Vietnam has reduced its tariffs on U.S. agricultural products, and U.S. wheat farmers hope that means more opportunities for sales.
“We went from a 5% tariff down to a 3% tariff,” said Dalton Henry, vice president of policy for U.S. Wheat Associates, the overseas marketing arm for the industry.
That might not seem like much of a reduction, he said, but it’s significant.
“The reality is, when you’re talking about shipping vessels at 50,000 or 60,000 tons, and 5% on a lot of wheat would be somewhere in the $12 to $15 range per ton, that becomes real money pretty fast,” he said.
Vietnam has purchased more than 450,000 tons of U.S. wheat during the last year, a record and nearly double the long-term average, Henry said.
“They’re not a Top 10 customer, but they’re right outside of it,” he said. “If they would continue to grow, they’re certainly not outside the realm of being in that category one day.”
Vietnam purchases 3 million to 5 million tons of wheat each year.
The U.S. has been able to tap further into the market because of reduced production in Australia, Henry said.
As Vietnam’s individual incomes increase, consumers move from purchasing rice as their primary carbohydrate into more high-end baked goods. This means purchasing higher quality wheat, including soft white wheat primarily grown in the Pacific Northwest, hard red spring wheat and hard red winter wheat, Henry said.
The next step is to find ways to further reduce tariffs, Henry said. Competing wheat suppliers to Vietnam are now down to no tariffs because of preferential trade agreements, he said.
Vietnam is not currently in line for a bilateral free trade agreement with the U.S., Henry said.
Discussions with the United Kingdom, European Union and Kenya are ongoing, but other negotiations aren’t in the works, he said.
As those talks progress, the U.S. wheat industry would like to see talks resume for potential trade agreements with countries in the critical South Asian market, he said.