Washington Wheat Farmers Rolling In The Dough
Tuesday, October 2nd 2007, 7:25 am
By: News On 6
ROCKFORD, Wash. (AP) _ When wheat prices hit $6.67 a bushel, farmer Michael Sargent sold his supply because he'd never seen prices that high. He wishes he had followed his wife's example.
She held onto her share of the wheat, which is now selling for a record $10.25 a bushel.
``She was more patient,'' Sargent said. ``I hear it every day.''
Worldwide shortages have produced record prices that have Washington farmers speculating that this will be the first $1 billion wheat crop in the state's history.
Although typically associated with high-tech products or apples, Washington is also a major wheat producer, with much of the crop grown in the fertile Palouse region. The state's nearly 4,000 wheat farmers produce about 130 million bushels per year, ranking Washington fourth in wheat production, behind Kansas, North Dakota and Montana.
Tom Mick, president of the Washington Wheat Commission, said this year's crop could bring in more than $1 billion because drought and heat have reduced crops in other major wheat-producing nations.
The reason it's not worth more is that many farmers sold their wheat before the recent price surge, sometimes against their will when bankers called in loans, Mick said.
Much of the wheat sold for less than $5 a bushel, which seemed reasonable after prices had hovered around $3.50 to $4 a bushel for several years, Mick said.
``Nobody knew it was going this high,'' he said.
Sargent sure didn't. Besides farming near Dusty, Sargent is a county commissioner in Whitman County, one of the largest wheat-producing counties in the nation. Its small towns are not yet reaping the benefits of higher prices, Sargent said.
One reason is that farmers had piled up so much debt over the years that much of this year's income is simply paying that down, he said. Farmers are also building their savings accounts, he said.
Another issue is that many farmers joined a federal program in which land was set aside as wildlife habitat, reducing the amount of wheat grown. As recently as 1996, Washington produced 182 million bushels of wheat, which sold for $755 million, the most lucrative crop in years.
Last year's wheat crop, of 140 million bushels, sold for about $615 million, said Linda Simpson of the Washington Agricultural Statistics Service.
There is a good chance the 2007 crop will join apples as the only Washington farm commodity to bring farmers $1 billion in one year, she said.
``Growers will tell you the price of fertilizer and fuel and everything else is going up,'' cutting into their profit, she cautioned.
But there is no denying there are a lot more smiles in farm country today than when wheat prices averaged $2.63 a bushel in 1998.
Prices this year started to surge in mid-May as a result of drought in Australia, Argentina and parts of Europe.
The Canadian crop is also down, said Mick, of the wheat commission.
At least half the Washington crop was sold early in the surge, he said. ``Farmers had been selling wheat at $3, so when it got to $4 and $4.50 it looked attractive.''
As of late September, about 70 percent of Washington's wheat crop had already been sold, leaving the rest to garner the premium prices, Mick said.
Most of Washington's soft white wheat is exported, primarily to Asia and the Middle East, where it is used to make cookies, cakes and flatbreads, he said.
He doesn't think prices will remain this high, though he hopes they don't drop below $5 a bushel.
No matter what, Sargent said, this year's prices will save some farms and keep the industry viable.
``If this price hadn't turned around, you would have seen a number of producers shaken out,'' he said. ``It gives people hope.''