Suspension of overseas ag container shipments is blow to US ag community

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Specialty Soya and Grains Alliance members were shocked to learn this week that shipments of agricultural products by containers are being discontinued by a major shipping line, effective immediately and for the foreseeable future.

The German international shipping and transportation company Hapag-Lloyd has dropped a bombshell, informing exporters it is suspending overseas ag container shipments from North America, a decision that could cause major hardships within the entire U.S. ag community.

The decision is being driven by hard economics during a time of unprecedented demand for higher-value North American consumer imports by containers from Asia at premium prices. Reports to SSGA are that Hapag-Lloyd has decided it needs to quickly reposition empty containers back to Asian shipping centers, even if it means forgoing hauling critical food and agriculture products back to manufacturers overseas.

SSGA members in the Upper Midwest, including shippers of bulk and identity-preserved (IP) soybeans and specialty grains, note the decision will especially hit exporters hard in the Minneapolis-St. Paul region. The strong Twin Cities market frequently finds itself short of inbound containers to meet demand and has long relied on Hapag-Lloyd’s services to reposition containers for exports.

“Hapag-Lloyd has been one of the most reliable and dependable carriers for rural, inland ag shippers, so this announcement is devastating and shocking,” said Bob Sinner, president of North Dakota-based SB&B Foods and chair of SSGA’s competitive shipping action team. “For those of us in the food soybean arena, we are just coming off a harvest that our overseas food manufacturing customers are anxious and desperate to begin receiving.”

According to available information from the global trade data company Panjiva, as read by SSGA, Hapag-Lloyd delivered 878 shipments of U.S. bulk soybeans at a volume of more than 17,000 twenty-foot equivalent units (TEU) between Oct. 22, 2019 and Sept. 25, 2020 to destinations around the world. The majority went to Japan, Indonesia, Hong Kong, Taiwan and Malaysia, as well as to Thailand and South Korea. Over that same span there have been 172 shipments of IP non-GMO food-grade specialty soybeans at a volume of 780 TEU.

“This disrupts the food supply chain,” Sinner said, noting that consumption of soy foods has been strong throughout the COVID-19 pandemic and that worldwide food inventories are low. “Companies in those countries rely on us for their food manufacturing. We’ve got our new crop harvested and we’re making significant and consistent bookings with carriers to get our products shipped quickly and as soon as possible.”

The move by Hapag-Lloyd poses an ominous sign for U.S. ag exporters if other ocean carriers decide to follow suit or delay ag shipments. SSGA is encouraging Hapag-Lloyd and any other carriers considering similar decisions to reexamine this policy. SSGA will explore all options to work on behalf of its members to try to help resolve this issue and is encouraging exporter members to talk to their shipping representatives.

Renewal time for SSGA members: ‘It’s nice to have a voice’

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By Shane Frederick, SSGA Communications Manager

The Specialty Soya and Grains Alliance (SSGA) was born in February of 2019, and the first official members began joining the organization the following spring.

A year and a half later, members are starting to renew with SSGA, showing their belief in the young organization and seeing value in being part of it.

“I believe this organization can be successful,” said Roger Mortenson, vice president for specialty products at Grain Millers. “My feeling is there’s a tremendous amount of experience and a tremendous amount of driven people, people actively involved on the board, people who are really respected. I’m really happy to see how it’s going.”

For six years, Mortenson was on the board of the Midwest Shippers Association, the organization that merged with the Northern Food Grade Soybean Association to form SSGA. That included three years as board chair. Grain Millers was one of the first of SSGA’s members to renew in 2020.

“SSGA has a lot of really good things going on,” Mortenson said.

Over the last year, SSGA has taken on big tasks, leading the way on the getting Japan’s phytosanitary certificate requirement delayed and working on market access issues in India and China. It’s moving ahead on projects such as helping plan and organize this summer’s virtual Global Trade Exchange & Specialty Grains Conference, which will be held Aug. 24-27, and getting a U.S. identity-preserved (IP) brand created and established.

“We do a lot of work with other companies that are part of SSGA. What’s important to them is important to me. What affects their business affects our business,” said Jacob Noll, general manager at Friederichs Seed Inc., another company that quickly re-upped its SSGA membership. “The issues we’re working on are important; the phyto is huge right now.”

Shipping, especially out of rural America, solving other logistical puzzles and market development are also important issues SSGA is tackling, Mortenson said.

“It’s good how the organization is focused on our business,” he said.

Noll agreed, adding that SSGA is indeed a true alliance of businesses big and small that focus on the production, processing and shipping of specialty soya and grains around the world.

“There are issues we need to work together on as a group,” Noll said. “Even though we’re competitors, we’re working together for the greater good. There is strength in numbers this way. … SSGA is putting action teams together and putting the right people in the right places. Having who understand the politics of it has really helped. That’s vital – to get funding, to work on the issues.”

Even though SSGA is a national organization often working on a global scale, it’s not a monolith. Noll said he can call up SSGA leadership and staff and speak directly to them whenever he has questions or concerns.

“It’s a great feeling,” Noll said. “SSGA has a national presence, but there’s still a hometown feel to it.

“It’s nice to have a voice.”

For more information, check out the SSGA membership brochure or go to the membership page on the SSGA website.

SSGA continues to study phytosanitary inspection issues

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By Shane Frederick, SSGA Communications Manager

The Specialty Soya and Grains Alliance has been working for the several months on how to improve U.S.-based grain and oilseeds inspections, a continuing problem for rural processors and exporters of identity-preserved (IP) field crops.

The high costs and logistical issues associated with getting a phytosanitary certificate are seen as punitive, especially considering the inspections add no extra benefits to the shipment.

IP soya already exports above federal grain standards. Prior to any inspection, crops are already thoroughly segregated, sorted and cleaned. They’re shipped in closed, sealed containers – not to be opened until they reach buyers’ factories where they are made into tofu, soymilk and other food products.

“These are the cleanest crops in the world,” SSGA Executive Director Eric Wenberg said, stressing that there are SSGA members who, in 20 years of loading crops for export overseas, have never had a phytosanitary finding. “Where’s the risk we’re mitigating? It seems as if we’re asking the least of us to pay the highest price.”

The everyday logistical issues IP exporters deal with – difficulties in finding containers, as well as blank or canceled sailings – make it difficult to schedule inspections for pests, disease and other areas of concern for countries importing field crops.

“We need a more flexible, easier system,” Wenberg said. “It’s not just a cost issue.”

Earlier this year, SSGA led the charge to get Japan to delay implementing a new phytosanitary requirement, working with the U.S. Department of Agriculture’s Animal Plant Health Inspection Service. SSGA continues to work with federal and state officials and regulators on this issue.

“We’ve got some breathing room with this issue,” Wenberg said.

Last week, it sent a letter to USDA Deputy Administrator Osama El-Lissy requesting that APHIS review and update its solutions to rural phytosanitary inspections of containerized grains and oilseeds and grant regulatory relief to IP exporters.

Also last week, SSGA put on a webinar and discussion for members to better understand the issue and discuss solutions.

“Together we can speak with one voice because this affects us all,” said Todd Sinner, SB&B Foods vice president and chair of SSGA’s Food Grade Soya action team.

Potential solutions range from negotiating to exempt IP crops from phytosanitary certification to self-sampling and inspection to changing perceptions by educating countries who import IP crops how safe the U.S. system is, among others.

“We need a better system,” Wenberg said. “This is our opportunity to talk about the quality we can provide.”

Watch the latest SSGA IP-ODCAST in which Wenberg and SSGA Communications Manager Shane Frederick discuss the issue here.

SSGA delivers ATP progress report

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The Specialty Soya and Grains Alliance recently submitted its first performance report on progress made on projects funded by an Agricultural Trade Promotion grant from the USDA’s Foreign Agricultural Service.

The grant is for the creation of a U.S. Identity-Preserved (IP) brand and creation of a digital IP exchange, targeting markets in North Asia, Southeast Asia and Europe.

“We’re moving to the most important phase of the project,” SSGA Executive Director Eric Wenberg said. “And that is establishing a brand to help the globe understand the high quality of U.S. IP – that the United States is farming for a purpose.”

In January, SSGA hired a technical adviser for each region to explore new and innovative ways to connect with key trade and decision makers in the target markets and continue building and driving industry awareness and demand by highlighting the diversity, quality and availability of premium U.S. IP soya and specialty grains.

With COVID-19 restricting travel and direct outreach, the technical advisers have adjusted, representing SSGA in virtual events, such as the USSEC Pan-Asia Soy Foods Summit June 9-11, and helping SSGA plan future events, including virtual educational seminars.

SSGA also commissioned a study to analyze the IP market opportunity in the Philippines and awarded contracts for development of the U.S. IP branding program and IP technical manuals to help potential customers understand the value of premiums required within the IP system. Both projects are expected to be completed and approved by year’s end.

Other highlights include:

  • IP training for technical advisers in Canada along with SSGA staff and board members in February.
  • Addressing market issues, including work with partners and agencies in April to delay the implementation of Japan’s phytosanitary certificate requirement.
  • Presentations on traceability and specialty soya and grains outlook at the June USSEC Pan-Asia Soy Foods Summit.
  • Planning of trade conferences and courses and identifying buyers to attend, many of which have been changed to virtual events or rescheduled to 2021 due to COVID-19.

“While the Japan phytosanitary extension was a big win for members, the IP technical advising team continues to press forward,” said Alyson Segawa, SSGA technical adviser for North Asia. “The IP virtual educational seminars, with support from the new market research, technical manuals and branding focus, present a valuable opportunity for SSGA to launch impactful messaging in key export markets.”

SSGA has partnered with the U.S. Soybean Export Council on its submission to FAS and thanks USSEC for its friendship and cooperation.

Updates from the experts

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For a recent virtual trade show, Specialty Grains Lead Dave Miller and Strategic Adviser for Trade and Transportation Bruce Abbe provided video updates on their respective areas of expertise. Listen to their updates below.

SSGA participating in Pan-Asia Soy Food Summit

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This week, SSGA is participating in the inaugural Pan-Asia Soy Food Summit hosted by the U.S. Soybean Export Council (USSEC). The virtual show focuses on soy food and oil markets in Asia with industry professionals delivering insight on supply and demand, benefits of U.S. soy, sustainability, impacts of COVID-19 and more. Key soy buyers and users from Southeast Asia, South Asia, North Asia and Greater China are expected to participate.

On Wednesday night, two individuals from SSGA member companies will present about topics related to identity-preserved (IP) soybeans. Rob Prather, Global Processing Inc., will present a supply outlook for U.S. specialty soybeans for food uses at 8:30 p.m. CDT, while Jeff Fjelstul from AGI SureTrack will highlight how production data innovations lead opportunities for IP at midnight Thursday (CDT). SSGA is also hosting a virtual trade show booth in the event.

You can find out more information or register for the event here.

USDA to provide $1 billion in loan guarantees for rural businesses and ag producers

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U.S. Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) is making available up to $1 billion in loan guarantees to help rural businesses meet their working capital needs during the coronavirus pandemic. Additionally, agricultural producers that are not eligible for USDA Farm Service Agency loans may receive funding under USDA Business & Industry (B&I) CARES Act Program provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“Under the leadership of President Trump, USDA is committed to being a strong partner to rural businesses and agricultural producers and being a strong supporter of all aspects of the rural economy,” Secretary Perdue said. “Ensuring more rural agricultural producers are able to gain access to much-needed capital in these unprecedented times is a cornerstone of that commitment.”

In addition to expanding eligibility to certain agricultural producers, the changes Secretary Perdue announced today allow USDA to:

  • Provide 90 percent guarantees on B&I CARES Act Program loans;
  • Set the application and guarantee fee at two percent of the loan;
  • Accept appraisals completed within two years of the loan application date;
  • Not require discounting of collateral for working capital loans, and
  • Extend the maximum term for working capital loans to 10 years.

B&I CARES Act Program loans must be used as working capital to prevent, prepare for or respond to the effects of the coronavirus pandemic. The loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020.

USDA intends to consider applications in the order they are received. However, the Department may assign priority points to projects if the demand for funds exceeds availability.

USDA announced the expanded B&I authorities in a notice published on page 31035 of the May 22 Federal Register (PDF, 315 KB). The Department will begin accepting applications for B&I loan guarantees on May 22, 2020. Applications must be received no later than midnight Eastern Daylight Time on June 22, 2020, or until funds are expended. Program funding expires Sept. 30, 2021.

Eligible applicants may contact their local USDA Rural Development State Office in the state where the project is located.

USDA is developing application guides for lenders and borrowers on the B&I CARES Act Program. The Agency also will host two webinars to provide an overview of program requirements.

To register for the webinar on Wednesday, May 27 at 3:30 p.m. Eastern Time, visit globalmeet.webcasts.com/starthere.jsp?ei=1322642&tp_key=7a700acddd.

To register for the webinar on Wednesday, June 3 at 2:00 p.m. Eastern Time, visit globalmeetwebinar.webcasts.com/starthere.jsp?ei=1324161&tp_key=6067315417.

USDA Rural Development provides loans and grants to help expand economic opportunities and create jobs in rural areas. This assistance supports infrastructure improvements; business development; housing; community facilities such as schools, public safety and health care; and high-speed internet access in rural areas. For more information, visit www.rd.usda.gov.

SSGA launches new webcast

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Let’s talk IP!

The I.P.-ODCAST, a new video series hosted by the Specialty Soya and Grains Alliance (SSGA) communications team, was launched on May 15. The first episode features Executive Director Eric Wenberg discussing the core tenet of traceability, as well as other trends the SSGA is currently following, along with host and SSGA communications manager Shane Frederick.

The I.P.-ODCAST will regularly highlight news, discuss issues and give viewers a chance to hear from the movers and shakers in the identity-preserved (IP) world.

SSGA requesting proposals for technical manuals, foreign research

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The Specialty Soya and Grains Alliance (SSGA) is seeking proposals for two projects related to its programs under the Foreign Agricultural Service Agricultural Trade Program to increase exports of U.S. identity-preserved (IP) specialty soya and specialty grains through foreign market development programs.

The requests for proposal include:

  • preparing and providing content for five IP crop buying technical manuals
  • foreign market research for the Philippines

Proposals for both projects are due May 14, 2020 by 5 p.m. CDT. View the complete RFPs here.

SSGA leads way in delaying Japan phytosanitary certificate

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In lieu of person-to-person meetings in Washington, D.C., the Specialty Soya and Grains Alliance (SSGA) board used technology to hold their board meeting and visit various federal regulators April 6-7.

SSGA met with U.S. Department of Agriculture (USDA) staff in the Foreign Agricultural Service (FAS), Federal Grain Inspection Service (FGIS) and Animal and Plant Health Inspection Service (APHIS) departments to discuss SSGA’s programs as well as Japanese market access issues. During these meetings, officials announced they received official communication from the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) confirming the delay of the Japan phytosanitary requirement set to be implemented June 1.

In the past few months, SSGA led the way by documenting examples from its member companies to USDA about the difficulties of certifying under current practices and complying with Japan’s request.

“This move gives us the breathing room we need to work with USDA to find a cost-effective, fair way to create these new certificates,” says Todd Sinner, chair of SSGA’s food grade action team and partner at SB&B Foods, Inc. “This June 1 deadline was really an April deadline because our companies were starting to do as directed and fulfill the phyto requirement. It’s too big of a risk – if we get a rejection it can cost thousands in losses.”

Although Japan has not announced new dates for the implementation, SSGA will continue to pursue long-term solutions with APHIS, other agencies and industry partners from across the spectrum of U.S. agriculture.

“The whole industry needs to pull together,” says SSGA Executive Director Eric Wenberg. “Passing the regulatory or administrative reform in the United States needed to comply with Japan’s requirement will take a lot of effort. We can pursue solutions together. Identity-preserved (IP) field crop shipments are low-risk inputs to food manufacturing and we need to send them to customers with as much efficiency as possible.”

To get a phytosanitary certificate for these shipments, a sample inspection from FGIS officials would be necessary, which would incur fees from the official traveling, often to rural and remote areas, to take the sample; but also indirect costs and inefficiencies, such as managing the phyto certificates, missing scheduled shipments waiting on a sample to be taken and infrastructure updates.

“Our customers trust us and are satisfied with the current inspections and certifications we go through to ensure they’re receiving the purest product,” says Curt Petrich, SSGA chair and president of HC International in Fargo, N.D. “It’s important that SSGA works for its members to either exempt IP crops from this inspection requirement or develop solutions with APHIS to improve the process of obtaining a phytosanitary certificate.

SSGA’s meetings with FAS officials detailed SSGA’s use of the Agricultural Trade Promotion (ATP) grant funding and SSGA’s recent additional attention to expanding market development opportunities for specialty grains.

“We had three great meetings with various officials that helped us plan our next steps. We’ve realized the potential change here is the process of obtaining a phytosanitary certificate, not about the need for the certificate,” Petrich says. “Our next step is to give Japan a suggested date for the delay. The IP industry needs a delay of 12 to 18 months to implement the infrastructure to accommodate their request. It’s not time to quiet the conversation.”