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Wheat Crop Stored Until Prices Rise Borrowing Enables Farmers To Weather Sluggish Market

Thu., Nov. 20, 1997

When white wheat dropped below $4 a bushel this fall, farmers put their grain away and headed to the bank.

“I’m sitting on most of my grain because I can get an operating loan,” said Ritzville farmer Ron Jirava. He recently borrowed money using his grain as collateral to get by until the price of wheat rises, which he hopes will happen early in 1998. When it does he’ll sell his grain, pay the bank back and start planning for next season.

Other wheat farmers in the region are storing their grain in the metal and cement bins at grain elevators and they’re filing into Farm Service Administration offices to take out loans with the Commodity Credit Corp. Like Jirava, they’re playing the game, borrowing money and waiting for the prices to rise.

Recent estimates from the USDA show wheat has dropped as low as $3.67 a bushel this fall. That’s what the farmers get at the delivery point in Portland before they pay for transporting the grain from the Inland Northwest, said agriculture economist Larry Makus. “A price like $3.80 in Portland equals about $3.30 here,” he said.

At current prices, many farmers would find it a stretch to break even. Growers in North Idaho and in the Palouse spend about $3.50 a bushel to produce a crop, he said.

But most farmers know how to wait out this perennial drop in price.

“They’ve been doing this enough years and we’ve had enough meetings and good hints as to what to do to be prepared for it,” Jirava said.

Last year, Washington farmers took out $17 million in federally-backed CCC loans against their wheat crops, said Mike Mandere, spokesman for the state office of the Farm Service Agency. That was on a total harvest of 183 million bushels.

“The loans allow them to get some capital, sit on that grain and wait for market conditions to improve,” Mandere said.

This year, farmers have already taken out $12.6 million in CCC loans in Washington and $8 million in Idaho.

“This is about normal,” Mandere said. “We’re at our seasonal average right now.”

While the number of loans is typical, the price of wheat is lower than usual.

“It’s off a bit,” said Makus. “Last year we had a fairly small world crop relative to this year.”

This year’s harvest, an estimated 22 billion bushels, may be a record for worldwide wheat production. The U.S. produces about 10 percent of that amount. The worldwide bumper crop is driving down the price of wheat in the U.S., Makus said.

The low price is a shock after the past two years, which were good to grain growers. In 1995 and 1996 U.S. white wheat brought $4 to $5, Makus said. “We’ve had a couple of good years,” he said. “My guess would be that when wheat gets below $4, there are going to be some producers that are struggling.”

, DataTimes The following fields overflowed: CREDIT = Hannelore Sudermann Staff writer

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