Last week, commissioners and staff from the Idaho Wheat Commission joined Lieutenant Governor Scott Bedke, Mr. Michael Chang, President of the Taiwan Flour Millers Association (TFMA), and Ms. May Lin, Director General of the Taipei Economic and Cultural Office in Seattle, to sign a letter of intent important to the wheat industry. The letter of intent represents a commitment by the Taiwan Flour Millers Association to purchase at least 132 million bushels of wheat over the next four years. The value of these purchases is estimated to be around $1.3 billion.
Different from the U.S. model, where wheat is contracted and purchased by mills independently, TFMA purchases all the wheat for all 20 mills in Taiwan collectively and then distributes the wheat accordingly. Taiwan imports 99.9% of their wheat consumed, and about 80% of those imports come from the United States. Since 1998, Taiwan has purchased more than 1 billion bushels of U.S. wheat—worth more than $8 billion.
While the wheat going to Taiwan from Idaho generally comes off the Palouse, it is not only northern Idaho farmers who are benefitting from the longstanding relationship between Idaho and TFMA.
“Our markets are driven by supply and demand,” said IWC Chairman Cory Kress of Rockland. “Idaho, along with the rest of the nation’s wheat farmers, grow far more than we can consume in America alone. We literally feed people around the world.” Idaho’s farmers produce, on average, 100 million bushels of wheat annually. Every Idahoan would have to eat five loaves of bread every single day to consume all the wheat Idaho farmers grow.
“While much of southern Idaho’s wheat is consumed domestically, all our markets are set by the same supply and demand fundamentals,” continued Chairman Kress. “When wheat sells out of the Palouse, southern Idaho farmers benefit from a smaller supply to meet the global demand. If those cargo ships of wheat were not leaving Portland from the PNW, the market would be saturated with wheat and the markets even more depressed. The less supply we have due to overseas market demand, the higher all of our markets go.”
Unfortunately, the price of wheat is determined by the market, not by the farmer or IWC. But IWC commissioners invest grower dollars into efforts to maintain current market demand—such as with Taiwan—and open new markets for Idaho wheat globally and domestically.
“We all benefit from longstanding relationships with customers like Taiwan that value our superior quality wheat and are willing to consistently pay a premium for it,” explained Kress. “Every wheat farmer wins when we sell wheat overseas.”
The signing of the letter of intent represents more than four decades of loyalty between TFMA and Idaho wheat growers. This agreement reaffirms a commitment that is mutually beneficial to TFMA and all Idaho wheat farmers.