Kansas for visits to Ardent Mills, a Cargill-Byers unit train loading facility, Progressive Farms, Best Harvest Bakery, CHS and the FGIS Technical Center, as well as a meeting with Louis Dreyfus. Throughout the tour the hosting state wheat commissions will provide their state’s crop quality outlook.

USW is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW activities are made possible through producer checkoff dollars managed by 19 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service. USW maintains 17 offices strategically located around the world to help wheat buyers, millers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six classes of U.S. wheat.

The U.S. Wheat Industry Relationship with Peru

Domestic wheat production in Peru is used in the rural areas and is not available to domestic millers. With the second highest per capita consumption in the region and an experienced and consolidated milling industry that is willing to use a variety of wheat classes, Peru ranks after Colombia as a major market for U.S. wheat exports in South America.

Peru is a part of USW’s South American region, which is supported by an office in Santiago, Chile. USW works directly with South American-end users and importers to help them strengthen commercial links with U.S. export companies through trade serving and technical assistance activities in the region and by facilitating visits to the United States, like the one taking place this month.

FAS cooperator U.S. Wheat Associates (USW) has worked for many years with all Peruvian wheat flour mills to introduce lower protein/lower cost U.S. wheat to its import scheme. To achieve this, USW is leveraging the Market Access Program (MAP) and Foreign Market Development (FMD) program by conducting baking seminars to demonstrate how excellent bread can be produced by changing certain techniques that perform best with U.S. wheat.

While Peruvian bakers are slow to change, this activity is making a difference. Today, according to technical staff, some companies are producing flour made with 100 percent HRW for Peru’s French bread market, which has the highest level of consumption and more potential impact on U.S. wheat sales to Peru.  

As expressed by baking consultant, Didier Rosada, a renowned French master baker now living in the United States, "the future of the baking industry is in the past." He refers to the need to return to producing excellent quality bread with full aroma and great taste using old time baking methods.

The Peruvian market has been and will continue to be an important market for U.S. wheat, as perceived through various regional activities such as trade missions, trade servicing, buyer's conferences and on-going contact with buyers who trust and rely on U.S. Wheat Associates for support at all times. In addition, USW continues to plan activities designed to keep buyers up to date on the reliable supply, quality, price and value of the six U.S. wheat classes.

[Read more about Peru, the fifth largest market for U.S. hard red winter wheat.]