On a sunny day in June 2021, a ship full of U.S. wheat grain entered the seaport of Buenaventura on Colombia’s Pacific coast. Some of Colombia’s largest industrial bakeries and pasta companies would soon receive the grain, transport it to the interior of the country, and mill it into cookies, pasta, and bread for Colombian consumers.
The shipment of wheat arrived as part of a USDA Food for Progress project implemented by Partners of the Americas (Partners), called Cacao for Development (C4D). Food for Progress donates U.S.-produced agricultural commodities to be sold abroad to fund agricultural, economic, or infrastructure development activities in developing countries and emerging democracies.
In August 2020, Partners won the USDA Food for Progress award to strengthen cacao and complementary crop value chains in Colombia. Funded by the sale of U.S. wheat, C4D works with cacao farmers in eight departments of the country to stabilize their incomes through crop diversification.
By growing market opportunities for new, complementary crops and strengthening opportunities for cacao, C4D aims to expand U.S.-Colombia trade.
The project comes at an opportune time to boost support to the cacao sector, as global demand for the product is projected to grow 30% by 2030. Colombia is currently a large importer of grains from the U.S., while it exports tropical fruits, coffee, and cacao.
Though Colombia’s demand for wheat is South America’s largest, 60 percent of its wheat imports are Canadian. The Canada-Colombia Free Trade Agreement entered force one year before the U.S.-Colombia Trade Agreement, and Colombian wheat millers have longstanding relationships with Canadian wheat sellers as a result.
Additionally, Miguel Galdos of U.S. Wheat Associates told Partners that U.S. wheat exporters typically only service Colombia’s Caribbean ports. Most U.S. wheat is grown in the central plain states and shipped to the U.S. Gulf by rail. This makes it expensive to transport through the Panama Canal to Colombia’s Pacific coast.
“Colombia is unique in that it has two major ports—one Pacific and one Atlantic,” Galdos said in an interview with Partners. “U.S. exporters cannot compete with freight rates from Canada to ship to the Pacific coast where most industrial bakeries and pasta factories are located. Millers and traders there tell us U.S. wheat isn’t typically available.”
Together with Jon Mooney Monetization Services and U.S. Wheat Associates, Partners identified an opportunity to deliver lesser-known U.S. Hard Red Winter Wheat to the Pacific port at Buenaventura through the Food for Progress commodity donation.
For two years before the sale, U.S. Wheat Associates worked closely with some of Colombia’s largest buyers, Pastas Doria and Bimbo, to promote the benefits of blending lower-cost U.S. wheat with higher protein Canadian wheat. By the time Partners advertised the sale in 2021, wheat millers in Colombia were familiar with the cost savings they could achieve with this strategy.
In June 2021, Partners delivered 41,000 metric tons of U.S. Hard Red Winter Wheat to three buyers. Satisfied with their purchases during the first sale, the same buyers—and several new ones—offered more competitive prices during Partners’ second wheat sale.
In December 2021, Partners delivered 28,100 Metric Tons of wheat to four buyers. Partners delivered 12.6% of all U.S. wheat sold on the Colombian market in 2021.
President of the Colombian Millers Association, Juan Manuel Martinez, told Partners that though freight costs can be higher from the Gulf of Mexico, U.S. wheat is lower in moisture and cheaper per ton than Canadian wheat.
These cost savings are critical for wheat buyers in 2022 as wheat prices skyrocket over fears that Russia and Ukraine will fall short of their usual supply to the global market. To keep food prices stable for Colombian consumers amid global uncertainty, these savings are even more important.
In the first six months of 2022, Colombian buyers have booked three additional wheat shipments from the U.S. that will arrive through the Buenaventura port. Martinez said his company, Organización Más, purchased an additional 20,000 metric tons following Partners’ sale and he hopes more U.S. wheat will enter the market so he can purchase it.
After delivering sought-after U.S. wheat to the Colombian market, C4D is using proceeds to help Colombia’s smallholder cacao farmers grow their incomes. The project created a new market opportunity for U.S. wheat producers and is a successful example of a Food for Progress project benefiting both U.S. and Colombian farmers, businesses, and consumers.