Massive combines have begun transforming much of the Palouse from waving fields of wheat into vast expanses of stubble. But the farmers cutting that grain are selling it at or below what it costs them to produce it.
The crop got a slow start this year caused by late snows and bitter cold in February. Hot and dry summer days allowed the wheat to mostly catch up, but farmers got hit this week by a crop forecast by the U.S. Department of Agriculture that drove already low prices down even further.
“Farmers are pretty upset about the USDA mass crop production report,” said Michelle Hennings, executive director of the Washington Association of Wheat Growers. “Farmers emailed me that they were upset.”
On Friday, the base price at Portland for a bushel of soft white wheat was $5.98. Hard red winter wheat was trading at $5.20 a bushel and white spring wheat traded at $5.90.
But on Monday, the USDA came out with its August crop production report which showed a 3% increase in wheat production from the July report. It also predicted a drop in both corn and soybean acreage from the June report.
Following the release of that report, wheat prices dropped on Monday and again on Tuesday. It resulted in a combined drop of 36 cents per bushel for hard red winter wheat; a drop of 17 cents for white spring wheat; and 13 cents for soft white wheat.
“So, those are pretty big drops,” said Joe Bippert, program director at the Washington Grain Commission. “I don’t have the specific number, but spring wheat especially is as low as I’ve ever seen it. Hits like this are really bad for any farmers who planted spring wheat this year.”
Mike Miller, who farms near Ritzville, had just started harvesting on Wednesday after weekend rains pounded the region and blunted several area wildfires. The harvest had to be put on hold until the sun dried out the wheat so that kernels showed below 12% moisture content.
“I’m hearing the yields are average to above average,” Miller said. “We’ve heard of some pockets below average but some way above average.”
But that appears to be where the good news stops.
“I can’t come up with (good news) and I’m an optimist,” Miller said. “Our wheat is still in demand, but other pressures are influencing the price right now. I don’t know where the floor is on wheat. I have no idea.”
As of Wednesday, farmers had harvested about 73% of their winter wheat and 33% of the spring wheat. Based on the five-year average, farmers normally have cut about 87% of the winter wheat and 62% of the spring wheat, Hennings said.
“I’d say we are about a week-and-a-half later than we normally are,” said Hennings, who farms with her husband near Ritzville. “When I’ve driven around, there is still a lot of green (spring) wheat out there.”
Farmers need to get about $5.50 a bushel for wheat to cover costs, which includes diesel needed to plant, spray and harvest the crop, Hennings said.
“I wish I would see a big jump in prices,” she said. “But with the trade situation we are in, everything is so sensitive. When we see prices fluctuate at all, the farmers get nervous.”
Some 90% of the wheat grown in Washington is shipped to Portland and exported. The two biggest buyers are Japan and the Philippines.
Hennings said trade officials had hoped that Congress would ratify new trade deals with Canada and Mexico because the delays in the deal to replace the North American Free Trade Agreement has a ripple effect on other deals.
“It’s important that our trade partners in Japan can see that we can pass and sign a trade agreement with our neighbors,” Hennings said. “We use that to finalize deals with other partners.”
The Trump administration authorized the USDA to spend $12 billion in 2018 to offset the ongoing trade war. Those payments ballooned to another $16 billion in 2019 to help mostly soy bean farmers and pork producers in the Midwest who were especially hurt by a recent decision by China to stop purchasing U.S. agricultural products.
That program is available to Washington wheat growers, but the formula benefits counties that have more than one crop. Those counties that have primarily one crop get paid at a much lower rate, she said.
“We appreciate that the administration realizes that farmers are struggling,” she said, “but these payments are a Band-Aid. We want the trade agreements. The farmers want to sell their wheat, not get payments from the government.”
Neither Miller nor Bippert could say how long local farmers will last by producing and selling wheat at a loss.
“That’s the question we are are trying to answer: How long can farmers hold on?” Bippert said. “It varies between individuals, but the bottom line is that it is hurting the farmer and it sometimes goes unnoticed how much these prices are impacting the farmer.”
Miller said at least the Northwest didn’t get hit with catastrophic floods that affected much of the Midwest.
“I have some very dear friends in Kansas,” Miller said. “They don’t know what they are going to do. They are in world of hurt. They’ve got a mess.”
For wheat farmers, it depends on the financial health of the farmer, how many acres they own versus what they have to pay to rent, and the age and condition of their equipment.
“Right now, I’m trying to harvest stuff,” Miller said. “I won’t think about the negative stuff until I get this stuff into the bin.”