Farmer and Camas Country Mill owner Tom Hunton inspects his field of einkorn wheat—an heirloom grain that harks back to the Fertile Crescent.
Arya Surowidjojo / OPB
The price of wheat has been fluctuating wildly in the last few weeks because of Russia’s invasion of Ukraine. The countries are two of the largest exporters of wheat in the world. Wheat growers in the Pacific Northwest mostly planted their fields last fall, but the volatility in the market is making some grain cooperatives nervous. The war is also driving up the cost of fertilizer and gas prices, which is adding to uncertainty for northwest growers. Darren Padget, the Chairman of US Wheat Associates and an Oregon wheat farmer, explains.
Note: The following transcript was computer generated and edited by a volunteer.
Dave Miller: The price of wheat on the commodities market has nearly doubled just since July; it has been fluctuating wildly in the last few weeks because of Russia’s invasion of Ukraine. Those two countries are two of the largest exporters of wheat in the world. The war is also driving up the cost of fertilizer and gas prices, adding even more uncertainty for all wheat growers all around the world. Darren Padget is a wheat farmer in Oregon, and the chairman of U.S. Wheat Associates. That’s a group focused on wheat exports and service to those markets. He joins us now to talk about all of this volatility and uncertainty. Darren Padget, welcome back.
Darren Padget: Hi, how are you doing today?
Miller: Doing fine. Thanks for giving us some of your time. I thought we could start with local or regional farmers in the Northwest, and then move outward from there. Broadly, how are Pacific Northwest wheat farmers doing right now?
Padget: Well, there’s a lot of things going on, and then the war is just really, really throwing things out of whack. To begin with, we’ve been dry for a year, so last year’s crop was down about 40%, and that was nationwide. The breadbasket was not overly abundant either, with production, so that is what lit the fire on higher prices was just not as much supply, and now we go through and it’s still dry in the midwest. We’re better off in the PNW, but we’ve still got a ways to go, and when the Russian-Ukrainian thing went off, it just threw gas on a fire, so to speak.
Miller: Can you remind us what kind of wheat most farmers plant in the northwest?
Padget: In the northwest, it’s predominantly soft white wheat, and 85% of the northwest production is exported primarily to Asia.
Miller: And when is that wheat planted?
Padget: Typically, it’s late September through October, and so it would be winter wheat, very little spring grain grown. It’s better yields with winter wheat, and the type of product you would get out of white wheat would be pita bread, Oreo cookies, Triscuits, Ritz crackers, confectionery flour, and maybe blended into some noodles. It’s very low gluten rates. If you made a loaf of bread out of it, it would get about an inch high.
Miller: So if that’s the vast majority of the harvest in the northwest, if that’s planted in the fall, I’m assuming that any kind of geopolitical catastrophes now wouldn’t affect what farmers planted, because stuff was already in the ground.
Padget: For the PNW, not so much. For the Midwest, yeah, that’ll be a factor, because winter wheat is primarily from South Dakota, there’s some in Montana, but when you get up into North Dakota and Montana, and Kansas, those are your primary production zones. North Dakota and Montana typically produce Hard Red Spring, which is an extremely high quality grain, and that will be going in, obviously, in the next month or two, but they have options. They could be doing post-crops like canola and other oil seeds, and then your spring planting in a lot of the Midwest is corn and beans, but with fertilizer prices triple what they used to be, they may be looking for less nutrient-hungry crops. With wheat prices up, that may come into play. We’re just not going to know for a month or two yet, until we see how things shake out with the planning.
Miller: And the decisions that individual farmers are making. Let’s turn to fertilizer prices. Since you just mentioned that, you said they’re up three fold, 300% increase. What’s the reason, or, what are the reasons for that gigantic increase?
Padget: Well, actually, this started last fall with a general shortage, a hurricane. A lot of the fertilizer that’s used is anhydrous ammonia, and that supply comes out of Canada and Texas and overseas. That’s one of the big things that’s driving this market. Russia supplies a lot of fertilizer to the world as well. An example of that would be Brazil gets 85% of their fertilizer from the Black Sea. Obviously we don’t get that much, but we get a lot. Hurricane Ida took out a plant in Texas for a while, so that production was gone. Things started to get a bit fearful on supply. A lot of people maybe could put their fertilizer down in the fall, even if they spring planted. Last fall, for anhydrous ammonia, I believe I was paying about $450 a ton. A friend of mine just laid in a truckload, said it was $1500 a ton. So three-fold is a little bit low. Last fall it even got down to where we were put on allocations as to how much we could use towards the end of the season. I have never in my life, and I’ve been farming since 1985, seen that happen.
Miller: Meaning you were limited in how much you could buy, or how much you could use?
Padget: Yes. Typically in our situation, we put down 2500 to 3000 gallons a day of product. We were called up and told ‘you will get 1100 gallons every other day.’
Miller: This is my ignorance as somebody who can just plant some tomatoes here and there. But, on the industrial scale of farming, feeding the world, what does it mean, for farmers like you to not be able to put as much fertilizer as you’re used to? But also farmers in much poorer parts of the country, that are closer to subsistence living?
Padget: Right now, I produce enough grain, and I live on marginal ground. We’re in a very dry area, and it’s a very complicated plant; that’s why you can plant it in the high desert. But we’ll feed enough caloric intake, on a 2000 calories a day diet, to, say, feed about four people per acre. Well, if I don’t have my fertilizer, that number drops to two.
Miller: The fertilizer, those inputs, they double your yield.
Padget: Yes, depending on the farmer and the depth of soil. There’s a lot of factors but it used to be that we didn’t fertilize a lot when I was growing up. If you got a 30 bushel crop, that was a big deal, maybe 35. I mean, that was just hitting it out of the park. But with new breeding techniques and the use of fertilizers and so forth now, we like to see 50 bushels an acre.
Miller: And this is one of the gigantic cost increases. You’re looking at fuel prices just to operate machinery are also obviously, right now at least, another big increase, or contribute to the big cost increase. Do you have a sense for, when you add all these together? And we haven’t even yet gotten to what the loss of exports from Russia and Ukraine might mean. But just what we’re talking about here, in terms of fuel costs and fertilizer costs. Do you have a ballpark sense for how big a global reduction we’re looking at?
Padget: Well, if I could predict that, I think I’d be a very rich man. I have a good friend that has a crystal ball he refers to, but I believe I’d have better answers if I used the Magic 8 Ball right now.
Miller: I take your point. There are a ton of variables and it’s a fool’s game, perhaps, to predict. But is it fair to say that you are expecting a big reduction in wheat globally at this point?
Padget: I would say yes, because the dryness in the US. The US has always been known as a reliable supplier. We’re not the cheapest, but we’re always there. But you still have to have the product to sell, and then when you throw in, now Australia did produce a pretty good crop this year, and Argentina seems to be doing okay, but the Northern Hemisphere is just suffering a lot, and I don’t know where Russian-Ukrainian production is. They’re about 30% of the world trade; they sell to a lot of people that are price buyers. Egypt or Iran or some of the African countries, those are the ones who are going to suffer first, because they’re going to pay a lot more money for their grain if they can get it.
Miller: US Agriculture Secretary Tom Vilsack said before right before the Russian invasion that the US would boost wheat production to prevent global supply chain problems, but based on what you’re saying, how much could that actually happen?
Padget: A lot of factors go into who produces wheat and how much. It’s interesting because wheat’s kind of a minor crop, corn and soybeans are more the major crops, but all of a sudden when you get wheat, and somebody like yourself calling from OPB to talk about wheat, that shows you where it is in world production right now. All of a sudden it’s front and center.
About 20% of the world’s caloric intake comes from wheat, just as a reference, so it is an important crop, though it’s not so widely grown. But people have to make decisions. You know mine. I’m limited. I can grow wheat, or I can grow wheat, or I can grow wheat. I simply don’t have the water to do soybeans or corn on a large scale.We barely have enough water on the east side of the mountains and places to water your lawn and take a shower. Now, you get in the midwest and a lot of those winter acres are already in. The people are just going to sit down, they’re going to look at their fertilizer costs, their chemistry costs to keep the weeds off, and what they can get out of the crop, and what is available to plant, and they’ll go from there. There’s a certain amount of acres that are inelastic; there’s just gonna be so many acres of corn and so many acres of beans. So those inelastic acres will be the question mark for the government to say ‘yeah, we’re going to ensure we have enough.’ That’s a pretty big stretch, to guarantee something from Washington DC.
Miller: Darren Padget. Thanks for your time. I appreciate it.
Padget: Sure, thank you.
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