U.S. agricultural exports face strong competition as countries around the world ramp up their trading games

While the U.S. marketing system has huge advantages when they aren’t what Wilson calls “interventions” in the marketplace, the advantages are reduced when the interventions exist.

“We have very intense international competition, more than we ever have had before,” Wilson told farmers Dec. 9 during a session about agricultural trade at the Prairie Grains conference in Grand Forks. ”That’s a challenge for us and an opportunity for us.”

Challenges that the United States faces include stiffer competition for agricultural exports from Brazil, which has lowered its shipping costs and the Ukraine, where rail transportation costs are low. Meanwhile, Ukraine is located near buyers in the Middle East, North Africa and the European Union, so it has a geographical advantage, Wilson said.

Russia is striving to become a multi-international giant, and VTB, a leading universal bank in the country has asked President Vladimir Putin for assistance with creating a competitive advantage that would control the role of foreign traders, he said.

The VTB’s proposed grain holding company would control the supply chain, Wilson said, noting that VTB already is Russia’s largest owner of facilities and rail cars, and the No. 1 exporter from the Black Sea.

Meanwhile, though U.S. companies have made great advances in agricultural technology, others have, too.

For example, Beijing has made clear that it will support its seed technology leaders, which will develop insect-resistant and herbicide-tolerant corn, Wilson said.

On the demand side, in the future, domestic need for biodiesel and sustainable fuels will result in reduction of U.S. trade, Wilson said. The reduction in commodity exports will be offset by the demand for the crops by U.S. companies driving prices, he said.

“That’s going to have a huge impact on the market,” Wilson said. “We’re going to have a huge battle for acres.”

According to Wilson, other factors that affect the agricultural commodity markets and global trade are:

• Increased differentiation in demand. For example, U.S. consumers generally have been accepting of food produced using GMO technology, while consumers outside of the United States have not.
• Changing technology, which has been adapted around the world in various ways. There have been substantial investments in agricultural productivity. “Everyone has the information. The advantage is who can analyze it best,” Wilson said.