Growers Earn Less for Trucked Wheatby Mitch Lies
Capital Press, August 19, 2010
Infrastructure doesn't support this year's level of production
Portland wheat exporters reportedly are paying $1.20 to $1.25 less per bushel to growers delivering wheat to terminals by truck.
That's lowering the price from approximately $6.40 a bushel to around $5.20 for many Willamette Valley farmers, who have no access to barge or rail.
Many Willamette Valley farmers also don't have storage facilities that would allow them to hold wheat until prices improve, said Tammy Dennee, executive director of the Oregon Wheat Growers League.
"If you don't have on-farm storage, your only delivery point is to the export facility," Dennee said.
"The infrastructure today does not adequately support this level of production" she said. "And it is horribly unfortunate for our growers to be faced with that kind of dockage."
Arnie Schaufler, general manager of CLD Pacific Grain, said paying less for grain delivered by truck is not uncommon. Collecting grain by truck typically is more labor intensive. And exporters prefer the higher volumes available in barge or rail delivery.
"The barge, rail and truck markets are different markets, and there are different costs and different relationships, and they are not always going to be equal," Schaufler said.
Still, rarely has the price difference been so dramatic.
CLD Pacific Grain and Columbia Grain are the only Portland export terminals that take grain by truck.
"We value our trucking customers very highly," Schaufler said. "It is an integral part of our business, but there is a different cost structure."
When asked if his facility was full of wheat, Schaufler declined to comment, but said: "We're in the middle of harvest and we're very busy."
The price reduction is a hard pill to swallow for many valley growers who shifted to wheat this year because of poor grass seed prices.
Wheat acreage in the Willamette Valley this year is projected at 180,000 to 200,000 acres, six to seven times a typical Willamette Valley crop.
Statewide, Oregon growers are expected to harvest nearly 1 million acres, also well above an average crop.
Dennee said her organization encouraged growers to build storage last winter through the use of Farm Service Agency loans. But, she said, in many cases, Willamette Valley growers view wheat as "a short-term cash crop to generate cash flow."
Building storage in some cases, she said, wouldn't be economically prudent.
Rebuilding rail systems in the valley to handle wheat also is a questionable investment, she said, given that the Willamette Valley wheat crop fluctuates dramatically between one year and the next.
"There are some fixes," Dennee said. "But those aren't quick and they're not immediate.
"The (rail) infrastructure is dilapidated at best, and nonexistent at worst," she said.
Many Willamette Valley farms contain grass seed storage facilities. But those facilities aren't capable of storing wheat. A bushel of wheat weighs about twice as much as a similar amount of grass seed.
"If farmers in the Willamette Valley continue to produce wheat in high volumes, infrastructure will follow," Dennee said. "But exporters and others are hesitant to invest right now, only to find this is some sort of a short-term relationship."
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