Jan./Feb. 1998
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.
FAIR Act Needs Housekeeping,
But Not Deconstruction
Over the past year or so there has been a change in attitude in the wheat industry up here in the North. Disease, bad weather, low prices and sticker shock over production inputs has made for some real pessimism out there.
People are looking for a cure for this general attitude and there is a temptation to look to the old farm program days as a solution for our problems. I think we should review what the old program gave us before we make an effort to return to the those days.
Let's assume that Congress would maintain the $4.00 target price in 1997. The national average wheat price for the deficiency payments are too high to have yielded any sort of payment for this year. Under the FAIR Act (1996 Farm Bill, or "Freedom to Farm") we have received market transition payments twice a year since its beginning.
In today's program we are encouraged to plant other crops like canola, crambe and sunflowers. Those have given a diversified income boost to farmers. They have also helped us manage cereal diseases. The flex-acre and 0/92 provisions of the old program allowed us to switch to these crops but it seems that there was subtle pressure to stay with what we had always seeded in the past.
The FAIR Act was budget-driven, but it was also written because the old farm program was a dinosaur whose time had come. Sixty years of supply control by the USDA had opened the door for any country to fill our limits on production mandated by the USDA. Remember the scenario? Prices would slide and USDA would come to our rescue by ordering a cut in wheat acres and an increase in the support price. Every farm in the world read this as a signal to fill that gap. Supplies would move higher and Uncle Sam would be left holding the bag. An artificially high U.S. price looked good to our friends to the North and they responded accordingly.
The FAIR Act eliminated market distorting factors like unrealistically high loan rates that encouraged overproduction by our farmers and the Canadians. The marketplace now determines what farmers should plant. We, as producers, are going to have to make better decisions in terms of pricing our production in non-traditional times.
For example, you cannot deny that during the past two years we have seen some very attractive prices in different crops, wheat, corn, and soybeans included. How much of that was priced? Very little.
The FAIR Act has addressed many of the flaws in the old program, but it is no farm program cure-all, and there are ills to be addressed.
Crop insurance as it stands today is not effective in dealing with consecutive years of drought or disease. The government's subsidy for premiums seems to pass through the hands of the insured and on to the agents and underwriters. Maybe it is time to take another look at this scheme and streamline it so that the government subsidy is directed toward loss claims.
Revenue insurance patterned after Canada's Net Income Stabilization Account (NISA) is worth looking into. This program allows farmers to put away part of their income each year if they choose. The farmer's contribution is matched by the government's and is held until the year the farmer needs it.
We have to keep working toward streamlining chemical registration. This has a direct impact on our cost of doing business. Both the EPA and chemical companies prevent labeling of minor use crops. In other countries farmers have few label restrictions and spend far less on crop protection than we do. We need good stewardship and we need to take measures to protect the environment, but federal pesticide policies need to be more reasonable. The government espouses the need for crop rotations; then why does it throw up regulatory roadblocks that discourage the production of other crops?
We also need a strong commitment to agricultural research, and aggressive farm exports under a fair trade environment if the FAIR Act is to succeed after 2002.
The new farm program terrain is rocky, but we're not going to get ahead by going back to the old gravel road. Energies of those who would turn back the clock would be better spent 1) working individually to manage their operations for the market transition; 2) working within the wheat association to improve what might not be a perfect bill, but a step in the right direction.
John Cook, Mohall, ND, NDGGA past president
Like Farming, The NAWG Embraces Change
Averaging 300 to 400 acres on a good day of drilling grain, I asked my neighbor's father if he ever thought he would live to see the day a semi-truck was used as a seed tender truck.
This veteran of many growing seasons said that it hasn't been easy to adjust to all of the changes that have taken place in agriculture the last ten years. But in the same breath he said he felt proud of the foundation of his operation. The management practices he past on to his son were built on strong and true principles, and have withstood the changes of technology, farming practices, and farm programs.
My neighbor's pride in his operation and how it has managed "change" made me think of our national association. The structure of NAWG is changing. It now has a new CEO position. This CEO will help define a new leadership role for our association in the wheat industry.
The wheat industry as we know it in the past has been fragmented and undefined. Leadership in bringing together this industry has been void. However, the leaders of your Association have stepped forward and have begun challenging industry to come together. Not only to talk about differences, but to talk about common ground and to build upon it for a unified wheat industry. The first steps have been taken to embrace change. You can see it at the NAWG's 48th Annual Convention, with the addition of the Wheat Industry Research Forum, and the NAWG Foundation's Long Range Planning Committee, which has industry leaders working alongside wheat producers.
The NAWG's foundation as a strong "grassroots" lobbying group will remain solid. Our lobbying needs are just as great today as they were before Freedom to Farm. Even though issues evolve - policy terminology such as target prices, set aside and low input sustainable ag have been replaced by market transition, risk management and biotechnology - there will always be politics that affect the prosperity of wheat production. Thus, U.S. wheat growers still must have a unified voice.
The foundation on which NAWG is built has a strong history, with 22 member states and a professional staff in Washington. The NAWG's new CEO will not be replacing our organizational foundation, merely expanding it. Yes, there will be change. But just like the farms that have weathered and improved through generations of change, so too will our association.
Tom Young, Onida, SD, Past President SD Wheat, Inc.
MN Barley President Meets With Glickman About Scab
I had the good fortune of a meeting with USDA Secretary Dan Glickman in Washington, DC last month, to discuss with him personally the need for federal funding for research of wheat and barley scab. I was joined by N.D. Sen. Byron Dorgan, several N.D. Congressional staff members, and several other USDA officials. N.D. Congressman Earl Pomeroy's office has my thanks for helping to arrange the meeting.
We have been successful in securing $1 million for federal scab research in FY98, but would like to see $5.2 million earmarked for scab research in the FY99 budget, which is being compiled now and will be released by the President next February. A consortium of crop scientists from 12 states affected by scab have compiled a list of top federal research designed to bring scab under control, with an annual price tag of $5.2 million.
Along with scab, we discussed a $40 million fund earmarked through the National Science Foundation for a plant genome project, where biotechnology will be applied to improve crops. It is essential that barley and wheat, which lack the private genetic investment afforded to corn and soybeans, receive a fair share of public biotechnological investment.
Mr. Glickman said that he is sensitive to the severity of the scab problem and would do what he could to earmark additional federal funding for scab in the FY99 budget. In Washington, time is money. I was able to visit with the Secretary for 20 to 25 minutes, which is remarkable as far as Capitol Hill appointments go. It demonstrates to me that Secretary Glickman is sincere in wanting to help our industries through this devastating disease problem.
The top echelons of USDA and many in Congress are sensitive to the scab problem. They truly want to help. We have put scab on the national radar screen, and it really shows what our wheat and barley associations can accomplish.
Gerald Lacey, Campbell, MN, MBGA president
MN Wheat Checkoff Increase Needed To Save, Solve, Sell
A statewide referendum established the Minnesota Wheat Research and Promotion Council in June of 1977. That year, 3.327 million acres of wheat were harvested in Minnesota, according to the Minnesota Ag Statistics Service. Yield per harvested acre was 39.6 bu/acre, and production was 131.9 million bushels.
Fast forward 20 years to 1997, when 2.465 million acres of wheat were harvested in the state, with a yield per harvested acre of 32.6 bu/acre and total production of 78.9 million bushels.
Scab, and an acreage shift to other crops, are the primary reasons for the 862,000 acre and 53 million bushel disparity between 1977 and 1997. A farm program that allows greater acreage flexibility in response to prices, coupled with a return to "normal" growing conditions, means wheat production in Minnesota has the ability to rebound. In 1992, for example, Minnesota produced almost 140 million bushels of wheat averaging close to 50 bu/acre from 2.8 million acres.
I don't need to remind you about what has happened to our wheat industry since then. Five years of scab has affected many, from producers and elevators to main street commerce, to our wheat checkoff's ability to generate the dollars needed to fight this disease.
That's a primary reason why a half-cent increase in the Minnesota wheat checkoff has been proposed. The proposed increase, the first in the 20-year history of the Minnesota wheat checkoff, will need to be approved by a majority vote of Minnesota wheat producers this spring.
While the checkoff has remained the same over the past 20 years, funding has actually decreased because of reduced yields, and reduced acreage. Ironically, wheat checkoff funding is decreasing when it is needed most.
A checkoff increase will help us save our state's wheat industry. It will leverage public research dollars for scab and other disease research, fund better varieties, and help our industry grow. Domestically, our checkoff dollars collectively with other states have led to a 50-year high in per capita flour consumption. And internationally, governments around the world are getting out of the wheat buying business, leaving new private wheat buyers around the globe who need to be educated about the advantages of using U.S. hard red spring wheat.
Save, solve, and sell. We need to save our wheat industry, solve the scab problem, and sell wheat. As farmers, we can't expect to grow and sell a wheat crop if we don't invest sufficiently in fertilizer, fuel, pesticides, land and machinery. How can we grow and sell wheat if we don't invest sufficiently to meet the significant challenges facing our industry?
Cliff Keller, Fergus Falls, MN, MN Wheat Council Chair
MAWG Supports Proposed Checkoff Increase
The Minnesota Wheat Research and Promotion Council has decided to seek a half-cent increase in the Minnesota wheat checkoff next spring. The Minnesota Association of Wheat Growers has voted to endorse this proposal.
Here's how the endorsement reads in the MAWG's 1998 resolutions: "The MAWG supports an increase in the state's wheat checkoff to help improve wheat profits through increased research, wheat customer service, and market development. Priorities under an increased checkoff would include scab research and funding a state wheat breeder."
The majority of our efforts in the past year have focused on scab. I am proud to say that we were successful in securing more state and federal dollars for scab research. At the state level, we secured $1.6 million over the 1998-99 biennium to continue an accelerated scab research program at the University of Minnesota. We also obtained a state commitment toward funding of a state wheat breeder. At the federal level, we played a key role in obtaining $200,000 in FY97 funding, and $1 million in FY98 funding, for scab research. We already have made inroads on trying to secure funding in the federal FY99 budget for scab.
But a key question that lawmakers ask when we have requested funding: "What are you doing to fund the problem?" The fact that producers are committing more of their own money through the checkoff to research is the lynch pin in leveraging state and federal taxpayer dollars.
Our checkoff dollars also leverage federal dollars for market development. The checkoff money that 18 wheat-producing states use to fund U.S. Wheat Associates, the U.S. wheat industry's export market development organization, is matched by the Foreign Ag Service of USDA.
Minnesota's wheat checkoff has been at the same rate since Jimmy Carter was president. But for Minnesota wheat to be competitive after the market transition and in the New Millennium, we need to develop a better product, and build better markets. That's why the MAWG asks all wheat growers to support an increase in the state's wheat checkoff.
Tim Dufault, Crookston, MN, MAWG President
Grains Magazine January 1998