Australian Grains Industry Conference 2010

“ U.S. Grain Export Industry Structure”July 28, 2010

North American Export Grain AssociationNorth American Export Grain Association

Private and Publicly Owned Companies and Co-ops Engaged in Bulk Grain, Oilseed Exports.Engaged in Bulk Grain, Oilseed Exports.

Established in 1912 – Foundation in Commercial Practices, Contracts and Advice to Governments, Non-tariff Trade Barriers

Members ship vast majority of $60 billion+ annual exports of North American bulk grain oilseeds and primary productsNorth American bulk grain, oilseeds and primary products

Commitment by MEMBERS to:Commitment by MEMBERS to:Integrity, Competition, Commercial Solutions, Open Markets

Reliability, Customer Driven, Quality and Safety Priority

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ADM ADM Louis DreyfusLouis DreyfusCargillCargill Bunge Bunge AgrexAgrex -- MitsubishiMitsubishi CLD PacificCLD PacificFGDI FGDI Mitsui Mitsui –– United United GrainGrainCHS CHS DeBruceDeBruceZenZen--nohnoh Grain Grain Itochu Itochu Toyota Tsusho Toyota Tsusho NideraNideraRichardson Richardson ViterraViterraGavilonGavilon United United HarvestHarvestRice Co Rice Co GiroskiGiroski AGROAGROCam USACam USA WestPlainsWestPlainsPasternak, Baum Pasternak, Baum Russell Marine Russell Marine ThionvilleThionville GhaznaviGhaznavi / Iran/ IranThionville Thionville GhaznaviGhaznavi / Iran/ IranAssoc. Terminals Assoc. Terminals SGSSGSCoBankCoBank InterstateInterstatePort of Corpus ChristiPort of Corpus Christi IntertekIntertekJ&S / DubaiJ&S / Dubai GlencoreGlencore

AGREX, Inc.

J&S / DubaiJ&S / Dubai GlencoreGlencoreColumbia Columbia –– Marubeni Marubeni Kalama ExportKalama ExportTEMCOTEMCO Star Trading & MarineBlue Water Shipping Company Seaboard Overseas Ltd.Degesch America, Inc. American Kadi Home Export

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GLOBAL FOOD DEMAND - Current Economic downturn impact on Agri commodities?downturn impact on Agri-commodities?

• The economies of China, India, Pakistan, Indonesia Nigeria Ethiopia Vietnam TheIndonesia, Nigeria, Ethiopia, Vietnam, The Middle East, among other countries and regions, are growing faster than the world average g g g

• Long Term Challenge – Feed peopleg g p p7 billion in 2012 8 billion in 2030 9 billion in 2050

• Will need 70% more food by 2050(UN Projections, March and October 2009)

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WORLD’S LEADING IMPORTERS OF WORLD’S LEADING IMPORTERS OF AGRICULTURAL COMMODITIESAGRICULTURAL COMMODITIESAGRICULTURAL COMMODITIESAGRICULTURAL COMMODITIES

MMT, 2009/10MMT, 2009/10 (Projected)(Projected)

Country/Region Amount CommoditiesN Afr /ME 65 6 W CGN. Afr./ME 65.6 W,CGEU-27 45.3 SB,CG,RChi 45 0 SB CG WChina 45.0 SB,CG,WJapan 23.5 CG,SBMexico 16.0 CG,SB SE Asia 12 1 WSE Asia 12.1 WS. Korea 7.6 CG

5Source: USDA, WASDE Report, Feb. 2010

Farm LandFarm Land** per Capita, 2009per Capita, 2009Entity Population (mil.)1 A./Cap2

World 6,790.0 .57China 1 336 0 26China 1,336.0 .26India 1,177.8 .30U.S. 308.8 1.32Indonesia 231.4 .21Indonesia 231.4 .21Brazil 192.5 1.01Pakistan 168.8 .28Bangladesh 162.2 .11gNigeria 154.7 .48Russia 141.9 2.04Japan 127.4 .08Mexico 107.6 .56

1 Countries with more than 100 million population; 40% of world total.2 Countries with less than 1/3 acre per person tend to be net importers2 Countries with less than 1/3 acre per person tend to be net importers. * The world is losing about 25 million acres of farm land per year; -.5%.

Source: CIA World Fact Book

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Source: CIA World Fact Book.

Consuming Market RegionsConsuming Market RegionsRegion Development Stage Growth RateChina Late Intermediate RapidChina Late Intermediate Rapid India Early Intermediate ModerateEast Asia Mature SlowEast Asia Mature Slow West Asia Beginning SlowN America Mature SlowN. America Mature Slow C. America Beginning Slow S America Late Intermediate ModerateS. America Late Intermediate ModerateEuropean U. Mature Slow Middle East Late Intermediate RapidMiddle East Late Intermediate RapidAfrica Beginning Slow Central Asia Beginning Slo

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Central Asia Beginning Slow

Trends ? More More Ag ProductionAg Production mustmustMove Move InternationallyInternationally

Africa11%

OECD CountriesAfrica11%

East Asia and the Pacific14%

11%OECD Countries

26%

14%

South Asia East Asia and the

11%

LAND

South Asia15%

Europe and Central Asia

South Asia22%

Middle East and

East Asia and the Pacific31%

LAND

Middle East and North Africa

4%

Latin America and Caribbean

10%

20%

Latin America and Caribbean

9%

North Africa5% Europe and

Central Asia8%PEOPLE

With population growth, urbanization and broad‐based economic development, many low‐income countries’ food consumption will outstrip their production 

i d h ill b l i88

capacity, and they will become larger net importers.888

TradeTrade

93rd China Agribusimess Summit April 9 2010

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Trade Trade

9

World Grain Trade follows Consumption –300

World Grain Trade follows Consumption –plus 44 mln tons (18 %) in ten years 

278283

280

290

259263

268272

260

270

239

249 251 251255

250

260

mln

t

239

230

240

210

220

200

210

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1010USDA 2006

10

120 World Oilseeds Trade follows Consumption-

110

120 World Oilseeds Trade follows Consumption-plus 27 mln tons (34 %) in ten years

97100

103106

100

110

84 85 8588

9295

90

mln

t

79

84 85 85

80

70

602005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1111USDA 2006

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World Bulk Grain SystemsThe grain industry’s challenge = move commodities from areas of surplus to areas of deficit, provide for regulatory compliance , safety and cost efficiency

Movement is bulk and comingled.

3 24 h d li l d i3‐24 months contract to delivery lead time 

Characterized by high volumes, low cost y g

Impossible to keep varieties totally separate in system

Commingling may occur in each link of chain

Adventitious events may occur in all shipments of all commoditiesAdventitious events may occur in all shipments of all commodities.

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Food and Feed Safety concerns Gl b l DilGl b l Dil

1) Adventitious presence of events in all transboundary

Global DilemmaGlobal Dilemma

shipments bulk, comingled, fungible commodities (both GMand non-GM) - Includes shipments from countries that do nothave GMO’s in commercial productionhave GMO s in commercial production.

2) Zero and impractical tolerance for unapproved events that are) p ppapproved (i.e. found safe) first in exporting countries and not inimporting countries.

3) Trade is often restricted or prevented - Identity Preservationsystems and grain channeling not successful or practical tosystems and grain channeling not successful or practical tomeet zero or testing limits based tolerances.

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Grain Export FactsGrain Export Facts

• Global supply chains cannot manage to a zero tolerance

• Practical and achievable standards need to be incorporated in contractsto be incorporated in contracts

• Testing is a tool but not the sole answer• Contract sanctity is of paramount

importanceimportance

Goal: National Policies that minimize impacts of Food Safety and Labeling regulation on

trade of commodities for FFPf f

1. Develop risk assessment policy that minimizes h l b dasynchronous approval gaps between trading partners

2. Establish policies for agricultural biotechnology that create access and predictability for global supply chains

3. Acknowledge the need for and support the development of practical and achievable standards for LLP (low level presence or adventitious presence)

Crop Life Korea LLP Workshop -January 28 2010 15

Trade NegotiationsTrade Negotiations

• Multi lateral – DOHA• Bilateral – U S – AustraliaBilateral U.S. Australia• Regional – Trans-Pacific Partnership

WTOWTO

• DOHA Stocktaking – March 2010– Maintain and strengthen centrality of g y

multilateral dimensions of these negotiations– Build on what is already on the tableBuild on what is already on the table– Development remains a core principal

Bilateral FTA’sBilateral FTA s

• U.S. – Australia concluded in 2005 has resulted in over 50% increase in two-way ytrade of $32.8 Billion in 2008.

• U S FDI in Australia was $88 5 billion in• U.S. FDI in Australia was $88.5 billion in 2008 and Australia FDI in the U.S. was $6$64.5 billion

Current U S SituationCurrent U.S. Situation

Th j FTA’ it C i l• Three major FTA’s await Congressional approval

Colombia (2006)Korea (2007)Korea (2007)Panama (2006)

S• Labor interests in the U.S. seek new modifications to these agreements

• The rest of the world is aggressively pursuing treaties without us.p g

Regional AgreementsRegional Agreements

NAFTA h b iti d l f• NAFTA has been a positive model for what can result from increased trade liberalization– Effective January 1, 1994– Eliminated Non Tariff Barriers– Most tariffs eliminated immediately with othersMost tariffs eliminated immediately with others

phased out by January 1, 2008– Created the world’s largest free trade zone of Created the world s largest free trade zone of

$17 trillion worth of goods and services covering 444 million people

Trans Pacific PartnershipTrans-Pacific Partnership

• USTR notified U.S. Congress of intent to enter into regional Asia-Pacific Trade gAgreement in 2009

• First round of negotiations in Melbourne• First round of negotiations in Melbourne March 15 – 19, 2010

• Second round June 14 – 18, 2010 in San FranciscoFrancisco

• USTR conducting 50 state outreach

Trans Pacific Partnership ContTrans-Pacific Partnership Cont.

• Most recent negotiating session focused on four goals:g– Architecture for market access negotiations

Relationship between the TPP and existing– Relationship between the TPP and existing FTA’s among the negotiating partnersH i t l i h ll b i– Horizontal issues such as small business priorities and regulatory coherence

– Process for tabling text leading up to the next meeting in Brunei in October

ConclusionsConclusions

I d d d f f d it ill• Increased demand for food security will continue to require adoption of new technologies and stronger supply chain linkages

• Disguised trade barriers add to costs and impede actions to meet food security pede act o s to eet ood secu tychallenges

• Trade regulatory frameworks must be• Trade regulatory frameworks must be adopted to facilitate more liberal trade.

Thank You!Thank You!

W. Kirk Miller, Senior Advisor New Technologies and Trade

North American Export Grain AssociationNorth American Export Grain Association

wkmiller@naega.org