Ethanol derived from grain gets the central focus in the debate over food and fuels. But wheat--or the lack thereof on the worldwide market--certainly needs to be discussed, according to presenters at the Agricultural Business Council of Kansas City's Food and Fuel Forum, held in Kansas City on Oct. 23.
Morton Sosland said the government's foray into renewable fuel mandates and incentives has expedited a trend in which farmers are growing more corn and soybeans, than wheat. Given that yield improvement of those two crops has grown at a rapid pace, it's not surprising that farmers are shifting to corn and soybeans, which often offer greater profit potential than wheat. But Sosland, editor-in-chief of Sosland Publishing Company, is troubled that the nation's prime wheat-growing regions are losing wheat acres to grains that can provide both food and fuel.
"This major shift was under way long before the fuel issue raised its head, reflecting significant improvement in yields of those two crops as well as agronomic advances that made their production suited to areas that used to produce mainly, if not solely, wheat. Genetic modification accounts for this sudden expansion in planting of corn and soybeans in states like North Dakota, South Dakota and Kansas. And it is the absence of genetic modification in wheat that explains why this crop is losing the yield derby to corn and beans," said Sosland, whose company publishes several milling and baking trade journals.
In 2008, the world market responded to declining wheat stocks by paying sharply higher prices for wheat. Yet, while high wheat prices were a boon to farmers, the baking industry suffered, according to Robb MacKie, president of the American Bakers Association. Bakers faced soaring input costs not seen since the 1970s, when Soviet Union purchases of U.S. wheat drove prices to then-record highs; the records were broken in 2008 when wheat prices soared into the teens. Compounding the bakers' problems are historically high diesel prices. Collectively, the baking industry runs one of the largest truck fleets in the country.
"All of our input costs increased and not just a little, but up the limit," he said. "I see a lot of uncertainty. I'm a little nervous."
Adding to the nervousness is the dramatic shift in acreage devoted to corn and soybeans, at the expense of wheat acres. MacKie attributes this shift to demand for corn and soy by the renewable fuel industry, fueled in part to what he considers an artificial market due to government incentives that promote ethanol and biodiesel production. In Kansas alone, MacKie said farmers have shifted one million acres from wheat to corn and soybeans. Farmers are simply responding to market demand for more lucrative crops.
"Farmers are smart; they'll go where they can get the greatest income," he said.
But the entire wheat industry has been shortchanged by the government's pro-renewable fuels stance, he added. "When it comes to research funding, wheat has gotten the short end of the stick. We've worked with wheat growers to get research funding increased. But it's tight each year in Washington D.C. to get more scraps from the table."
With all these factors at play, biotechnology could well be the answer to the problem of reduced wheat stocks--and growing demand for corn and soybeans from the renewable fuels sector, according to Sosland.
"The lack of genetic modification of wheat largely is explained by the resistance of grain-based foods to the promise of this science on account of fears of consumer reactions. Even if these objections were eased, wheat will not be able to catch up any time soon in its genetic gains. This means the industry will have to pay more to keep production in line with requirements," Sosland explained. "Otherwise, we will have assured a continuation of the steady decline in U.S. wheat production."