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April 17, 2015
CapitalPress.com
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Wheat industry asks decision-makers to consider billion-dollar impact
Report shows
farmers’ business,
personal spending
By MATTHEW WEAVER
Capital Press
As state legislators consid-
er changes in tax policy that
could impact the wheat indus-
try, a Washington State Uni-
versity economist has issued a
report showing wheat farmers
directly contribute more than a
billion dollars to the state.
“It’s a pretty stable contrib-
utor to the overall economy,”
said Randy Fortenbery, profes-
sor and small grains endowed
chairman in Pullman, Wash.
According to the report,
wheat farmers contributed
more than $1.1 billion in 2012
to the earnings of non-farmers
through purchases of business
inputs — seed, fertilizer and
such business services as ac-
counting and legal fees — and
personal purchases made by
growers and their employees,
File photo
Matthew Weaver/Capital Press
Washington State University
economist Randy Fortenbery
found that Washington wheat
growers contribute more than
$1 billion in activity to the state’s
economy.
such as eating in local restau-
rants, attending local sporting
events or movies.
Every dollar earned on the
wheat farm contributed to 51
cents in earnings by businesses
supporting the business needs
of wheat farms and 47 cents
A new report says Washington wheat farmers contributed more
than $1.1 billion in 2012 to the earnings of non-farmers through
purchases of business inputs — seed, fertilizer and such business
services as accounting and legal fees — and personal purchases
made by growers and their employees.
earned by businesses support-
ing personal needs of farmers
and their employees, according
to the report.
“Every dollar from wheat
farming resulted in another
98 cents in economic activity
throughout the state, much of it
in the rural communities where
the grain producers operate,”
the report states.
Due to “significantly lower”
wheat prices, businesses serv-
ing private, non-business needs
earned $464 million in 2013
from farm employees, down
15 percent from $546 million
in 2012. According to the re-
port, there was a larger reduc-
tion in the value of farm busi-
ness-to-business practices, as
farmers dealt with lower prices
by cutting production costs.
If the sales tax exemption
on the purchase of seed, fertil-
izer and chemicals were elim-
inated, wheat farmers would
have faced increased costs
of $13.3 million, assuming
their input use did not change.
Total profits to Washington
wheat farmers would decline
by roughly $25.5 million.
“This would impact the
ability of wheat farmers and
their employees to make pur-
chases in support of other
businesses in the state, and
as a result the businesses sup-
ported by wheat farm workers
would also be negatively im-
pacted,” the report states.
Some farmers may cut
back on input use, affecting
yields and total revenue. Oth-
ers may decrease off-farm
spending.
The value of the report may
be for people who are less
connected to the wheat sector,
Fortenbery said.
“The growers already know
they have a significant impact
in the communities where they
live and operate, and probably
most people in those rural com-
munities do as well,” he said.
“It’s important those who
make some of the rules that
govern our industry know
what wheat farming means to
the state,” said Scott Yates, di-
rector of communications for
the Washington Grain Com-
mission. The commission re-
quested Fortenbery’s report.
“Although each individual
wheat farmer is not big by any
means, add them together and
it’s a billion-dollar industry in
direct impacts with another
billion-dollar impact in indirect
impacts.”
Fortenbery hopes to monitor
economic impacts of the indus-
try over time, releasing reports
every other year.
“If we ended up having
some policy initiatives that we
thought would impact (the in-
dustry) coming out of the legis-
lature this year, we might want
to come back and investigate
exactly what those changes will
mean for contributions in the
coming years,” he said.
Spud market sluggish as planting begins
By JOHN O’CONNELL
Capital Press
IDAHO FALLS, Idaho —
As potato growers plant their
2015 crops, University of
Idaho Extension economist
Paul Patterson believes the
market is sending signals that
they should reduce their spud
acres.
Whether growers will heed
the market’s warning remains
to be seen, Patterson said.
The potato market start-
ed 2013 with low prices and
gradually improved, finishing
the year strong. In Decem-
ber, Patterson predicted 2014
crop prices, which started low,
would also improve steadily,
with grower returns crossing
into the black by January.
Instead, according to Pat-
terson’s estimates of Eastern
Idaho production costs and
economist Bruce Huffaker’s
estimates of grower returns,
prices peaked in early Decem-
ber, when the grower return
covered about 87 percent of
production costs on paid yield.
From February through April,
Patterson estimates grower
returns have covered just 67
percent of production costs on
paid yield.
The exception has been car-
tons of the largest spuds, due
to a 2014 crop profile heavy
in small tubers. Large carton
prices are up 16 percent since
early December, while con-
sumer bag prices are down
about 29 percent. On Russet
Burbank, Patterson said just
60-65 percent of Idaho’s crop
grades U.S. No. 1 and can be
packed for fresh sales, and just
10-15 percent of spuds end up
in large cartons, which are now
selling for more than $30 per
hundredweight, compared with
$10.50 per hundredweight for
John O’Connell/Capital Press
Seed potatoes are loaded into a planter April 13 at a Wada Farms
field in Eastern Idaho. Spud prices remain below the cost of pro-
duction as Idaho growers commence with planting.
the smallest-sized cartons.
“The market is saying re-
duce the supply,” Patterson
said. “The message that grow-
ers should hear is plant fewer
acres of potatoes.”
The major processors,
looking to cut their Northwest
acreage, are allowed under
Idaho contracts to reduce spud
acres by 10 percent. Industry
experts hope contract growers
won’t maintain normal acreag-
es and sell the excess through
fresh channels.
Patterson believes proces-
sors are responding to the high
value of the U.S. dollar affect-
ing foreign exports and market
disruptions caused by the West
Coast port labor dispute.
Kevin Stanger, senior vice
president of Wada Farms in
East Idaho, said his business
has cut back on spud acres in
favor of wheat.
“I see large cartons continu-
ing to stay strong and get stron-
ger. I don’t really see much
hope on the small bags and
small cartons,” Stanger said. “I
think we’re looking forward to
next year, and hopefully we’ve
got less acreage and we’ve got
a little better product.”
United Potato Growers of
America will physically count
every spud acre in Idaho and
other major growing areas in
May and June. UPGA Pres-
ident and CEO Jerry Wright
and his staff have updated a
2004 UI study to convince
growers to lengthen their rota-
tions between spuds.
In 2004, UI calculated
growers who plant spuds ev-
ery other year stand to increase
yields by 40 hundredweight
per acre over time by length-
ening rotations between spuds
by one year. Using Patterson’s
most current yield and input
cost estimates and 2014-2015
contract prices, UPGA calcu-
lated the extra year increases
grower margins 50 cents per
hundredweight.
“You’ll also get measur-
able improvement in quality,”
Wright said.
UPGA will send thumb
drives with a program to
growers wanting to calculate
farm-specific numbers on
lengthening rotations.
16-1/#7
Wheat breeders to meet with Asian customers
Capital Press
Four wheat breeders and re-
searchers will meet with Asian
customers next week to hear
what they want from the variet-
ies U.S. farmers grow.
Washington State Universi-
ty winter wheat breeder Arron
Carter, Oregon State Universi-
ty extension cereals specialist
Mike Flowers, North Dakota
State University spring wheat
breeding professor Mohamed
Mergoum and University of
Minnesota wheat breeding and
genetics professor James Ander-
son will travel to Asia on April
18-26.
They will meet with buyers
and end-users in Japan, South
Korea and Thailand. In 2014-
2015, Japan purchased 2.8 mil-
lion metric tons of U.S. Wheat,
Korea 1.1 million metric tons
and Thailand roughly 500,000
metric tons, according to U.S.
Wheat Associates, which is
sponsoring the trip.
Breeders have to balance the
needs of their customers, Flow-
ers said.
“One of those is obviously
the growers, but ultimately, they
have to be able to sell their prod-
uct to somebody else,” he said.
“The idea is to bring that infor-
mation back and make sure the
quality attributes people are look-
ing for are built into the varieties
and they’re also the best agro-
nomic varieties for the growers.”
Roughly half of the 55 mil-
lion-60 million metric tons
produced in the United States
each year is exported, said Steve
Wirsching, vice president and
director of U.S. Wheat’s West
Coast office in Portland. About
40 percent of U.S. wheat is ex-
ported from ports in Washington
and Oregon, according to the
Washington Grain Commission.
Wirsching hopes to get both
positive feedback and areas in
which the industry can improve.
Positives are likely to include a
dependable, consistent supply.
“That means we’re produc-
ing a similar product year after
year,” Wirsching said. “The
wheat grown in a certain area
of northern Washington or the
Palouse, even though the condi-
tions are different than what you
might find along the Columbia
River in Oregon, both those
wheats will perform in a similar
manner and can be blended as
they’re being loaded in vessels
(in Portland).”
He expects customers to
discuss such problems as in-
creased moisture in the northern
U.S. and lower protein levels in
spring wheat.
U.S. Wheat officials often in-
teract with buyers, but the buy-
ers also like to meet with breed-
ers to better understand how
new varieties are developed, he
said.
A similar team of breeders
visited Asia in 2004. Teams have
visited Latin America, Europe
and North Africa, Wirsching
said.
Flowers hopes to get more
of an idea of what customers are
looking for and bring that infor-
mation back to growers.
“I’m just going there with
an open mind to hear what they
have to say,” he said.
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