Wheat is produced widely across the world. Total world wheat production has increased from 531 million tons in 1986/87 to 580 million tons in 2000/01. China was the largest producer of wheat in 2000 (102 million tons), followed by the E.U. (99 million tons) and the United States (64 million tons). Other major wheat producing countries are the former Soviet Union, Canada, Australia, Turkey, India, and Argentina. These nine countries produce about 74% of wheat produced in the world. Because of the concentration of wheat production in a few countries, a large volume of wheat is traded in the world market. The total quantity of wheat traded in the world market was 127 million tons in 2000, which was about 21% of wheat produced in that year. Major exporting countries are the United States, Canada, the E.U., Australia, and Argentina.

The world wheat market has changed dramatically in the past decade. Farm support policies in exporting and importing countries have encouraged production, resulting in large stock buildups. Countries still use quotas, variable levies, tariffs, and other forms of import restrictions to protect domestic producers even though the Uruguay Round Agreement of GATT intends to lower trade barriers in importing countries. As world trade decreased during the early 1980s due to a depressed world economy, major exporting countries expanded the use of export subsidies or export promotion programs to maintain their grain market share.

The Uruguay Round of GATT negotiations, which became effective in 1995, has affected trade flows of wheat from exporting countries to importing countries. In addition, recent financial crises in several Asian countries, including South Korea, Thailand, Indonesia, and Taiwan, have also affected the world wheat market. Import demand for wheat from those countries was reduced substantially, resulting in depressed wheat prices in the world market. The average export price of wheat at the Gulf ports decreased from $5.02 per bushel in 1996/97 to $ 3.47 per bushel in 2000/01.

The outlook projection is based on an assumption that current farm and trade policies adopted by wheat exporting and importing countries are unchanged. Assumptions associated with macroeconomic variables, such as GDP growth rates, interest rates, inflation rates, exchange rates, and consumer price indices in the United States and other countries, are based on forecasts prepared by the WEFA Group and Project LINK. Average weather conditions and historical rates of technological change are also assumed to prevail during the projection period. The Global Wheat Policy Simulation Model was used for this analysis.

World wheat trade is projected to increase 17.3% from 88.9 million metric tons in 2000 to 104.3 million metric tons in 2010. Durum wheat trade is expected to grow faster than common wheat trade. Because of the financial crisis in South and Southeast Asian countries, their import demand for common wheat was weak for the last few years, but is expected to recover later in the forecast period.

The wheat export price of U.S. common wheat is projected to slightly increase by 1.1%, from $2.61 per bushel in 2000 to $2.64 per bushel in 2010 (Figure 1). The price of U.S. durum wheat is projected to increase 5.3%, from $3.18 per bushel in 2000 to $3.35 per bushel in 2010.

U.S. Senator Byron Dorgan (D-ND) and a group of agricultural leaders and university officials gathered in NDSU’s Morrill Hall on August 6 to dedicate the Center for Agricultural Policy and Trade Studies and to discuss its mission. Senator Dorgan spoke of the importance of having good research information available for decision makers. Through Senator Dorgan’s efforts, funding has been made available for this center. NDSU President Joseph Chapman; NDSU Vice President and Dean of Agricultural Affairs, Patricia Jensen; and the North Dakota Agriculture Commissioner, Roger Johnson, also spoke of the importance of agriculture in this region and the important research information that this center can provide.

U.S./Canada Grain Handling and Transportation Systems - Agribusiness & Applied Economics Report No. 451 by Joon J. Park and Won W. Koo

The United States and Canada have developed very different grain handling and transportation systems over the last several decades. There has been considerable pressure for change in Canada’s grain handling and transportation sector. This study examines the differences in grain handling and transportation systems between the two countries, the mechanisms and issues of Canadian transportation, rationalization and current policy issues in Canada, and the implications for grain trade.

United States and Canadian Agricultural Herbicide Costs: Impacts on North Dakota Farmers - Agribusiness & Applied Economics Report No. 456 by Richard D. Taylor and Won W. Koo

There are price and label differences for agricultural herbicides between the United States and Canada. This study estimates the total additional cost paid by North Dakota producers for agricultural herbicides compared to the cost of herbicides in Canada.

Economic Analysis of the Farmers Union Farm Bill Proposal - Agribusiness & Applied Economics Report No. 460 by Richard D. Taylor and Won W. Koo

The Farmers Union Farm Bill Proposal is a targeted plan which utilizes varying loan rates based on the USDA’s full cost of production for program crops and a Farmer Owned Reserve. The proposed loan rates decrease as the value of the crop loans increase. This study develops a distribution of farms in North Dakota to estimate the impact of the Farmers Union Proposal on the state compared to the continuation of the FAIR Act.