Low Prices, Foreign Oversupply Hurt U.S. Wheat Farmers

May 31, 2016

One in every five calories people around the world eat, comes from just one grain, wheat. And for generations the U.S. led the world in wheat exports. But, that’s changed, and maybe for good.

Wheat is not something you want to run out of. Wheat shortages helped spark the bloody French Revolution and the Arab Spring.

But, out in western Kansas this year, there is plenty of wheat. Farmer John Thaemert wades into a rolling field of green, belly-high wheat stretching to the horizon.

“You get it when it’s this tall, and you get a little breeze, it’s a pretty sight,” says Thaemert. “You know wheat is a pretty crop. It’s not all that profitable, but it is a pretty crop.”

Across the Great Plains the wheat crop looks terrific, but prices are in the dirt. Wheat is trading at about half what it was this time 2 years ago, the lowest it’s been in a decade.

Thaemert, and lots of other wheat farmers, are turning to alternative crops, like milo and alfalfa.

“I’m probably growing 30% less wheat than what my dad did,” figures Thaemert. “So, yeah. That used to be the thing. You planted wheat. Then, you planted wheat.”

And American farmers used to ship lots of surplus wheat around the globe. For half a century, at least, the U.S. exported more wheat than any other country.

“Well, it’s the 'breadbasket of the world,'” proclaims Thaemert. “Kansas was the breadbasket, and still is, of the world, but wheat’s grown all over the world now."

And the U.S. is no longer the top exporter.

“We’re really looking at a significant shift in world wheat market dynamics,” says Steve Mercer with U.S. Wheat Associates.

Mercer says farmers around the world, especially in China, India the EU, are growing much more wheat than they used to. Wheat’s a resilient plant. It’ll grow just about anywhere. Even a country that used to rely on American wheat, is now outselling the U.S. in the world market.

“Russia was a net importer of wheat, and today they’re one of the leading exporters of wheat in the world. So that’s a good example of the kind of change in production that’s happened,” says Mercer.

Skyrocketing production is lately outpacing mounting world demand. U.S. consumers aren’t helping any. Concerns about gluten and carbs, have kept domestic consumption pretty much flat, and Frank Stone, President and Founder of the Kansas City Trading Group, sees wheat piling up now.

“Wheat supply is huge,” says Stone. “I think we’re going to have another record world stocks of wheat this year.”

And those stocks are crushing global wheat prices, but wheat’s got other problems. The strong dollar is making U.S. wheat expensive compared to foreign competition. 

Wheat has also been left out of the GMO revolution. So, people who grow it haven’t seen the remarkable per-acre productivity gains that corn and soybean farmers enjoy.

Stone says, those who can, are giving up on wheat.

“The farmer’s a smart guy, and he’s going to grow what makes him the most money, and it’s getting to be where it isn’t wheat, and that’s really a good thing, because it’s an efficient allocation of resources,” says Stone.

U.S. farmers pulled some 5 million acres out of wheat production over the last couple of years, capping a 35-year slide in wheat planting.

Back out in western Kansas, John Thaemert sees changes coming for land that’s paid his family’s bills, producing a wheat crop every year since 1908.

“No, I love this place. This is where I was born and raised. And my dad was born and raised here,” says Thaemert in the shade of trees he planted as a kid. “I’m the third generation, and probably the last generation, cause none of my kids want to farm.”

It’s hard to turn a profit in the wheat belt these days, but Thaemert is pretty sure farmers will adapt.

“You know, technology changes, but people gotta eat. And people always will have to eat. And somebody’s going to be there to grow it for them,” says Thaemert. “And, uh, It’s just a matter of how it’s done.”

And where it’s done, as wheat production spreads around the globe, and out of the breadbasket of the world.

Frank Morris is a national correspondent and senior editor at KCUR 89.3. You can reach him on Twitter @FrankNewsman.

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