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MARKETING

Marketing takes bigger bite out of budget

By Scott A. Yates, July 2013

Tom Zwainz, chairman of the Washington Grain Commission (WGC), said he listened to feedback from the country as well as his own financial instincts to craft the organization’s $6.3 million 2013/14 budget, a year-to-year increase of $768,000 over 2012/13.

Research funding remains the No. 1 priority of the WGC by far, with $2.3 million of farmers’ assessment income directed to 35 different projects, but market development received the most attention in the new budget. Zwainz said given the global environment, it made sense to increase marketing’s clout by $403,000, or nearly 40 percent more than last year.

“Think of the changes that have occurred over the last five years in the grain industry. The Australian Wheat Board has gone bust, and the country’s grain infrastructure has been sold to private companies. The Canadian Wheat Board has ceased to be the monopoly it once was, and private companies there have been bought and merged into larger operations. Japan, which has joined Trans Pacific Partnership trade talks, may be forced to phase out its state buying group. And let’s not forget the ramp up of production in the Black Sea states. All of these challenges point to more investment into marketing our crop overseas,” he said.

New investment in marketing comes down to several key areas. In the 2012/13 budget, the WGC funded its contribution to U.S. Wheat Associates (USW) and just three other USW-sponsored, state-funded projects for a total of $515,000. In the 2013/14 budget, the WGC’s $385,900 membership to USW is funded as well as 11 projects with a Northwest/Eastern Washington focus for a total of $597,000. 

One of these projects, $65,000 for a soft white wheat technician, is shared with Oregon and Idaho, which contributed based on a formula that takes production into consideration. The three-state effort funds consultant Andrea Saturno’s assignment to sell the soft white blending concept into the Latin American market. The total cost is $130,000 and includes shipments of flour samples or containers of wheat to identified markets.

Other USW partnerships include $50,000 for a procurement course to help Indonesian and Vietnamese buyers better understand the U.S. specification and tendering system. There is also $17,000 to finance Eastern Washington wheat breeders’ overseas travel to learn more about the wheat quality needs of Eastern Washington’s customers.

Marketing initiatives separate from USW include a $75,000 marketing line item earmarked for what’s referred to as a “blend milling consultant.” Zwainz said this item is related to the Latin American blend initiative and will, in part, pay cereal chemist Art Bettge’s consulting fees. A former cereal chemist with the Western Wheat Quality Lab in Pullman, Bettge’s knowledge of the chemistry side of baking has been a hit at the conferences he has attended overseas, including two trips to Taiwan and one to Japan. His work is the most current phase of the soft white wheat blending project, an initiative that has been unfolding for several years.

“I’m very proud of this project and how the WGC has pursued it. Almost a decade ago, a commissioner on a trip to Latin America witnessed a baker blending soft white to make pan bread. From that observation, the WGC has funded the scientific research to understand the class’s blending advantage in combination with hard red winter and hard red spring wheat and hired Saturno to promote the concept in Latin America. He made his first visit to a Costa Rican mill May 20. This is exactly how marketing is supposed to work. It isn’t like flipping on a light switch,” Zwainz said.

A big ticket item in the marketing column is $373,502 to the Wheat Marketing Center based in Portland. This is $110,500 more than last year’s $262,000. A large portion of the increase is Washington’s $93,000 share to finish installation of a $486,000 biscuit line at the center. Idaho and Oregon are also contributing proportionately. In addition, the three states are splitting the cost of a biscuit line operator, Washington’s portion of which is $50,000.

“Cookies, which everyone else in the world seems to call biscuits, are a growth industry, and guess which wheat makes the best type? Soft white. It’s important we have a cookie line where people from overseas can learn about the highly technical specifications that comes with continuous baking,” Zwainz said.

Another ongoing project is the shipping of containers to far flung milling outposts. This year, $50,000 is budgeted for the effort. Depending on the destination, four to six containers will be sent overseas.

Containers, which hold about 50,000 pounds of grain, are (hopefully) the last step before an order. Smaller amounts of wheat milled in a company’s R & D facility can give a good idea of the quality, but a container’s worth of grain allows a company to evaluate it through a mill’s commercial system. In the 2013/14 time frame, mills in the Middle East, Latin America and Asia are on the list to receive containers.

The Education/Information portion of the commission’s budget grows from $370,000 last year to $489,200, a 32 percent increase. Under classroom education, the Franklin County Conservation Service receives $260,000 to support its own educational programs (Wheat Week, Salmon in the Classroom and Water on Wheels) in addition to dispersing funds to other educational programs, including Ag in the Classroom and the Northwest Natural Resources Institute. 

The Washington Wheat Foundation (WWF), a sister organization of the Washington Association of Wheat Growers (WAWG), charged with “advancing the wheat industry by building support for programs and activities that increase public awareness,” will receive $165,000 as part of the WGC’s budget. The largest portion, $115,000, is available for an assessment of the state’s wheat and grain organizations’ public relations and educational needs. The other $50,000 provides the WWF funding to manage requests for donations from educational organizations that currently come through the WGC.

The Grower Services portion of the budget grows from $891,500 in 2012/13 to $1,078,000 in 2013/14, a 20 percent increase. The Washington Association of Wheat Growers portion increases from $664,100 to $739,100. Much of that boost comes from an additional $50,000 going into the organization’s public relations campaign for a total of $250,000. The second largest line item is $210,000 that the WGC pays for its presence in the WAWG magazine, Wheat Life.

A line item that was moved from the research portion of the budget to Growers Services is $30,000 for the Plant Pest Diagnostic Clinic. The clinic, run by Karen Ward, will, for a small fee, diagnose diseases of various crops, including wheat. For more information, farmers can contact Ward at Karen_flint.ward@wsu.edu.

There is also a $50,000 line item for a “Wheat University” program to be developed by WSU’s new endowed chair in weed sciences, Drew Lyon. The web-based project is intended to put all of the research on various challenges, opportunities and recommendations WSU has conducted over the years at farmers’ fingertips.   Here's a full listing of the WGC 2013-2014 budget