Creating Class Distinction
December 01, 2004
by World Grain Staff
by Martha Cuniberti and Mariano A. Otamendi
Argentina grows an array of different wheat varieties, ranging from outstanding bread baking quality to hard and semi-hard wheat varieties, similar to those in Canada, the United States and Australia. Although wheat with specific genetic traits is available, once harvested all wheat is stored together as if it were the same. As a result, quality varies depending on the region and years in which it is cultivated.
This practice puts Argentina at a competitive disadvantage to other wheat producing countries that classify their production, as wheat can only be offered in the international market as a lowerpriced commodity grain.
In the 1990s most of Argentina’s customers changed their grain procurement practices from large volume public bidding to direct purchase of smaller volumes by milling companies. Demand has grown for product differentiation to meet specific end uses — and that requires reliable shipment of expected quality and consistency. This trend can be seen in Brazil, Argentina’s near neighbor and most important customer since the creation of MERCOSUR, the free trade agreement between Argentina, Brazil, Paraguay and Uruguay. This relationship is greatly encouraged not just by geographical proximity but by a tariff of 10.5% on wheat bought by Brazil from beyond the boundaries of MERCOSUR. Brazilian milling companies are requesting certain varieties, consistent farinograph values or bread-making strength and alveograph strength (W).
Argentine farmers receive no subsidies; in fact, they have their crop and oil exports taxed. In the case of wheat, a 20% export tax is deducted from the f.o.b. price, so the producer must use greater efficiency to remain profitable. The bonus for protein above 11% is not always paid, and if paid it is not always enough to offset the cost of the inputs necessary to obtain it.
This and other misguided policies in the past explain why more and more technology is being introduced to maximize yield and why wheat produced in the humid regions of Argentina is showing a decrease in protein, especially during those years in which weather conditions favor high yields. Furthermore, local and Brazilian millers are concerned about the quality of a recently launched high-yielding variety of French origin and would prefer it to be segregated.
The presence in the international market of Black Sea countries such as Russia, Ukraine and Kazakhstan offering commodity wheat that competes on prices but not on quality, also poses a cause for concern.
CHANGES IN QUALITY AND MARKETING
Awareness is growing of how risky it is for Argentina to offer only one type of wheat. A group of producers, researchers and grain brokers is working towards adding value to Argentine wheat by trying to build a wheat value chain to manage the consistency and reliability of wheat production; a vision that has gained the support of Brazil.
Leading-edge producers have great knowledge of end-use quality parameters, the relationship between fertilizers and proteins and the quality of the different varieties and of their own harvests. Many of them segregate their production by varieties and protein and sell at better prices within the local market.
One of the difficulties faced when trying to segregate production, however, is that there is insufficient farm storage capacity. Bagged storage (in 200 tonne horizontal plastic bags) has proved very helpful in this respect. For many years, almost 70% of the wheat production was sold during the harvest season but this has changed, and now classification systems have become more feasible.
A small group of specialists started working years ago on a project to differentiate varieties according to end use. Wheat varieties were divided into three groups on the basis of a large amount of data from the Yield and Quality Trials Net (RET) performed on some 50 commercial varieties in 28 different locations within the whole wheat-growing area. This classification is reviewed every year as more information is obtained, in order to group wheat varieties more precisely.
Information on quality is used to estimate a Quality Index for bread wheat, on the basis of test weight, protein and gluten content, flour yield/ash content ratio, alveograph strength (W), farinograph stability and loaf volume. Each of the variables is weighted according to its importance in the assessment of the final quality of wheat.
The system was checked against RET trials over several years of cultivation, in macroplot variety trials by Argentinean Association Pro Wheat (AAPROTRIGO), information obtained by Argentina’s Secretariat of Agriculture, Livestock, Fishing and Food (SAGPyA) about varieties in the whole wheatgrowing area in Argentina during 2001 and samples taken from 4,000 trucks that reached the port of Bahía Blanca in 2003 (Figures 1 and 2).
Each group of varieties represents a different class of wheat and each class a different end use, diversifying Argentinean wheat offerings in the local and international markets.
AAPROTRIGO integrates the complete wheat chain in Argentina, disseminates information on the classification system among producers in all wheat-growing areas within the country and also promotes government initiatives.
The association has also created an agreement with the Brazilian Association of Wheat Millers (ABITRIGO) to help teach the Argentine wheat chain how to sell different wheat qualities. A scheme was started in 2003 whereby wheat is exported to Brazil and sorted into different classes to determine the consistency of each classification.
Currently, the SAGPyA is promoting the application of wheat classification systems in Argentina through the National Program for Wheat Quality. The participation of commercial varieties in the RET used to be optional but has become mandatory. Also under consideration is a change in marketing standards, so that a transparent commercial system may be developed on the basis of wheat classification. Ports are starting to segregate shipments.
Argentine producers use methods that are at the higher end of technology. The potential of each growing area to produce wheat with specific qualities needs more consideration. Information provided by the RET is available and well known to producers, many of whom are already taking quality and variety performance into account when planning their production.
Much work is being carried out with Argentine and Brazilian millers to advance price differentiation by class or variety group, with enough transparency for the information to be available to all producers. All the information relevant to these changes, as well as to the advancement of class differentiation, will be disseminated among regular buyers of Argentine wheat.
Argentina has the support of several strong private organizations, such as the Grain Arbitration Chambers of Buenos Aires, Rosario and Bahía Blanca; Futures Markets of Buenos Aires and Rosario; Arbitration Chambers at different loca- tions with well-equipped laboratories; producers’ associations; and chain associations like AAPROTRIGO and the National Agricultural Technology Institute These organizations are working for the advancement of a wheat production system in Argentina that will meet both the present and future demands of buyers. This is reflected in the significant exchange of ideas and information, and the work carried out among the organizations themselves and Argentina’s most important customer, Brazil. In the near future Argentina should be exporting different wheat classes with different levels of protein to satisfy a world market that is demanding increasingly better service. WG
Martha Cuniberti is the head of Wheat and Soybean Quality Lab from INTA Marcos Juárez, Córdoba, ICC South America and National Delegate and reference for wheat quality and classification.
Mariano A. Otamendi is an industrial engineer, farmer of the South East Region of Buenos Aires Province and president of the Argentine Association PRO Wheat.They may be contacted at firstname.lastname@example.org, email@example.com for more information, or visit: www.aaprotrigo.org