St. Lawrence Seaway Development Corporation May 16, 2018
Gary C. Martin, President and CEO Work rking ing Tog ogether ther to Mak ake e Trade ade Work rk Ryan Olson, Director of Operations
International Grain Trade Coalition (IGTC) Katy Lee Secretariat
National Grain and Feed Association 1,000 + NGFA Member Companies: Grain elevators Feed, feed ingredient manufacturers Oilseed processors Flour, corn mills Biofuels producers Many other related agribusinesses 26 State/Regional Associations Partnerships with NAEGA, PFI Mission: Secure abundant, safe food and feed supply Promote free markets
St. Lawrence Seaway Volume
China Trade Developments
World’s Bulk Grain Systems The grain industry’s challenge = move commodities from areas of surplus to areas of deficit, provide for regulatory compliance , safety and cost efficiency ✓ Movement is bulk and comingled. ✓ 3-36 months contract to delivery lead time ✓ Characterized by high volumes, low cost ✓ Adventitious materials may occur in all shipments of all commodities. ✓ Regional , Hemispheric as well as national trade flow patterns are accommodated.
Global Supply through Trade Global Supply through Trade Pressure has never been greater on agriculture to provide for global food security, food defense and energy security while maintaining high quality, safe products throughout the value chain. The role of international trade in agri-bulks is expanding and increasingly complex and in need of market access with sound, responsible, predictable commercial and official relationships
KEY INTERNATIONAL OBJECTIVES • System Integrity, Predictability, and Reliability • Consistent and notified requirements that enable markets to trade products and provide for proportionate and effective risk mitigation and management. • Appropriate measures that allow grain systems to maximize the value of the grain product and minimize cost inefficiencies and handling costs associated with the supply chain, while meeting plant protection needs. • FINAL at LOAD Port is BEST and NECESSARY. Must Maintain and Defend the US as the Gold Standard 9
Delivery Terms and Transfer of Risks Domestic Domestic cargo Foreign Foreign Foreign cargo International Buyer Seller transport terminal Domestic customs reception customs terminal transport Ownership of goods: Seller Buyer Assumer of risks: Seller Buyer End of Loading Spout Assumer of costs: Seller Buyer Type of contract FAS Free along side ship FOB Free on board CFR Cost and freight CIF Cost Ins. freight Ex SHIP Risk transfers to buyer
Fungibility A good or asset's interchangeability with other individual goods/assets of the same type. Simplifies the exchange/trade process, as interchangeability assumes that everyone values all goods of that class as the same • In the supply and use of grain, fungibility refers to grain in the system being adequately interchangeable to provide for sustainable supply and price discovery – Hence to a degree functionally the same • Example: No.2 Corn does not matter where Corn was grown or where it is delivered - worth the same amount.
Fungibility • Farmers have widely embraced growing a generic product, with clear specifications. • For those who originate and handle grain fungibility has been a key attribute to enable efficient supply chains. • For both domestic and international customers have access to a safe, low cost and predictable food supply chain. A goal: ENABLE Fungibility
Cargo capacity comparisons One jumbo hopper car One barge can carry: One 15-barge tow can One 100-car train can One large semi truck • can carry: 1,500 tons carry: carry: can carry: • • • 100 tons • • 52,500 bushels 22,500 tons 10,000 tons 26 tons • • • 3,500 bushels • • 453,600 gallons 787,500 bushels 350,000 bushels 910 bushels • • 30,240 gallons • • 6,804,000 gallons 3,024,000 gallons 7,885 gallons Equivalent units 58 One barge 15 jumbo hoppers 58 large semi trucks 870 870 large semi trucks One 15-barge tow 2.25 100-car trains 1 panamax (50,000 tons) = 38 barges = 2,200 semi trucks = 2 million bushels = 330 trillion soybeans
Regulatory Cooperation and Coordination Regulatory Cooperation and Coordination Provide for the use of the most trade enabling and least trade distortive measures, while improving trade and official by addressing regulatory: a.Pre-Export Actions b.Actions at Import c.Science and Risk Analysis d.Audit and Transparency
Requirements / Regulations play critical role International (NAEGA) U.S. (NGFA) Plant Health (IPPC) Commercial Practices and Code Maritime Law (IMO) Trade Rules – Rail and Grain Trade Insurance and Finance Terms Occupational Health and Safety Food Safety (Codex) Environmental Protection International Biosafety / Crop Biotechnology (BSP) Homeland Security Maritime Law (IMO) Sustainability Mandates GMO regulation/ commercialization Insurance Security (ISPS) Food, Feed Safety (US FDA) Banking Terms Digital Documentation and Verification Product Quality Sale of Goods Convention Trade Barriers and Sanctions (WTO) Industry Education and Training Food Safety (Codex) Contract Guidance and Dispute Economic and Tax Policy Resolution Contract Guidance and Dispute Resolution Compliance, Co-ordination and Support for Actions of Governments
International Collaboration with USG NAEGA Works with the Following U.S. Government Agencies & Departments: ➢ FAS – NAEGA Consults with FAS on a wide range of issues, and we utilize Market Access Program funds primarily for international travel. ➢ AMS, FGIS and APHIS – Regional Seminars, Inter-market Survey ➢ U.S. Coast Guard – Alternate Security Program (ASP), IMO, ISPS code. ➢ FAS Cooperators – USGC, USW, USSEC ➢ FDA, EPA, Commerce, State
17 International Grain Trade Coalition (IGTC) Aim: to achieve a market and regulatory environment supportive of trade that avoids disruptions in the international trade of grain, oilseeds, pulses and derived products. www.igtcglobal.org Katy Lee, Secretariat, IGTC (Geneva)
26 associations, 8000 businesses 85 countries COCERAL RGU CGC NAEGA, NCGA, GAFTA UGA NGFA, USGC, USW, CRA, Geneva, CNFA, CNAGS, USSEC Switzerland Eastern CGBA Africa , Grain ANEC Council GTA, AGEA CAPECO ANIAME, APPAMEX SOPA, SEA CIARA-CEC SACOTA
19 Features of the global grain trade ➢ Well developed and highly globalised ➢ Large, growing and increasingly complex ➢ Utilises sophisticated infrastructure and processes to provide safe, cost effective, reliable supply ➢ Moves product in high volumes with interchangeability of commodity, transportation, handling and infrastructure ➢ Constant improvement and innovation
IGTC’s work with international partners UN FAO (194 governments) • IPPC (183 governments) • World Customs Organization • (180 governments) World Trade Organization (162 • governments) International Grains Council (55 • governments) Global Low Level Presence • Initiative (15 governments)
Policy opportunities 2018 1. Crop protection product approvals & residue measures 2. Plant Breeding Innovation 3. Low Level Presence 4. Cartagena Biosafety Protocol 5. Harmonisation of phytosanitary control methods UN International Plant Protection Convention (IPPC) 6. Innovation in electronic trading documentation
IGTC survey – MRLs, 2018 Grain deemed unacceptable at destination market - breakdown of data by region (41 reports) Asia - East Asia – South East Europe Near/Middle East South America 22
Commercial Practice and Trade Policy Ryan Olson, Director of Operations, NAEGA
Western Inspection 7. Quality Quality and condition to be final at port of loading in accordance with official inspection certificates and/or other certificates as may be required in this contract. In case of delivery at St. Lawrence ports, quality and condition to be final in accordance with Lake and/or loading ports official inspection certificates; Lake inspection certificates to be properly identified at ports of loading. Each party hereby authorizes the other party to request in both parties' names an appeal inspection under the U.S. Grain Standards Act, if applicable, or as may be required in this contract at any time prior to or during the loading of the vessel, and whether or not such request was filed before commencement of loading. The cost of such appeal inspection, unless otherwise stipulated in this contract, shall be borne by the party requesting it. The commodity is not warranted free from defect, rendering same unmerchantable, which would not be apparent on reasonable examination, any statute or rule of law to the contrary notwithstanding.
Compliance with U.S. and Canadian Law 17. U.S./Canadian Government Rules and Regulations Buyer and seller agree to comply with the U.S. and/or Canadian regulatory requirements applicable to this contract, including, but not limited to, those governing any export subsidy, destination controls, government financing of agricultural commodities and the monitoring of export purchases and sales. Any losses, fines, penalties, expenses, costs or damages incurred as a result of failure to perform in accordance with this provision shall be borne by the party responsible for such failure.
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