JUNE 1996
News &
Views from the
Wheat & Barley Growers
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
1990s vs. 1970s price: little comparison
A lot of comparisons have been made with today's high grain prices and those in the early 1970s. But although some of the dynamics are the same, including low stocks and strong exports, there are also stark differences between then and now.
I think a key difference is the farmer's buying power and his input costs. It will take many more truckloads of $6 wheat or $3.50 barley to pay for a combine, tractor, or pickup now then in the 1970s.
The grain value is different too. The N.D. spring wheat price averaged $4.45 in 1974-75, the last time before recently a $6 wheat price was achieved on the farm. But, according to NDSU, that $4.45 in 1974 had about the same purchasing power as $10.92 today.
There are positive differences too, however. Today's export demand is more likely to be sustained, and with cash or short-term credit from more reliable private buyers around the world, rather than huge flash-in-the-pan grain purchases from a government on shaky credit. And we shouldn't have the boom-to-bust farm debt crisis that followed the 1970s either.
To keep inflation in check, and realizing that our crop is far from being harvested (and once it is, a lot of farmers need slack to bounce back from the last few years of poor crops) I hope the media and price setters of equipment and ag inputs will remember the differences between then and now. This is not the Golden Age of Grains Part 2.
Mike Seeger, Red Lake Falls, MN, Chairman, MN Barley Council
Transition time for wheat farming
Some day I might look back and have a "yep, I was there" nostalgic view about being president of the MAWG during the writing of this new farm bill. After all, the new law represents major policy reform and a historic turn for U.S. agriculture. But for now, after many meetings, faxes and hours on the phone conveying the MAWG's viewpoint on the many points of this bill during its drawn-out, unconventional stages of development-I'm just relieved it's over.
The new law will need time to prove itself, good or bad. But considering some of the cards put on the table early during the bill's debate-proposals for deeper cuts in farm spending, big increases in unpaid flex acreage, and a heavier environmental presence-I think our final hand played out well. We were able to get greater planting flexibility; more farmer-friendly conservation compliance and wetlands rules; fixed payments regardless of market price, funding to help cover the 1995 deficiency payback; and retention of the old 1949 Ag Act, assuring that a guardrail remains in place when the new law reaches the 2002 turnpike.
Is this the last farm bill? I don't know. I will say that my gut feeling is that it may be a fundamental transition to a new form of income protection. Perhaps money spent on FCIC insurance and crop subsidies will be pooled, and the producer would be able to buy both yield and price protection: similar to what is being tested now under a revenue insurance pilot program (which, incidentally, the NAWG is working to take experimentally on a national level). In any case, I don't think we've seen the last overhauling of crop insurance.
Meanwhile, during this new seven-year plan, I think it would be prudent to use the payments to reduce debt and invest in value-added projects. When I assumed the MAWG presidency, I wanted to work with the board in concentrating on two fronts: the farm bill and value-added. We have the former, and we're making real headway on the latter. You've been hearing about the newly formed Red River Farm Network and United Spring Wheat Processors: it should be noted that the MAWG was instrumental in helping to establish both, as well as identify other value-added opportunities through a wheat and barley steering committee.
It's somewhat ironic that both the farm bill and USWP were unveiled to growers at almost the same time this past spring. It symbolizes a transition taking place in production ag: a move to get more profit from the marketplace instead of Washington. They are signs which indicate that the resolutions and goals the MAWG began pursuing in the past few years are sound choices. As a member of the MAWG, you are part of a progressive organization.
Jerry Nordick, Rothsay, MN, President, MAWG
Let's grow it, and sell it
My thoughts on the new farm bill? I think it will work fine, if we keep following the grain market philosophy our country has increasingly adopted during the last 10 years: let's make sure the pile of our wheat doesn't get too big.
Let's keep our commerce lines open, export 65 percent of our crop yearly, make sure our wheat remains competitive in the world market, and that our overseas customers are satisfied. If we end up with a 1 billion bushel carryover again someday, this farm bill won't work very well. Let's grow it, and let's sell it.
Chuck Merja, Sun River, MT, President, Natl. Assn. of Wheat Growers
New wheat industry vision in the works
For what reasons do we want our wheat associations to exist? What path do we want our wheat industry to head? The National Association of Wheat Growers Foundation, about 18 state wheat grower associations, and other representatives of the wheat industry are answering those and other fundamental questions over the course of this year.
We are, in essence, working to establish a vision statement and set goals to guide each of our farms into a wheat industry ready to face the 21st century and beyond.
Many of the producers participating in this process of creating an industry-wide vision, including myself, have come to the realization that we merely dump our grain and allow someone else to profit from finding its full value.
So it's time to redefine the business we're in, and develop a proactive plan to allow producers to take charge of their own destiny. Part of that includes identifying the final value of what we produce, and knowing how, why, when, and where the grain that we supply holds the most value. It's information that can change the role of the farmer, from producing a raw commodity to being an industrial producer, providing and marketing inputs to meet the demands of our end-use customers.
This new vision statement for the U.S. wheat industry will be further refined this summer. We'll want to encourge our state wheat commissions and U.S. Wheat Associates to participate in the process. A final plan will be unveiled at the NAWG's 1997 annual convention. Then, we must work together at all levels-from each farm and each state wheat association to the NAWG on the national scene-to take action on this plan for a more successful U.S. wheat industry.
Tom Young, Onida, SD, President. SD Wheat Inc.
More attention to wheat quality needed
We all do it: we think in terms of producing more and more to profit, and focus on increasing yields maybe even at the expense of quality. At some point, though, consideration must be given to the type and quality of grain produced.
It is possible that we could see more profit potential from identity-preserved and specified quality grain. Of course, it is difficult to quantify which inputs relate to the variable returns on protein level, gluten strength, purity and color; yield is always the easiest return to calculate.
The recent change in federal farm policy and the sudden growth of farmer-owned, value-added ventures will motivate producers to focus more on production of quality, maybe even more than quantity of wheat. The farm program in the past has encouraged mass production, while many markets prefer pure high quality wheat and barley.
Farmer-owned processing facilities demand that members commit to providing the highest quality product. From seed selection, to planting and harvesting techniques through to post-harvest storage and handling, growers are urged to consider the quality of the grain they grow.
Yield, though extremely important, is only one of the considerations for our crop's overall value in the market: quality should be another. Nothing can illustrate the importance of quality more than a trip through the produce section of a grocery store, and watching the selection of fresh fruits and vegetables. When we shop for bananas, strawberries, lettuce, you name it-we inspect meticulously. We don't really care what that apple orchard or orange grove yielded, what matters is appearance and taste. If what we see is of poor quality, we'll buy elsewhere.
Many of our wheat customers are no different.
John Cook, Mohall, ND, President, ND Grain Growers Assn.
Safety net also gone for grain end users
An editorial in Milling and Baking News this last spring discusses the loss of the "safety net" for production agriculture. Freedom to Farm also removes the safety net for the grains processing industry.
Gone is the certainty of how many acres will be planted, a safety net end users have enjoyed for decades. Government farm programs had a larger impact on wheat supplies than did price. Consequently, processors didn't have to bid up price to secure bushels.
Now, the M&BN editorial states, economics will be the main factor affecting crop intentions. Many areas of the country may find it more profitable to switch to one or another crop, instead of planting for the government income.
In short, the editorial is saying to grain users that the free ride is over, and if you want acres planted to a certain crop, you'll have to raise the ante and bid the price for that crop up. The door has opened for production decisions to be based not on a government program, but on economics, and rightfully so.
Tim Dufault, Crookston, MN, MAWG Vice President
Foreshadowing a research need
The cereal smut positions at Logan, Utah; and Corvallis, Ore., have been eliminated. These were the only full-time cereal smut positions in the nation. However, smut problems still exist and could become very serious; further research is needed in order to control smuts."
Thus states a letter from a group of U.S. wheat breeders known as the National Wheat Improvement Committee to the USDA Agricultural Research Service Administrator. The letter continued: "…Flag smut and Karnal bunt continue to be quarantine problems, especially in relationship to the exchange of wheat germplasm. Research on the epidemiology and pathogenicity of these smuts is needed in order to improve the quarantine regulations. Because of these concerns, we urge you to continue in your effort to improve funding directly aimed at control of diseases and pests, especially in the regions where the problems occur; and we urge you to rectify the loss of smut specialists as soon as possible."
That letter was not written after Karnal bunt hit the news this last spring and caught the concern of the U.S. wheat industry: it was written nine years ago.
The Kansas Wheat Commission, which brought the letter to light, says that unlike other crops, wheat seed is primarily developed by the land-grant colleges. However, certain pest and disease controls are specialty areas that cannot be supported by each region, but require national USDA participation.
In our neck of the woods, scab and the orange wheat blossom midge are vivid reminders of the need for on-going, fully-supported agricultural production research.
Paul Aasness, Fergus Falls, MN, Chairman, MN Wheat Council