Industry Environment
U.S. export grain marketing is essentially a private sector
system; with the exception of humanitarian food aid, the U.S.
Government does not directly engage in the day-to-day marketing
of grain and oilseeds. Grain and oilseeds are sold by competing
private-sector merchants using predominately private facilities.
When the US Government acts to export for international food
assistance it contracts for commodity and logistics with the
private-sector system.
The US grain export system is a large, diverse,
and evolving industry including public, private and cooperatively
owned and managed facilities and trading entities. The industry
must constantly seek added efficiencies, mitigate the enormous
risks associated with international trade in a mature and
politically charged environment, compete and trade with subsidized
and state controlled organizations, upgrade export facilities
and streamline logistical capabilities in order to sustain
the export of US agricultural products.
As much as one third of all grain produced
in the U.S. moves into export. In 2003 approximately $20 billion
worth of grains and oilseeds were exported from the United
States via this system. It is expected that over 100 million
metric tons, of primarily US corn, soybeans and wheat, were
handled by the US grain export system in the calendar year
2003. Annual volumes and value vary widely based on pricing,
currency values, US market access, and global supply and demand
for the commodities produced in the United States.
Characteristics of the system include
- Highly efficient system that can receive, store, sort,
blend and ship large amounts of grain of uniform quality
to a diverse international customer base
- Competitive suppliers provide several options for buyers
by proving a system that is highly flexible (food, feed,
industrial markets).
- System relies on contract sanctity and has built-in system
of dispute resolution that includes several private dispute
settlement mechanisms that provide an alternative to public
judicial system. Integrity in business relationships combined
with the ability to equitably resolve disputes in a timely
and cost effective manner are a hallmark of the US grain
export system.
- At export, multiple commodity loading ability is combined
with vessel-loading rates that reach 3200-3400 tons per
hour. Year round capacity to supply a wide assortment of
contractual specifications for both quality and quantity
at several different ports
- US grains and oilseeds must meet rigorous U.S. government
standards and destination market requirements before being
certified for export shipment. Lots not meeting contractual
specifications are normally rejected.
o Grain Quality inspections are certified by the US Government.
For most US exports a Federal agency, the Grain Inspection
Packers and Stockyards Agency (GIPSA,) provides Federal
Grain Inspection Service (FGIS) certification of quality
under official US grain standards, performs vessel hold
inspections, and certifies the weight of export shipments.
o US Animal Plant Health Inspection Service officials (USDA/APHIS)
provide for Sanitary and PhytoSanitary requirements by certifying
shipments as required by international convention and sovereign
regulation
o Third party private inspection laboratories are available
to perform a wide variety of process certification, inspections
and testing services to meet buyer and contract requirements.
Exporting grain is both a competitive
and a capital-intensive industry. Since the margin of profit
to be earned from moving a ton of grain can be quite small,
exporters depend upon moving large volumes very quickly. They
seek to achieve an economy of scale that lowers their average
fixed costs per unit of volume handled, provides operating
flexibility, increases bargaining power in chartering for
shipping, and improves the services they can provide worldwide.
The following drivers frame global supply
and demand for agricultural products and the competition to
meet demand among supplier countries early in the 21st century:
- Trade liberalization and opening
of markets, in particular the reduction of trade barriers
through global progress in World Trade Organization agreement
and implementation.
- Political Conflicts, Economic and
Social Stability.
- The rise of questionable sanitary
and phyto-sanitary issues and anti-dumping actions, replacing
tariffs and quotas as the trade barriers of choice
- Population growth and heavy urbanization
in developing countries,
- Growth in consumer income and of
the middle class in emerging markets,
- Rising demand for high-value products,
especially new, specialty products,
- Stagnant aggregate demand in high-income,
developed countries,
- Global debate over the value, safety,
and morality of biotechnology and other technologies,
- Relative cost of production among
international competitors, and
- The competitiveness of marketing
infrastructure.
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