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In excess of $27 million: Karnal bunt losses on Rolling Plains spiral

An economic analysis recently completed by a Texas A&M economist indicates the fungal disease Karnal bunt has hurt the Rolling Plains regional economy to the tune of more than $27 million.

Karnal bunt infects wheat, durum wheat and triticale if flowering plants come in contact with disease spores when temperatures are cool and rainfall and humidity are high. The spores can spread from field to field on plants, seeds, soil, farm equipment, tools, vehicles or on the wind.

Once in the soil, Karnal bunt spores can survive for as long as five years — if not longer. Infection typically damages only a small portion of individual grain heads and kernels. In most cases, however, infestation is well below levels necessary to affect or reduce yield and quality.

Infected grain is not toxic to humans or livestock, but flour and feed containing high levels of infected grain often has an off color and unpleasant “fishy” odor.

Karnal bunt was detected in late May in Young County. Subsequent testing by the USDA Animal and Plant Health Inspection Service (APHIS) led to a quarantine of Young, Archer, Throckmorton and Baylor counties in the Rolling Plains.

APHIS quarantines infected areas to minimize the potential negative impact on the nation's $4.9 billion wheat exports, and to contain the disease within an infected area. The United States is currently the leading global wheat exporter.

Roughly 400,000 acres are under quarantine in North Texas, but USDA must wait until the 2002 crop is harvested before it can alter its quarantine because the disease was not detected until harvest was under way and some of the crop was already shipped.

USDA is now negotiating with nations that don't ban Karnal bunt to buy affected grain at discounted prices. Grain elevators in the four counties now hold 1.5 million bushels of infected grain and about 2.1 million bushels of non-infected grain that was mixed with bunted grain.

“Approximately 2.8 million bushels of Rolling Plains winter wheat was classified as ‘bunted’ after samples tested positive at federal laboratories,” said Stan Bevers, Texas Cooperative Extension agricultural economist at Vernon.

“Another seven million bushels tested negative as bunted wheat, but, because it was grown or co-mingled with wheat grown in an infected area, it cannot be marketed through normal channels.”

“Once a positive identification is made, it is APHIS' charge to contain the disease in an infected area. This effort imposes restrictions on grain sales, use and movement that producers' must bear.

“There is a federal mechanism in place to compensate producers for some of their losses. Right now, that compensation amounts to a maximum of $1.80 per bushel for bunted wheat, but there isn't any compensation for negatively tested wheat that is still affected by the quarantine.

“Wheat that is bunt positive cannot be sold for the export market. It's only real use is as livestock feed, and that means a reduced price for producers selling this grain.”

Bevers recently completed an economic analysis outlining the projected impact of Karnal bunt on the four-county area economy. That analysis reveals the following losses:

  • More than $3.6 million due to a reduced value as a livestock feed wheat ($1.25 to $1.50 per bushel).

  • More than $2.8 million on wheat not eligible for federal compensation.

  • More than $1.9 million in interest and storage costs, due to producers not being able to move or sell their affected wheat.

  • More than $733,000 for buying new seed or treating negative seed for the 2001-2002 wheat crop.

  • More than $1 million from producers switching to other crops.

  • More than $1.9 million due to reduced stocker cattle contracts.

  • More than $1 million in lost wheat seed cleaning and fertilizer sales for agribusinesses.

  • Approximately $2 million for grain elevators and handlers.

“These are direct economic losses. When added together, they amount to more than $15.1 million. But to gauge total impact on a regional economy, you also have to factor in some indirect losses,” Bevers said. “Indirect losses are those that ripple through a regional economy beyond agriculture and agribusiness.

“If a producer cannot purchase or repair his equipment, buy tires for his vehicles, or take his family out to eat, it is an indirect economic loss to people and businesses providing those services.

“Right now, we are estimating more than $12.1 million indirect losses on the four-county area economy due to Karnal bunt. Add the direct and indirect losses together and you have a total estimated economic impact of more than $27.2 million.

“The average value of the four-county wheat crop is approximately $24 million. The maximum USDA compensation package to producers is only $5 million — or $1.80 per bushel for our 2.8 million bushels of bunted grain.”

Farm-state lawmakers have asked USDA Secretary Ann Veneman to make Karnal bunt eradication a federal policy goal. They are also asking for a compensation package that will include grain handlers as well as producers, a means to ensure that infected grain is kept out of the export system, and more money for Karnal bunt research.

Texans can get more information on Karnal bunt in the United States, and its ramifications for crop and livestock producers from these sources:

The first two sites contain two Texas A&M publications on this crop disease: Karnal Bunt in Texas Wheat outlines its history, biological characteristics, best management practices, current situation, and detection tips and regulatory efforts for control; while coping with Karnal bunt in Texas addresses issues in dealing and coping with Karnal bunt and its economic impact on producers.

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