Serving Whitman County since 1877
Serving Whitman County since 1877
On the side of the U.N. Assembly, a deal was made.
“Hey, it’s fantastic. It’s gonna put us back on par with Canada and Australia. That’s what we’ve been shooting for,” said Gary Bailey, a third-generation St. John farmer and chairman of the board for Washington Grain Commission.
The deal – announced Sept. 24 from New York by the Trump administration and Japanese Prime Minister Shinzo Abe — drops tariffs amounting to 55 cents more per bushel of U.S. wheat, including Whitman County western white wheat and hard red winter and spring, which Japan selects for its millers.
The increased tariffs on U.S. wheat took effect earlier this year after the Trump administration dropped out of talks for the eventual 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), signed in March 2018.
Was Japan paying the higher price?
“They’ve been buying all along,” said Bailey. “They like our wheat. They didn’t really want to change their recipe, so to speak.”
Glen Squires, CEO of the Washington Wheat Commission, indicated that Japan’s trade groups were saying the same thing to their government that the U.S. trade groups were saying.
“Everyone was on the same page, it was the governments that were having the differences,” said Bailey.
The CPTPP was ratified Dec. 31, 2018, with tariff cuts beginning April 1 on wheat shipped to Japan from participating countries – making for a $20 less tariff per metric ton for Australia and Canada. Every year following April 1, the rate would decrease to an eventual total of $65 less than the U.S. rate per metric ton.
In the first five months of this year, however, Japan’s U.S. wheat purchases remained the same.
By coincidence, Canadian spring wheat and Australian spring wheat are now experienceing higher prices because of a two-year drought in Australia, and Canadian prices affected by the U.S. trade war with China.
Australia and Canada’s current higher prices have made for less of an impact for the higher tariffs on the U.S.
In a normal year, Japan buys 52 percent of its wheat from the U.S., and 20 percent from Canada and 15 percent from Australia. Much of that 52 percent is soft white wheat which is grown extensively in Whitman County.
“They need that, so they continued to purchase it,” said Steve Mercer, vice president of communications for U.S. Wheat Associates, based in Washington, D.C. “The difference in price just hadn’t been enough incentive for the Japanese millers to change. The concern was for next year and the year after and the year after.”
Could there have been a point that certain Japanese millers would simply pay more for U.S. wheat?
“Japan is a very specific market, the millers don’t want to change unless they have to,” said Mercer. “They buy 50 percent of their wheat from the U.S. for specific reasons, there is a pretty strong preference for U.S. wheat.”
Japanese wheat purchases represent more than 10 percent of annual U.S. wheat exports.
The new agreement between the two countries also includes reduction or elimination of tariffs on other agricultural products from fresh and frozen beef and pork to blueberries and tomato paste. A second part of the deal concerns digital trade, including prohibiting customs on products sent electronically such as software, games, music and videos.
Garth Meyer is a former Whitman County Gazette reporter.
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