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Wheat crop looks good this year--but what about the future?By Larry Dreiling By all measure, the 2008-09 U.S. wheat crop is looking pretty good. Overall, the U.S. wheat crop outlook is for higher production, lower exports, and increased domestic use. Total production is projected at 2.4 billion bushels, up 16 percent from 2007-08, according to the World Agricultural Outlook Board of the U.S. Department of Agriculture. The survey-based forecast of hard winter wheat production is up 17 percent as area and yield are higher than last year. Hard winter wheat production is forecast at 1.78 billion bushels. Expected area for harvest as grain or seed totals 40.2 million acres, up 12 percent from last year. Based on May 1 conditions, the U.S. HWW yield is forecast at 44.3 bushels per acre, up 2.1 bushels from the previous year. Total wheat supplies are projected up only four percent because of historically low carry-in. Total wheat use is projected down five percent for 2008-09 as lower exports more than offset increased domestic use. Global view The rest of the world's wheat growing areas are looking good, too. Global wheat production for 2008-09 is projected at a record 656 million tons, up eight percent from 2007-08, and up five percent from the previous record in 2004-05. This is due to higher production projections for most of the world's major exporting countries including Australia, Canada, European Union-27, Russia, and Ukraine. According to the WAOB report, strong world prices and favorable weather in most of EU-27 and Former Soviet Union-12 raised production for 2008. Production is also projected higher in Brazil, China, and India. Partly offsetting are reductions for Argentina and Kazakhstan. Ending stocks for 2008-09 are projected at 483 million bushels, more than double the current year's projected 239 million. Even with all the extra worldwide production, the national average farm price for 2008-09 is projected at $6.60 to $8.10 per bushel, compared with the current year forecast of a record $6.55 per bushel. Wheat prices will be supported by farmer forward sales and early season export demand. With all of this good news come concerns, however, as wheat acres swing with market volatility brought on by increased speculation due to weakness in the U.S. dollar and the need for money that has been cashed out of a falling stock market to move to commodities--and that includes wheat. Input cost woes Compounding the situation are increasingly high input costs for wheat that caused some producers last year to move to planting corn and soybeans. "Fertilizer has doubled since last year. Phosphate has tripled. All other chemicals have either doubled or tripled," said Jerry McReynolds, 2nd vice president of the National Association of Wheat Growers. "All of a sudden, in a short period of time, our line of credit demands are just out of reason." Standing outside the machine shed of his farm south of Woodston, Kan., McReynolds said a great transfer in wheat acreage to corn and beans is slowly occurring because wheat isn't on a level playing field for yield with those crops. "Corn yields are going up while wheat yields pretty much stay the same. The advantage is, of course, is that inputs are less. Wheat is our basic crop, but we've lost out. It's tragic." Maybe biotech? The anticipated swing toward higher corn acres has McReynolds worried for all segments of the wheat industry. "Back when, people had a good product with American wheat and it was a matter of how cheap could they buy it. Now it's scarce, hard to come by. Buyers have to scramble for substitutes," McReynolds said. "They knew more about our product than we growers did. "What a time it would have been to have biotech wheat. It wouldn't have been an issue at all since they all buy biotech beans and corn. Seventy-eight percent of what goes into use is biotech and people don't know it." The issue of biotech wheat remains extremely important to growers like McReynolds, even though companies such as Monsanto decided a few years ago to stop pursuing a line of wheat varieties with biotech traits. "It's going to be a while now before we catch up with those other crops. In fact, I don't know if we'll ever catch up. "If we had been united, there could be varieties that could be very promising. We could have seen additional water efficiency, increased utilization of nitrogen, fusarium resistance, leaf rust resistance." USWA view One group is taking another tact in supporting biotechnology, proclaiming opponents are hurting the environment and endangering humanity. In an op-ed column distributed recently worldwide, U.S. Wheat Associates made their support clear for biotechnology. "Biotechnology is the best and most practical tool available to give the world the boost in agricultural productivity we must have to reduce starvation and environmental degradation," said the column written by Alan Tracy, USWA president and Ron Suppes, a Scott City, Kan., producer who is USWA chairman. "Continued opposition to this applied science will only bring greater misery, poverty and environmental destruction to the world," the column continued. Tracy and Suppes contend that as long as they are properly tested and licensed, the resulting products from biotechnology are just as safe and nutritious as the traditionally bred foods they replace. "The approval process is rigorous and despite all of the fuss most U.S. cropland is now occupied by genetically modified crops and none of the fearful specters raised has proved true," Tracy and Suppes said. About the only thing Tracy and Suppes didn't raise in their op-ed is the issue of how to proceed with release of biotech wheat. That still is creating debate within the wheat industry as a whole. Bakers' view Take the view of the American Bakers Association, which earlier this year called for the U.S. to end wheat exports in order to take care of domestic needs. ABA's primary concerns about biotechnology remain much the same as they have for several years, according to Lee Sanders, ABA's senior vice president for government relations and public affairs. "ABA still has the same concerns and is asking questions regarding: --Safety of biotech wheat; --Consumer acceptance; --Bake-ability of such new wheats," Sanders said, adding there are "questions about simultaneous regulatory approval for U.S., Canada and Japan, along with other global trade implications. "ABA continues to be involved in the Wheat Summit dialogue discussions with NAWG, NAMA (the North American Millers Association), and biotech providers to flush out these key issues listed above and to drill down. With tightened supplies and greater demand for wheat globally, these discussions are critical." McReynolds, for his part, said he doesn't think simultaneous approval and release of biotech wheat among nations is needed. "The world is using this as an excuse. China is going to whip us. Australia is going to whip us," McReynolds said. "What we need to be is first one out of the gate. You don't want to release together. This idea of releasing together so we don't hurt anybody is a bunch of hooey." Conventionals continue While debate continues on biotechnology, conventional wheats are being developed by a couple of private companies along with public universities. The catch now is to capture more money into public wheat breeding programs so wheat can continue as the dominant crop on the High Plains. Programs such as the Colorado Wheat Research Foundation and the Kansas Wheat Alliance have been founded in order to bring new research dollars in from royalties on current and new varieties. "The whole intent (of the Kansas Wheat Alliance) is to get more money in the wheat-breeding program so we can bring more varieties, better varieties, sooner to the producer," Daryl Strouts, KWA executive director, said. "There are some things we can bring down the pipeline, but (funds aren't) being returned into the system. Economically, there's no way to put value into wheat compared to corn, soybeans and alfalfa. "This sets up a structure so K-State can get access to those traits should they become available, and farmers can get those traits and the money can go back to K-State in research dollars." The way SWA is set up is an investment in the future of the wheat industry. "That investment will take time for it to pay off. We want to take those dollars and put them into the wheat variety program," Strouts said. "We'll be two to three years in obtaining funding with varieties currently in the pipeline. Then it will take the usual time, up to 10 years, before we really see new varieties funded with these new dollars." Perhaps McReynolds summed it up best in consideration of the future of the wheat industry. "We have a lot of challenges ahead." Larry Dreiling can be reached by phone at 785-628-1117 or by e-mail at ldreiling@aol.com. 6/16/08 Date: 6/13/08 Advertisement
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