Low quality makes farmers discount spring wheat

Producers of hard red spring wheat in the upper Midwest have reaped one of the biggest harvests in history, but the bin-busting crop isn't of high enough quality to pay the bills for many farmers.

The same cool weather that produced the bumper crop reduced the level of protein in the grain used for bread products. Since lower-protein grain can hurt the quality of bread and other foods, it brings a lesser price, and farmers are finding their bumper crop worth a lot less than expected.

"It's the difference between a break-even scenario vs. a profitable year," said Byron Richard, who farms near Belfield in the southwest part of North Dakota, which grows about half of the nation's spring wheat each year.

North Dakota's 2009 crop is the largest in 13 years, thanks to a record yield, or bushels harvested per acre. But much of the grain is coming in with less than 14 percent protein, generally considered the threshold between good-quality and poor-quality grain.

"What we're seeing on our farm is about a (percentage) point less than average; it's running around 13.5 when normally it's around 14.5," said Richard, who is president of the North Dakota Grain Growers Association.

The problem for farmers is not likely to have a large impact on consumers.

The American Bakers Association acknowledged any disruption in supply typically affects consumer food prices. But given "the relative size of the hard red spring wheat crop, the ability to blend wheat, if necessary, and the overall competitiveness of the market, it is unlikely that low protein levels in this year's spring wheat crop will affect prices," it said.

Also, bakers in the U.S. use different types of wheat with varying proteins for different products, said Hayden Wands, chairman of the association's commodity and agricultural policy committee. For example, hard red spring wheat is used for hearth breads and crusty rolls, while bakers use hard red winter wheat for pan breads and soft red winter wheat for cookies and crackers.

Wheat industry officials say they hope to work with the milling and baking industry to produce quality food from spring wheat that doesn't quite meet the 14 percent protein standard. They say it would be in the best interest of food producers who want a stable supply, because some farmers are switching to other crops, such as corn and soybeans, to avoid the risks associated with wheat quality discounts.

"We're not asking (millers and bakers) to lower their standards," Richard said. "But maybe they can find ways to do what they doing now with 14 percent, with 13 percent."

Minnesota, South Dakota and Montana follow North Dakota as the top spring-wheat producing states. Jim Peterson, marketing director for the North Dakota Wheat Commission, said the average yield in the region this year might approach 50 bushels per acre, surpassing the 43 bushel-per-acre record set in 2004.

"For a lot of guys it's the equivalent of getting two crops in one year," he said. "But it's hard to get bushels and that 15 percent protein wheat at the same time. Something has to give."

Peterson said farmers have run into similar problems in past years, including in 2004.

North Dakota Agriculture Commissioner Doug Goehring said the discounts for low-protein wheat are steep - spring wheat with 13 percent protein is selling in some instances for as much as $1.50 per bushel less than 14 percent grain. For a farmer with yields of 40 bushels per acre, that adds up to about a $60,000 difference for a 1,000-acre wheat farm.

With the rising cost of seed, fuel, fertilizer and chemicals, some farmers are struggling to pay their production costs.

Low protein can be a particular problem for farmers who sell to overseas markets, many of which blend high-protein U.S. wheat with lower-quality wheat from other sources, Peterson said.

Countries primarily concerned about feeding their populations don't consider it a big issue, he said. But countries accustomed to the usual "Cadillac quality" of American wheat could turn to nations such as Canada or Australia if their grain quality is higher, he said.

"Our main big markets each year are Japan and the Philippines, and they are quite quality conscious," Peterson said. "It's probably going to be a challenge to maintain market share in some of those markets."

South Dakota and Montana have pockets of higher-protein spring wheat that will help fill some of that demand. Farmers with high-protein wheat might even benefit from premium prices, Peterson said.

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On the Net:

North Dakota Wheat Commission: http://www.ndwheat.com/

North Dakota Grain Growers: http://www.ndgga.com/

American Bakers Association: http://www.americanbakers.org/

North American Millers Association: http://www.namamillers.org/