Agriculture Reference
In-Depth Information
using primary standards such as moisture and
protein content for purchase from the farmer and
export standards meant to describe in more detail
the quality and uniformity of the crop to proces-
sors. Primary standards are in place to grade
wheat upon delivery by the farmer. Because all
Western Canada wheat becomes the property of
the CWB upon delivery to the elevator, export
standards are used to grade wheat destined for
export. These export standards include charac-
teristics such as cleanliness, uniformity, and con-
sistency, and they promote a safe, reliable supply.
Canada, through the CWB, exports about 15 to
20 million tonnes of wheat each year. As a single-
desk supplier, the CWB decides who receives
Western Canada wheat in times of short supply.
It is the CWB's best interest to sell wheat for the
highest possible price, but the pricing system is
often criticized for its lack of transparency. In the
US, the market-determined price becomes the
arbiter of trade.
Australian cultivar development system is similar
to the US system and less restrictive than the
Canadian system.
PURCHASING DECISION MAKING
When purchasing wheat, international buyers can
choose from among many classes and associated
sets of quality attributes from a variety of coun-
tries. To understand this decision-making process,
we must understand how wheat is offered to the
market at large and how a buyer arrives at an
understanding of price.
The price a buyer is willing to pay for wheat is
a function of several factors: market factors, such
as quantities of global supply and demand; gov-
ernmental policies; payment terms of the con-
tract; delivery time; quantity of shipment and
quality attributes. With nearly 600 million tonnes
of wheat consumed globally each year and, on
average, more than 100 million tonnes of wheat
traded annually by more than 30 countries,
individual buyers do not impact supply or
demand forces that control the market price of
wheat (forces which are discussed further in
Chapter 23).
Governmental policies that affect the cost of
wheat include import and export restrictions,
tariffs or quotas, and phytosanitary requirements.
Many countries require imported plants and plant
materials to have a phytosanitary certifi cate which
verifi es that the material does not contain biologi-
cal contaminants, such as various fungi and molds
that can contaminate wheat or unwanted plant
seeds. In some cases, such as direct governmental
purchases, buyers might have the ability to
infl uence governmental policies. In most cases,
however, buyers cannot control governmental
restrictions.
Terms of payment are fi nancial agreements
between buyers and sellers to arrange payment for
the wheat. Terms of payment affect the contract
price for wheat exports, depending on which
party is extending credit to the buyer and how
long the seller is fi nancing the wheat shipment.
The longer the seller must carry the cost of the
AUSTRALIAN SYSTEM OF
CLASSIFICATION AND MARKETING
Wheat classifi cation in Australia has similarities
to the US and Canadian systems. Similar to
Canada, wheat in Australia is handled by a single-
desk marketing authority. When originally estab-
lished by government statute, the Australian
Wheat Board, now AWB, acted as the sole wheat
pooling and exporting authority for Australian
wheat. In recent years, the newly organized AWB
has become the major manager of Australia's
grain. It evolved from a government agency to a
publicly listed company and is owned primarily
by Australian growers. Like the CWB, AWB acts
as the only bulk exporter of wheat for its country's
farmers. This could change; proposals are under
consideration to divide some of the export respon-
sibilities among regions and have bulk-handling
companies export the wheat.
Australia divides its wheat into six separate
classes: Australia prime hard, Australia hard,
Australia premium white, Australia standard
white, Australia soft, and Australia durum. The
