Pakistan Loan Credits Aid Wheat Growers Deal Backs Big Wheat Purchase That Will Be A Boost To Northwest Farmers
Last week as the wheat harvest got under way, Eastern Washington’s growers spent their time in their fields from dawn until dusk, but their thoughts were as far away as Pakistan.
On Thursday, the U.S. Department of Agriculture approved $45 million in loan credits to back Pakistan’s purchase of about 1.5 million tons of wheat, much of it the soft white winter variety. This comes at a time when U.S. wheat prices are down and supply is up. Such a large guaranteed sale will be a relief to Northwest farmers.
“This is really important,” said George Wood, president of the Washington Association of Wheat Growers. “I would expect to see a significant increase in the price of wheat. If it could bring the price up 20 or 30 cents, it would bring a lot of dollars into the wheat growers’ pockets.”
The USDA had already extended $300 million in loan credits to Pakistan this year, but the country needed the extra loan backing to buy more wheat in the months of July, August and September. Pakistan’s own supplies are low because it suffered a poor wheat harvest last year.
The decision to extend the loan credits to Pakistan came just in time. Otherwise, wheat growers in other countries might have captured the market. According to U.S. Sen. Dirk Kempthorne, R-Idaho, U.S. farmers already lost out on a $25 million sale of wheat, when Australia took advantage of a USDA delay.
The delay may have been due in part to concerns that Pakistan is a poor credit risk. But, U.S. Rep. George Nethercutt, R-Wash., encouraged the USDA to extend the extra loan credits, saying that “Pakistan actually has an excellent repayment history.”
Nethercutt said he was relieved to hear the credit had been offered. “It really helps our Eastern Washington farmers,” he said. “And I believe we wouldn’t be extending the credit if there was some serious concern.”
The loan package includes $25 million in Export Credit Guarantees, known as GSM-102, and $20 million in Public Law 480 Food for Peace credits.
By the end of August, the USDA expects to offer a loan package of up to $80 million to enable Pakistan to buy U.S. wheat.
In 1996, Pakistan was the fifth-largest importer of American wheat, taking in 1.7 million metric tons. The U.S. competes with Australia, Canada and Argentina to sell its wheat abroad.
Growers in Washington, Idaho and Oregon produce about 75 percent of the country’s soft white wheat. This year’s crop, though slowed by the wet spring, is slightly better than usual, said Wood.
The only downside to the season was the low prices for wheat, an issue that is already improving with the announcement of the sales to Pakistan.
“We were at a low,” Wood said. “We needed some type of business like this to get us kicked ahead.”
, DataTimes The following fields overflowed: CREDIT = Hannelore Sudermann Staff writer