1. XVI Annual International Conference “Black Sea Grain and Oilseeds 2010/11”. Moscow, Russia 9 September 2010 Vince Peterson Vice President of Overseas Operations

2. World Wheat Situation – A look into the Future. and the Role of Governments in the Grain Industry.

3. A note about 2010-11… US Wheat Situation…as of June, 2010 A note about 2010-11… US Wheat Situation…as of July, 2010 A note about 2010-11… US Wheat Situation…as of August, 2010 Will the US profit from the situation in Russia?

4. U.S. Crop Planted Area Comparison Competition for Land Area

5. World Wheat Consumption vs. Land Area Million MT __ Harvested Area (MHA) (without scale) __ Wheat Consumption (MMT)

6. Harvested Land Area by Crop World Total 1960 to 2010 1,000 HA Corn Land Area +57% Wheat Land Area 1968 = 2010 Soybean Land Area +300% ---- ---- Russia/Ukraine Wheat Corn/Oilseeds (without scale) 33.2 MHA 31.8 MHA 7.2 MHA 16.1 MHA

7. Production by Crop World Total 1960 to 2010 1,000 MT

8. World Wheat Prodution Belts Northern and Southern Hemispheres World wheat production occurs between approx. the 25 th and 55 th degrees, N & S latitudes

9. FAO World Hunger Map Mid-Latitude Hunger Concentration Northern Hemisphere Wheat Belt Southern Hemisphere Wheat Belt World wheat production occurs between approx. the 25 th and 55 th degrees, N & S latitudes

10. World wheat consumptionWorld wheat harvested area 660+ MMT 30 year trend +/- 900 MMT Demand in 35 years 229 MMT 353 MMT 212 MHA 239 MHA 202MHA

11. Projected World Population Growth 2010 to 2050 (From 6.9 to 9.5 billion?) Southern Hemisphere Wheat Belt Northern Hemisphere Wheat Belt Mid-Latitude Demand Concentration World wheat production occurs between approx. the 25 th and 55 th degrees, N & S latitudes

12. World Wheat Trade

14. X

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17. World trade to all “others” has grown to 250% of 1980 levels 50 MMT 125 MMT Trend in “other” importers denoted ( )

18. World Wheat Trade... WHAT IF only 50% of the 240 MMT increased demand is traded internationally? 125 MMT 250 MMT Trend in “other” importers denoted ( ) 2020 2030 2040 2050 50 MMT ?

19. History… is a very good teacher "Those who cannot remember the past are condemned to repeat it.” George Santayana, 20 th C. Philosopher Reason in Common Sense, 1905

20. History: US Government Helps Put Brazil in the Soybean Business In 1973, President Nixon suspended soybean export sales because of short US domestic supply. MMT MHA

21. History: US Government Primes EU Exports January 4, 1980 US President Carter embargos 17 MMT in open sales to USSR 51.8 MMT 25.0 MMT 1980-1985 Huge $$$ US government spending for stocks and reserve ownership; and land set asides 1985-1995 $ Billion/year US government spending on export subsidies ___ European Union Wheat Exports US Wheat Stocks (without scale) 1974 and 1975 US President Ford effectively slows exports to USSR; Ist Grain Agreement

22. Governmental Distortion of Markets: WTO Agreement Negotiations Doha Round B. SCHEDULED EXPORT SUBSIDY COMMITMENTS 162. Developed country Members shall eliminate their remaining scheduled export subsidy entitlements by the end of 2013. 163. Developing country Members shall eliminate their export subsidy entitlements… by the end of 2016.

23. 1970’s Wheat Import & Export STE’s “State (authorized) Trading Enterprises” Japan Food Agency Philippines NGA China Ceroilfood India STC Soviet Union Exportkhleb Egypt GASC Indonesia Bulog S. African Wheat Board Peru ENCI Mexico CONASUPO Brazilian Wheat Board Sri Lanka CWE N. Africa ONIC Cuba ALIMPORT Poland Rolimpex Portugal EPAC Ecuador Ecuagran Iran GTC Iraq IGB Sudan CIDCO Norwegian & Finnish Grain Boards Turkey TMO Canadian Wheat Board Australian Wheat Board Argentina Junta EXPORT STEIMPORT STE

24. 2000 Wheat Import & Export STE’s “State (authorized) Trading Enterprises” Japan MAFF Cuba ALIMPORT Iran GTC Iraq IGB Canadian Wheat Board Australian Wheat Board EXPORT STEIMPORT STE China COFCO Turkey TMO N. Africa ONIC Egypt GASC India STC

25. 2010 Wheat Export STE’s “State (authorized) Trading Enterprises” Canadian Wheat Board Russia United Grain Company China COFCO Turkey TMO

26. WTO Agreement Negotiations Doha Round 3. In order to ensure the elimination of trade-distorting practices with respect to agricultural exporting state trading enterprises…Members shall: (a)Eliminate…all forms of export subsidies including those related to food aid and export credits: (ii) government financing of agricultural exporting state trading enterprises, preferential access to capital… with respect to government financing or re-financing facilities… (iii) government underwriting of losses…by agricultural exporting state trading enterprises on their export sales. (iv) by 2013, the use of agricultural export monopoly powers for such enterprises.

27. Will I have access to the market? Importers natural fear: Export restrictions…due to short supplies … export license controls? … … imposed export levies and taxes? … … administratively restricted supplies? … Governmental Intervention in the Markets

28. Agricultural Embargoes and Contract Sanctity THE UNITED STATES CONSTITUTION Article. I., Section 9., Clause 5: “No Tax or Duty shall be laid on Articles exported from any State.” The Food and Agriculture Act of 1977: If export sales are suspended for reasons of short supply, domestic wheat price support would by mandate be raised to $533/MT (today’s calculation).

29. Agricultural Embargoes and Contract Sanctity Food Security Act of 1985: Declares it U.S. policy to encourage agricultural exports and not to restrict exports except under the most compelling circumstances. The Food, Agriculture, Conservation, and Trade Act of 1990: Contracts to export agricultural commodities, which were agreed upon before any prohibition, should not be abrogated. Export Administration Act of 1999: Prohibition on agricultural exports can only be imposed when the President declares a national emergency. (high prices do not qualify as an emergency)

30. Thank you for your invitation to speak and share some topics of vital importance to the wheat industries in both Russia and the United States.