Wheat Decrowned

April 2, 2013 09:18 PM
Wheat Decrowned

Domestic changes excel global production

Wheat’s history is that of humanity and the crop has been a staple of mankind. However with diminishing acres and less demand during the last three to four decades, wheat has lost
its golden crown.

U.S. wheat consumption hit bottom in 1972 at 110 lb. per capita and rebounded in 1997 to 147 lb. per capita. This rise allowed the wheat processors to expand and modernize, explains Gary Vocke with USDA’s Economic Research Service.

Changing consumer preferences, led by the adoption of low-carbohydrate diets, again reduced per capita wheat consumption. Interest in these diets spiked after 2000, says Vocke who specializes in the wheat market.

Per capita flour use dropped rapidly at first and then fell more slowly until reaching a low of 134.4 lb. in 2005. USDA Economic Research Service (ERS) estimates per capita wheat flour use at 132.5 lb. in 2011. This reduced consumption in recent years resulted in the closure of older, less efficient mills.

Today nearly half of the wheat crop is exported. "The U.S. wheat sector has incurred many challenges during the last decade, including a weak domestic market," Vocke says.

U.S. wheat harvested has dropped by more than 30 million acres, more than one-third, from its peak in 1981. Vocke attributes the decline to the profitability of other crops and farm legislation, which has allowed farmers more flexibility with crop choices.

Policy Change. Authorization of the Conservation Reserve Program (CRP) in the 1985 Farm Act, followed by planting flexibility provisions in the 1990 Farm Act, provided wheat farmers with other crop options. Under the 1990 Farm Act, farmers participating in commodity programs could plant up to 25% of their base wheat acreage to other crops without losing base acreage.

This incentivized farmers to grow crops promising higher returns or to earn payments from idling land in CRP.

This flexibility triggered corn and soybean expansion in what had traditionally been dominated by wheat. In 1983/84, U.S. farmers planted 76.4 million acres, of which 61.4 million were harvested.
The average yield was 39.4 bu. per acre and farmers received about $3.53 per bushel. Most recently, farmers planted 55.7 million acres, of which 48.9 million were harvested. Yields averaged 46.3 bu. per acre and farmers earned $7.70 to $8.10 per bushel, according to USDA.

Total U.S. wheat production declined from 2,419.82 million bushels in 1983 to 2,269.12 million bushels last year.

Scientists today are challenged with breeding the wheat of the future. A 50% increase in wheat yield would represent a global economic benefit of $50 billion to $100 billion per year, reports the Wheat Yield Consortium.

Yield Push. Higher and more stable yields will benefit farmers and consumers in developing countries and reduce the pressure to bring natural ecosystems into cultivation. The Wheat Yield Consortium helps prevent shortfalls in wheat—a crop that furnishes one-fifth of humanity’s caloric intake.

"Wheat farmers want technologies that will allow them to address multiple production challenges and improve yields and quality while using less water, fertilizer and pesticides," explains Chuck Connor, president and CEO for the National Council of Farmer Cooperatives.

"Other new traits in the pipeline for commodities, fruits and vegetables will provide additional benefits to consumers and farmers. It’s important that USDA continue its science and safety-based regulatory process."

Wheat Prices chart

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