WASHINGTON, April 14, 2016 - While American wheat growers finish weaving their Wheat Action Plan to improve their crop’s profitability and encourage more planting, the big chill in U.S. production isn’t abating.
The National Association of Wheat Growers launched its plan a year ago, hiring a Land O’Lakes affiliated consultant group, FLM+, to work with myriad players in the wheat industry, including growers, millers, researchers and food makers.
The goal, says Gordon Stoner, a Montana grower and NAWG president, is to halt and reverse the decline in the wheat industry by making the crop more profitable to grow. The groundwork continues, and Stoner says the group expects to roll out its plan by the end of the year, while recruiting and orienting a new chief executive to replace Jim Palmer, who is departing soon.
But the world isn’t waiting for the Americans to finish their game plan. Around the globe, farmers continue growing much more wheat than is consumed. World harvests have exceeded use for three years running, pushing stocks to a record 8.8 billion bushels for the 2015/16 marketing year, and another record in the next year is ensured if farmers abroad don’t plant less this year. So far, some major producers, including India, Russia and the European Union, are expected to plant fewer acres than last year, and an early 2016/17 harvest forecast by the International Grains Council is for a small dip to 6.2 billion bushels of production. But even that much of a harvest would once again probably exceed world consumption, adding more stocks.
Meanwhile, “the big story for the U.S., especially in the last couple of years, is the export situation,” says William Chambers, the lead wheat analyst for the USDA World Outlook Board. U.S. farmers have become very accustomed to selling roughly half of their wheat crop abroad. But now, he says, “We’re forecasting a 44-year low for exports. It’s been a very difficult situation. Record crops in other countries… and the [impact of the dollar’s] exchange rate. I guess there’s a little more to it overall, but that’s it.”
Those trends spell tough sledding for U.S. growers. U.S. wheat exports tumbled 27 percent in the 2014/15 marketing year, and USDA projects them to slip another 9 percent in the year ending May 31. But they are 16 percent off last year’s pace so far. What’s more, big competing exporters – the European Union, Russia and Ukraine – are closer to most of the top wheat import markets of Asia, the Middle East, and northern Africa. With U.S. foreign sales throttled, domestic stocks swelled in March to 20 percent over a year earlier, and growers are now getting $4 to $5 a bushel for the various classes of wheat this year, about a buck less than last year.
Thus, ahead of spring wheat seeding, just now starting, growers nationwide told USDA they’ll plant less than 49.6 million acres this year in all types of wheat, the smallest acreage in the department’s century-old survey.
However, “surrendering market share is not the solution,” Stoner declares. Especially in north-central states and the eastern Great Plains, fields long seeded to wheat have been shifting to corn, soybeans, sunflowers, canola and many specialty crops that offer better profits. Stoner says yields and agronomic traits have been enhanced for those crops faster than for wheat, making them attractive to farmers. “One analysis suggested that if we could increase wheat productivity by 20 percent we would become competitive, or at least stop the erosion [in U.S. acreage].”
“Ultimately it’s a matter of profitability,” Stoner says. But part of the economic solution for wheat growers is to invest in new uses of wheat, just as corn and soybean growers have done with the array of food, feed and industrial uses generated for their crops. USDA’s data show total domestic use of corn has nearly doubled since 1990; for soybeans, up 60 percent. Domestic use of wheat declined 13 percent in the same period.
Stoner points out that American producers raise six classes of wheat, segregated into separate regions across the country. On his farm near the Canadian border, for example, he grows durum, the wheat for making pasta, and considers it a specialty crop. Wheat already has a bevy of uses – bread, noodles, crackers, etc. – and he wants to see wheat developed for more specific food, feed and industrial uses to expand the wheat market. Wheat has gluten, Stoner notes, and it is his industry’s job to develop new uses for that wheat component. “I’ve been a little more of the philosophy that if you produce the wheat, you will be able to find markets.”
For decades, wheat growers have devoted a lot of resources to research and control efforts against fusarium head blight (called “scab”), a scourge that attacks wheat almost coast to coast. Succeeding in that long battle is crucial to growing wheat profitably, and there is progress.
Steve Joehl, NAWG’s director of research who coordinates its affiliated National Wheat Improvement Committee (NWIC), says that the main success so far is “to incorporate scab-resistant genes within the elite wheat and barley germplasm base.” Thus, he says, researchers are narrowing the gap between the most productive wheat varieties and newly developed lines that give wheat scab tolerance. “They’re finally getting yields that are comparable if not exceeding current commercial lines.” To better complete the challenge, the wheat sector is pressing Congress for a boost of $3.3 million, to a total $10 million annually, for research in the U.S. Wheat & Barley Scab Initiative, as was approved in the 2014 farm bill.
Growers are also trying to wrestle $3.4 million from Congress for next year for the USDA Agricultural Research Service to hire scientists and other staff for a Small Grains Genomic Initiative. An international team of plant geneticists, called the Wheat Genome Sequencing Consortium, is expected to complete “a high quality sequence” of the very complex wheat genome by next January, Joehl said. “They anticipate that this will be a high quality sequencing for wheat,” he said, and it will greatly speed the work of scientists finding genes they wish to mark and move within wheat varieties. So, with the sequence completed, NAWG and the NWIC want to see a sufficient team of experts employed to take advantage of it in breeding further disease resistance and improved commercial strains of wheat, he said.
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