The global wheat market is burdened with surplus wheat and predictions of large yields worldwide. This is prompting U.S. growers to abandon wheat, seeding the fewest winter wheat acres since 1909. Many are switching to soybeans or corn, though high corn yields have caused surplus inventories just as high as wheat. These markets are warily watching the uncertainty of U.S. and global politics, leaving U.S. farmers wondering what seeds to sow.

“Most wheat from Montana and North Dakota is exported to Asia,” says Anton Bekkerman, associate professor in the Department of Agricultural Economics and Economics at Montana State University. “Last year, 31 million metric tons of soybeans were exported from the U.S. to China — six times more than any other location where the U.S. exports soybeans. But the current trade and geopolitical uncertainties may create barriers for U.S. farmers' access to worldwide markets.”

Anton Bekkerman specializes in ag economics at Montana State University in Bozeman, Mont.

Additionally the U.S. EPA recently received new restrictions on its operations, but it is unclear how this affects the ethanol mandate, which sets the amount of biofuel required in the U.S. “The EPA ethanol mandate drives a lot of corn production in the U.S.,” Bekkerman explains. “If the biofuel standards go away or if there is continued uncertainty on how much ethanol is demanded by the market, we can see even more corn acres go to soybeans. It’s a wait-and-see whether wheat acres will be replaced by corn or soybeans, but right now it's looking like soybeans are the big winners in this land allocation contest.”

The new pulse
In the northern Great Plains, many dryland farmers are not able to grow soybeans, and are looking to pulse crops — yellow and green peas, lentils and garbanzo beans — to replace wheat. “Fifteen to 20 years ago, this never would have happened,” Bekkerman says. “Wheat producers would have to take the hit. Now there's an option for dryland wheat producers to go into pulse crops, because that market is doing well. Lentil prices are quite high; pea prices were a little low right around the harvest, but now they've picked up again.”

To switch to pulse crops, there is little additional machinery cost, especially if growers have soybean equipment; if not, they can have pulse crops custom-harvested or purchase a roller combine head. “The biggest cost for farmers who haven't grown pulse crops,” Bekkerman explains, “is learning agronomic differences when transitioning from a wheat-fallow rotation to a continuous, more intensive cropping system.”

The market for peas is increasing within the U.S., lessening their price dependency on global export. “There's a lot of protein in peas, and growing demand for vegetable-based protein in both food for humans and animals, like domestic pets,” Bekkerman says. “Researchers are studying how to extract pea protein at a higher rate to produce things like dog food and energy drinks.”

Dryland wheat producers are also taking a closer look at the organic wheat market, where premiums are four to five times that of conventional wheat prices. It takes more effort to transition to organic production than to switch crops altogether, but sustained growth in consumer demand for organic wheat and the price per bushel that accompany it, are convincing some producers to do so.

“The demand for organic and for specific properties of foods, like ‘I want bread or pasta that is whole wheat and organic’ is driving the market,” Bekkerman observes. “To meet market demand, producers need to grow organic wheat with certain properties to produce that particular type of pasta. Going forward, I think there will be movement away from the mindset of, ‘It's a commodity. It's wheat.’ The market is asking for wheat with certain characteristics to produce specific foods, and growers will need to adjust.”

The wheat transition
As with any business decision, market prices and production costs need to be weighed in the transition from conventional wheat to other crops. “Many producers may just see the benefits of selling organic wheat for $20 a bushel instead of $4,” Bekkerman cautions, “but there are costs to going organic. You have to go through the transition period, you have to deal with weeds on a long-term basis and you may see lower yields.

“Questions to ask: Are there elevators or processing facilities within reasonable driving distance where you can deliver your organic wheat or pulse crop? If you have no elevators around you willing to take your crop, then you don't have a market.”

Bekkerman also suggests evaluating your land, equipment, age and economic situation when looking at stepping into new markets. “This year, it might make more sense for you to plant less acres,” Bekkerman explains. “Perhaps let some land leases go, or even downsize to not carry those extra costs that may inhibit you to make a profit. Costs need to be evaluated alongside potential revenues, because ultimately you care about profit — not revenue.”

Hemken writes from Lander, Wyo.