Harvest Of Uncertainty

east_oregonian | July 6, 2013 6:56 a.m. | Updated: July 6, 2013 1:56 p.m.

Contributed By:

MATTHEW WEAVER

HELIX, Ore. — With harvest starting, wheat farmer Jim Williams has more questions than answers.

He typically begins harvest around July 10-12. Just like every other year, Williams is watching his fields and the markets, pondering the potential yield and price he’ll receive for his crop.

But after the discovery in May of genetically modified wheat on a farm in nearby northeast Oregon, Williams and other Northwest wheat farmers are still looking for answers from the USDA about its investigation and wonder how much the incident will impact overseas demand — and prices — for their wheat.

The information, they say, is crucial.

“We have a lot of decisions to make for the next year’s crop that need to start being made,” Williams said.

Beyond determining a strategy for marketing this year’s crop — he can lock in a price now or take a wait-and-see approach — one of the decisions includes which variety of wheat to plant this fall, Williams said.

“If we can’t come to any conclusions with our customers — if they’re going to start purchasing soft white wheat again or not — we might have to change classes of wheat,” he said.

Customer concerns

The customers that most concern wheat growers are Japan, the top importer of U.S. wheat, and South Korea, the No. 4 importer. Both nations suspended purchases of soft white winter wheat — the type found to be genetically modified in that single Oregon field — and “western white” wheat, a blend of club wheat and soft white winter wheat.

According to U.S. Wheat Associates, there have been no changes in the current buying status of those customers. Japan’s top agricultural official this week offered a blueprint for resuming the importation of soft white winter wheat from the Pacific Northwest, which will center on verified testing to assure that none of it is genetically modified. The timing of the resumption of imports is still to be determined.

Wheat buyers in South Korea have also temporarily suspended new purchases of western white wheat, pending clearance from that nation’s Ministry of Food and Drug Safety.

Other nations, such as Taiwan, continue to buy western white wheat. Contrary to USDA reports, Taiwan has taken no steps to restrict U.S. wheat imports, said Steve Mercer, vice president of communications for U.S. Wheat. Taiwan Flour Millers Association purchases of U.S. wheat, including western white wheat, were recently made. Williams said the GM uncertainty impacts him as a club wheat producer. This year, he grew nearly 800 acres of club wheat.

“That’s certainly a crop we won’t see a premium for this year, for sure,” he said. “We’ve suffered through some market loss right now. We’ll have to see how bad that’s going to be.”

Oregon State University wheat breeder Bob Zemetra said the university is putting together recommendations for farmers with regard to fall planting. He emphasized planting certified seed, which has a history, can be tracked more easily and fields have been inspected. Zemetra particularly recommended Clearfield wheat varieties, which are non-GM varieties resistant to Beyond herbicide, which uses no glyphosate, the herbicide the GM wheat was resistant to.

Crop looks good

The Oregon and Washington wheat crop is looking good overall, officials say, though they add that it could be smaller than recent record-breaking years and be impacted in some places by dry weather or frost.

Oregon Wheat CEO Blake Rowe said cool weather and moisture in June may push harvest later, although some farmers may have started early. Rowe said the moisture helped the crop, depending on location.

“Some areas got very dry and the moisture may have been too late to help them,” he said. “In other areas, it’s been very timely. Probably both volume and condition will be helped.”

Rowe said the year will be average — not as good as near-record volumes in 2011 or last year. There haven’t been many reports of diseases or pests, Rowe said.

Washington Grain CEO Glen Squires expected his state’s harvest to begin around July 4. Some areas are ahead of normal due to dryness, while some areas may be a little later due to coolness and moisture. Some areas were hit by frost, Squires said, but it’s hard to know how much damage was done. In the early spring, some temperatures moved quickly between freezing and hot.

“The wheat plant’s pretty resilient, but I’m sure that creates a little stress,” Squires said.

Idaho Wheat Commission Executive Director Blaine Jacobson originally thought this year’s crop would be comparable to last year’s. But recent heat stress and water shortages have dimmed the picture in some areas.

The recent record hot spell will be “devastating” to the dryland farms in eastern Idaho, which account for about 10 percent of the annual harvest. Smaller irrigation districts recently shut water off in the Magic Valley, but big districts were still providing water, and Jacobson hoped to have water for two more weeks. The commission is evaluating whether the total size of harvest would be impacted.

“If larger districts shut off water then growers may have to make a decision between which crops to water,” Jacobson said.

Bill Schillinger, director of Washington State University’s Dryland Research Station in Lind, Wash., said the effect of recent 100-degree temperatures around the region depends on the maturity of the crop. Winter wheat at Lind, Wash., is filling kernels.

“Most areas had substantial rains very recently, so there’s moisture in the soil,” he said. “When it gets so hot, the wheat wants to transpire water to keep itself cool. The plus side is it does have water down there. The bad side is temperatures are so hot, the plant might not be able to keep up with its transpiration needs.”

Economic impact

Williams said his input costs increased this year due to storms displacing fertilizer last summer. That required top dressing during the spring, more fertilizer than Williams would normally use. Early weed populations developed, so Williams had to use more extensive broadleaf herbicides than the norm. About every acre was treated for cheatgrass.

“Very expensive input costs this year, and of course with the GMO situation, the prices are starting to go down,” he said. “It’s going to be a tough year.”

Randy Fortenbery, WSU professor and small grains endowed chair in the School of Economic Sciences, said since the GM wheat discovery was made public, there’s been about a 45-cent drop in soft white wheat futures prices in the Pacific Northwest. Corn and soybean prices are also dropping, so it’s hard to say how much is directly attributable to the GM issue, he said. Wheat prices usually track corn prices.

If overseas customers don’t buy soft white wheat, Williams is concerned about filling export channels to a point where exporters won’t take any more. At the beginning of a new marketing year, exports are often soft, Fortenbery said. He recommends watching the weekly export picture for news that the countries are re-entering the market for soft white wheat.

“If that continues to be a problem, we should expect to have future price issues related to that,” he said. “The question is what they’re going to be doing in the next several weeks as we move through the summer.”

If weekly exports gain pace and match USDA expectations, that will be a positive, he said. If shipments remain slow through the summer, Fortenbery expects a negative impact on price. If the GM situation is confirmed as an isolated event, Fortenbery said that will be a positive.

“But if it’s a bigger issue than that, there will be a lot to be concerned about,” he said.

Rowe said the jury is still out on how much of an impact the GM situation might have on prices, but Squires and Jacobson don’t foresee much impact.

“I think the expectation is that this will just kind of be behind us,” Squires said. “Growers will be able to harvest and move grain like normal. Japan and Korea are important markets, but their concerns don’t mean the grain can’t continue to flow.”

Jacobson cites recent letters from Agriculture Secretary Tom Vilsack to his counterparts overseas to assure them of the safety of U.S. soft white wheat.

“I would expect that by the time we get into harvest, most of this is behind us,” Jacobson said. “I think we’re over the hump now. Barring another incident, I think it will gradually just fade away.”

Jacobson believes APHIS has been “very thorough and forthcoming” with their information.

“I think we know right now everything they know,” he said, complimenting the agency’s thoroughness and professionalism. APHIS called the incident a single isolated incident on a single farm. Jacobson says APHIS’ statement gives the majority of the Pacific Northwest wheat industry a clean bill of health.

“I think the farmers can get their wheat to market without any concern,” he said.

This story originally appeared in East Oregonian.

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