An Oregon staple explodes in value

Agriculture - Farmers are planting 44% more of suddenly profitable wheat  

May 25, 2008

ERIC MORTENSON

The Oregonian

Two years ago, the Oregon Department of Agriculture declared, in a report, the rising cost of fuel and fertilizer "have taken any profit out of wheat production."

But international events have turned that assessment on its head. A severe drought in Australia reduced the world wheat supply while the rise of Asia 's middle class sent the demand for grain skyrocketing.

And just like that, Oregon is back in the wheat business.

Bushel prices exploded in 2007, and the hardy farmers in the wheat-growing reaches of Sherman, Gilliam, Wasco, Morrow and Umatilla counties saw the value of their crop jump to $360 million, an 82 percent increase from 2006.

And with a lucrative harvest behind them, the state's farmers are banking on another fertile year in 2008. They intend to plant 55,000 acres of wheat this spring, a 44 percent increase from last year, according to the National Agricultural Statistics Service.

The turnabout has been phenomenal, said Jim Johnson, a land-use specialist with the agriculture department.

"It's a combination of a lot of things," he said. "A lot of other areas where wheat grows in the world had bad weather, so here you go -- the price went way up."

It was a classic case of decreased supply meeting increased demand, he said, as the expanding economies of China and other Asian nations produced a growing middle class with money to spend on grain-fed meat and wheat products.

Wheat prices averaged $7.70 a bushel in 2007, compared with $4.48 in 2006. Temporary spikes in the market sent the bushel price into the $12-to-$14 range at times. A bushel of wheat equals 60 pounds.

Oregon isn't a leading wheat-growing state; it produces a fraction of the wheat grown in North Dakota or Kansas , for example. Instead, the state has a remarkably diversified agricultural scene that produces 37 commodities with an annual value of at least $10 million each. The Willamette Valley has internationally acclaimed wineries, and the state's greenhouse and nursery operations topped $1 billion in production value last year.

But in dry eastern Oregon , it has been wheat that supported families and whole counties for generations. Even if it lacks the panache of pinot noir or the soaring value of landscaping plants, wheat is perennially among the state's top 10 agricultural commodities.

"We're not a big player, but where it's at in Oregon -- especially in north-central Oregon -- it's the dominant player," Johnson said. "It's got history, it's been around forever."

Even when prices were low, Oregon 's longtime wheat families could hang on because they typically owned the land they farmed and didn't have to make lease payments, he said.

The soaring wheat prices of 2007 didn't necessarily make for rich farmers, however.

"Generally speaking, it was a good year -- to an extent, that's true -- but you have to factor in their expenses as well," said Bruce Pokarney, spokesman for the state agriculture department.

Net farm income is a better indicator, and those figures won't be available until August or September.

"For wheat farmers, if you look at their slice of the pie, no doubt it was good last year," Pokarney said.

The upturn in wheat prices highlighted a solid year for Oregon agriculture, as the value of all crops reached nearly $5 billion in 2007. The value of the state's greenhouse and nursery products topped $1 billion for the first time, and wine grapes cracked the state's top 10 list for the first time.

Meanwhile, an increased demand for using field corn to make ethanol resulted in a 61 percent increase in the value of that crop in 2007. Field corn, a $50 million crop, is used for grain or animal feed; it's different than the sweet corn people eat.

Other specialty crops fared well. The value of hazelnuts, blueberries, hops and cranberries also showed double-digit increases in 2007.

Overall, the state's agricultural commodities increased in value 6.5 percent in 2007. Crop values have shown steady growth for two decades, averaging 5 percent to 7 percent increases and declining in only two of the past 22 years, Pokarney said.

Eric Mortenson; 503-294-7636; ericmortenson@news.oregonian.com For environment news, go to: oregonlive.com/environment

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
NOTE: In accordance with Title 17 U.S.C. section 107, any copyrighted
material  herein is distributed without profit or payment to those who have
expressed  a  prior interest in receiving this information for non-profit
research and  educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

Source:  http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/

1211604915291770.xml&coll=7