North American Export Grain Association
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U.S. Export Grain Marketing
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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