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Keys to wheat success

The adoption of biotechnology, export expansion, and supplier reliability are crucial components to further bolster the U.S. wheat industry; a $16.5 billion economic powerhouse in 2008.

“Bringing biotechnology into the wheat realm is imperative for a healthy and expanding U.S. wheat industry,” said Michael Edgar, Yuma, Ariz.

Edgar is nearing the completion of his one-year term as chairman of U.S. Wheat Associates (USW), the industry’s export market development organization. Edgar’s full-time job is general manager of Barkley Seed Inc., Yuma. He is a board member of the California Wheat Commission and the Arizona Grain Research and Promotion Council.

USW and the National Association of Wheat Growers (NAWG) are collaboratively building industry support for the adaptation of biotechnology in wheat.

The two groups and the North American Millers’ Association, plus similar associations in Canada and Australia, announced in May the intent to work toward synchronized commercialization of biotech traits in wheat. The groups agreed that biotechnology in wheat should be introduced in a coordinated fashion to minimize market disruption.

Biotech wheat is currently not grown commercially in the world.

“Wheat has lost acreage in the U.S. to corn and soybeans due to competition from crops that have the advantages of biotech traits,” Edgar said.

More than three-quarters of the wheat growers responding to a NAWG survey approved a petition supporting the commercialization of biotechnology in wheat.

“Until now, there has only been speculation about the breadth of grower support for biotechnology in wheat,” said NAWG Chief Executive Officer Daren Coppock. “This petition was designed to gather those answers from across our wheat producing areas, and now we have an objective and clear answer.”

According to the National Agricultural Statistics Service, U.S. wheat farmers produced more than 75 million tons of all varieties of wheat in 2007. California growers harvested about 1.5 million tons of wheat in 2008, while Arizona farmers produced about 471,000 tons.

About half of the U.S. crop is exported annually, Edgar says. The top five customers in order: Japan, Egypt, Nigeria, Mexico, and the European Union.

USW’s key role is building export markets for U.S. wheat in about 90 countries. Cuba is a budding market for expanded U.S. wheat sales. USW leadership visited Cuba several years ago, successfully opening the door to limited U.S. wheat sales into the country.

Edgar and U.S. wheat farmers met in Washington, D.C. this past spring with leaders from the Cuban Interest Section, a quasi-equivalent to a Cuban embassy.

“Cubans consume 750,000 to 900,000 tons of wheat annually and we should be able to supply their needs,” Edgar said. “It doesn’t make sense for Cuba to buy European-grown wheat that’s transported across the Atlantic Ocean when the U.S. coastline is several hundred miles away.”

Free trade agreements (FTA) are another venue to building markets for U.S. farm products. The North American Free Trade Agreement with the U.S., Mexico, and Canada is the most popular and controversial FTA. More than a dozen FTAs are in place.

Pending U.S. FTAs with Colombia and Panama are on hold awaiting direction from the Obama administration.

“USW is providing the Obama administration with background information and export projections on U.S. wheat sales to Columbia and Panama,” Edgar says. “I don’t have a good feel on whether the Obama administration will support or oppose the proposed agreements.” USW supports the agreements.

If the deal is worked out, Columbia and Panama would likely purchase hard red winter wheat from the Pacific Northwest or the Gulf of Mexico.

The U.S. wheat industry has a solid reputation as a reliable, steady supplier of grain to the world. That image is critical, Edgar says, to maintain current markets and build new opportunities. USW has 16 foreign offices around the world promoting the U.S. as a reliable and steady wheat source.

“When the world experienced a short wheat supply last year, the U.S. wheat industry and U.S. Wheat Associates stayed in close contact with their customers worldwide,” Edgar said. “We remained a reliable, steady supplier of grain to the world. Not all wheat-exporting countries could say that.”

USW is not a grain trader; the organization develops markets for U.S. wheat companies to negotiate wheat sales.

State wheat commissions in part fund USW through grower assessments for each harvested ton or bushel of wheat totaling about $4 million annually. California wheat growers pay a $1 per ton assessment while Arizona farmers pay 40 cents per ton. The U.S. Department of Agriculture provides the lion’s share to USW — more than $10 million annually.

In the West, California wheat farmers harvested about 1.5 million tons of all varieties from 555,000 acres in 2008 with a 2.7 ton per acre average yield, according to the National Agricultural Statistics Service (NASS). The economic value totaled about $350 million.

About half of the wheat grown in the Central Valley is green chopped for feed for dairy cows.

California flour millers primarily use red and white wheat varieties grown from Bakersfield to Sacramento to make bread and tortillas. Desert durum wheat grown in the Imperial Valley is used for U.S. pasta production and for export to Italy for premium-quality pasta.

“Despite its large wheat production, California is a wheat-deficit state,” Edgar says. “The bulk of California-grown wheat remains in California to help feed the state’s 30 million-plus residents.”

Some lower-quality California wheat is shipped from the Port of Stockton to feed people in less-developed countries under the USDA’s Food for Peace program.

Arizona wheat farmers harvested about 472,000 tons of all wheat in 2008 on 161,000 acres with 2.9 ton per acre yields; the economic value was about $130 million, NASS reports.

Desert durum comprises about 95 percent of Arizona’s wheat crop; with two-thirds exported mainly to Italy for premium pasta. The remaining durum is processed by the American Italian Pasta Co. in Tolleson, Ariz., for pasta and noodles for domestic and export consumption. Hard white wheat and other types are processed at Bay State Milling, also in Tolleson.

Wheat prices in California and Arizona fell sharply from about $450 per ton in 2008 to the $200 to $220 ton range this spring. Edgar blames higher prices for competing crops and the recession for wheat’s price decline.

Edgar believes Western wheat growers should keep their eyes focused on wheat markets in North Dakota and eastern Montana, areas deluged by heavy spring rains which delayed planting.

“If the crop in these areas isn’t planted until late May or early June, production problems could drive up prices for the 2010 wheat crop,” Edgar said.

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