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Growers in major wheat areas seeking more profitable crops
 
By STAN MADDUX
Indiana Correspondent
 
 MANHATTAN, Kan. — “We’re not in Kansas anymore” is what some financially pinched growers in the nation’s leading wheat-producing state could be saying, while turning to other crops.
 
The problem is not exclusive to Kansas or North Dakota and across the Plains where wheat is king. A glut on the market from more countries growing their own wheat and consumers in many parts of the world switching to a higher-protein diet have dropped prices, to the point where 2017 saw the fewest acres of wheat planted in the United States since the USDA began keeping records nearly a century ago.

“Overall, we still do think of wheat when we think of Kansas, but they are looking for alternative crops,” said Todd Hultman, a grain analyst with Omaha, Neb.-based DTN, a provider of solutions, information and market intelligence for agriculture.

Hultman said some Kansas wheat growers in 2016 planted sorghum, but the results were not the best. Even corn and soybeans are being planted, but only the ground in central and eastern Kansas are suitable enough for yields that might be viewed as “just average” in major corn and soybean states like Illinois and Iowa.

"It’s a tough scenario, especially in most parts of the country that rely on wheat,” he said. According to USDA, this year’s crop of 45.7 million acres is the lowest since 1919. North Dakota, the second-largest wheat producer, planted 15 percent less while other major suppliers including Montana and Nebraska were down 11 and 23 percent, respectively.

Last year was the least profitable for wheat growers in at the least 30 years, said Hultman. “Countries like Russia and the Ukraine are really kind of taking market share away from the U.S. As wheat just becomes more commonly produced around the world, we become a significantly smaller and smaller market share of that.”

Chickpeas, lentils and sunflowers are among the more popular alternatives in areas like the northern Plains and parts of Washington and Oregon where ground and climate make it possible for those crops to thrive. These crops are also more profitable, as more consumers in developing countries with additional money to spend on meat and others simply with a desire to eat healthier add protein to their diets.

Dan O’Brien, a professor of agricultural economics at Kansas State University, said an outbreak of disease last year especially in high wheat-producing states has also been a factor in growers turning to other crops. It’s challenging enough for wheat growers to turn a profit, so to avoid the higher operating costs of combating the disease, some farmers switched crops to try to preserve their bottom line.

O’Brien said it might take a drought in one of the major wheat-producing countries for prices to start going back up, but there are some naturally occurring positive indicators – such as a slight tightening of worldwide supplies, not including China, the past three years.

“We’re almost as tight as we were in 2012,” he noted. Prices that year in the U.S. set a record, and he thinks the current market is really not that far off from demand catching up to supply.

O’Brien said prices have not responded yet to a shrinking surplus because of wheat still pouring in from competitors, like those in the Black Sea area between Europe and Asia.

The wheat surplus in China has grown substantially in recent years because of its ban on exports due to concerns over food supply within its borders. But, O’Brien didn’t include China in the amount of surplus wheat globally because of it being kept off the world market.
 
“If you look at accessible world stocks to use, then you got a different picture than as seen when you look at the large aggregate, all-world number,” he explained.

Bob White, director of National Government Relations for Indiana Farm Bureau, said what’s happening to wheat in the United States is not much of concern in the Hoosier State, with practically all grain produced here being corn, as well as soybeans.

“Sometimes guys will put it in their rotation just to have something different on the ground for a while,” he added. In 2016, Indiana had 330,000 acres of wheat planted, compared to 8.5 million acres in the ground in Kansas and more than 7 million acres in North Dakota, according to the USDA. Montana, Texas and Oklahoma were next with acreage at or just above 5 million. (It should be noted Midwest and southern wheat is generally used for different baking and milling purposes than that grown in the Plains.) 
9/14/2017