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Tuesday, September 22, 2020  Spokane, Washington  Est. May 19, 1883
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Promising wheat crop could help Washington farmers counter chronically low prices

UPDATED: Wed., Aug. 5, 2020

Farmers harvest wheat near Reardan in August 2018. Farmers are now about a third of the way through the 2020 harvest with above-average yields. However, the prices remain below the cost of production.  (Tyler Tjomsland/The Spokesman-Review)
Farmers harvest wheat near Reardan in August 2018. Farmers are now about a third of the way through the 2020 harvest with above-average yields. However, the prices remain below the cost of production. (Tyler Tjomsland/The Spokesman-Review)
By Thomas Clouse The Spokesman-Review

A slow start to the wheat growing season in Eastern Washington transitioned into a warm, wet spring that made excellent conditions for making a near-record crop. However, farmers will need every kernel, as the price for soft white wheat remains below the cost of producing it.

The U.S. Department of Agriculture forecast expects Washington farmers to average 74 bushels an acre from winter wheat, which would rank as the fourth-highest ever, said Glen Squires, CEO of the Washington Grain Commission.

The same forecast predicted farmers would see about 60 bushels an acre from spring wheat, which would be the second-best ever, Squires said.

“So, in other words, we are having some pretty good yields,” he said. “Those May and June timely rains really helped out a lot.”

The region’s farmers generally harvest in a westerly circle that starts in the Tri-Cities, moves west through Grant and Adams counties before finishing in the rich Palouse fields to the south of Spokane. Squires said farmers are about one-third through the harvest.

However, soft white wheat, which accounts for about 80% of all acres grown in Eastern Washington, was trading only $4.90 a bushel Wednesday at the Ritzville Warehouse Co.

Michelle Hennings, executive director of the the Washington Association of Wheat Growers, said that number has to be about $6.50 a bushel for farmers to cover the cost of plowing, seeding, spraying, fertilizing and harvesting wheat.

“Our wheat crop is average to above average, which is good for the farmers,” Hennings said. “But the prices just haven’t rebounded.”

Prices have stagnated and have remained just above or below the price of production for about eight years. Included in that time was a trade war brought on by President Donald Trump, who pulled out of the Trans-Pacific Partnership. That made it difficult for U.S. farmers to compete against growers in Australia and Canada.

A prime example is Vietnam. Once a major wheat importer, U.S. growers have largely lost that market to Australia and Canada because tariffs give them a trade advantage, Squires said.

The U.S. has since replaced the North American Free Trade Agreement with the United States Mexico Canada Agreement, or USMCA, and another major trade deal with Japan. But, neither of those deals have done much to cover the costs for Washington farmers.

“The agreement with Japan was huge for the wheat industry,” Squires said. “But, it hasn’t translated into exports.”

China has begun buying corn and soybeans, and while China has purchased wheat, very little has been the soft white wheat primarily grown in Washington.

“The Philippines over the last few years has been our number one importer,” Squires said. “Their imports are up compared to last year. South Korea is up. But one thing we lost was Indonesia. Those imports are down. It has to do with competition.”

One bright spot has been war-torn Yemen at the southern tip of the Arabian Peninsula, which remains an important trading partner for Washington wheat.

“We’ve had a lot of wheat going to Yemen. That’s been helpful,” Squires said. “Yemen is an extremely important market for soft white wheat.”

So far, Yemen has imported about 330,000 metric tons. That’s second only to the 540,000 metric tons shipped to the Philippines as of June 1. Last year, Yemen brought in a total of 380,000 metric tons, compared to 1.5 million metric tons to the Philippines, he said.

“Yemen is usually in our top four or five markets,” he said.

While wheat industry officials continue to find and expand new markets, the question remains how much longer Washington growers can continue to produce crops below the cost of production.

“It’s a challenge,” Squires said. “There are fewer farmers every year. Farms get bigger. They try to figure out ways to reduce costs.”

One major fixed price that has helped is the cost of diesel, which remains just above $2 a gallon, he said.

Hennings said the only way farmers can continue to survive at such low crop prices is to bring in above-average crops. Anything above the 10-year average yield helps farmers make up the difference between the cost of production and making land, equipment and other payments.

“We would really like to see a price boost,” Hennings said.

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