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Economic and dam related articles

Wheat Exports Ride on Pacific
Northwest's Reputation for Quality

by Eric Mortenson
Capital Press, December 18, 2016

“The price goes up, they don't buy any less,”
said Steven Wirsching, director of U.S. Wheat Associates

(Terence L. Day) Two Gleaner combines make their way through a hillside field on the Arnold Van Hollebeke farm 22 miles northeast of Pasco near the Star School on the Pasco-Kahlotus Highway on Aug. 2. PORTLAND -- Pacific Northwest soft white wheat growers must rely on the quality of their product to maintain an edge in the highly-competitive export market, speakers at a Dec. 5 media briefing said.

Cheaper wheat is available from Russia, the Ukraine and elsewhere, but buyers in Japan, Korea and Taiwan are “premium buyers” who remain willing and able to pay for Northwest wheat used to make crackers, cakes and cookies.

“The price goes up, they don't buy any less,” said Steven Wirsching, director of U.S. Wheat Associates, a trade group that maintains offices in Portland and Arlington, Va.

Sales to North and South Asia are so critical -- the Philippines and Indonesia are also among the top 10 customers – that seven of U.S. Wheat's 15 international offices are in Asia. The premium Asian buyers are notoriously strict about wheat quality, he said.

“Certainly, market development is a full-contact sport,” Wirsching said.

Wheat is the world's most widely planted grain, Wirsching said, and provides 20 percent of the world's calories. In the world's poorest regions, wheat provides 20 percent of the protein, he said.

Blake Rowe, CEO of the Oregon Wheat Commission, described the “quality loop” in place that brings new varieties on line, protects growers and satisfies the demands of overseas buyers.

He said it can take eight to 12 years to develop new wheat varieties with the yield, quality, stress and disease tolerance that make them worthwhile for growers. New Northwest varieties are tested with three years of data from 15 sites, and are always grown side-by-side with and compared to the Stephens variety, the industry standard.

The growing, handling, storage and shipping of wheat is carefully monitored, he said. If something goes wrong on the farm, or at the elevator, it resonates down the line of trade. Japan, he said, tests wheat for 220 pesticide residues.

In markets such as Japan, the end use of soft white wheat is in such things as sponge cake, and consistent presentation and look of the finished product is crucial, Rowe said.

“They understand pretty much everything you want to know about wheat and what products they can make from it,” he said.

“Quality is a priority for us. If the only way we have to compete is on price, we will lose some markets.”

On another topic, Rowe said it's unclear how a Trump administration will handle agricultural issues such as the next farm bill. As of Dec. 5, when Rowe spoke at the Portland briefing, Trump had not appointed an agriculture secretary to replace Tom Vilsack, who is wrapping up eight years at USDA under the Obama administration.

While Trump has no history with farming, wheat growers are comfortable with Vice President-elect Mike Pence's agricultural background as Indiana governor, Rowe said.

“Right now we have to wait a little bit,” he said. “We will get there.”

Rowe acknowledged the Trans-Pacific Partnership, which export-heavy Pacific Northwest farmers favored, is “not going anywhere in its current form.” Trump was highly critical of the TPP during the election campaign, but whether he intends to scrap it or re-negotiate it is unknown, Rowe said.

It's clear Trump intends to roll back regulatory acts such as the EPA's unpopular “Waters of the U.S.” proposals, “But the specifics of that we have to wait and see,” Rowe said.

Wirsching, of U.S. Wheat Associates, noted that the Columbia and Snake river systems will be closed to wheat barge traffic as locks and gates at dams are repaired and updated from Dec. 12 into March 2017. He said the industry will move wheat from up-river elevators by using other transportation modes, primarily rail. He estimated there will be market demand for 1 million metric tons of soft white during the closure.

He said such repairs are done every 50 years and will provide long-term benefits to trade.

“A planned closure is better than an unplanned accident,” he said. “We feel we can easily handle the closure.”

The media briefing was organized by BASF, the German company that produces ag chemicals. Jim Vandecoevering, technical services manager with the company's Western region office in Boise, said growers face challenging times. Growers of many types had excellent yields in 2016, but weak commodity prices are likely to result in a seven-year low in farm income, he said.

“It's a risky business, the biggest job on earth, as we say,” Vandecoevering said. “Unfortunately, U.S. consumers don't recognize the importance of farmers and the crops they produce.”


There is more land planted to wheat in the world than any other crop.
It provides 20 percent of the world’s caloric consumption.

Wheat Facts
by Washington Grain Commission, 2015 / 2016

Pacific Northwest All Wheat Production
Washinton 111.5 million bushels 3.3 million tons
Idaho 87.1 million bushels 2.6 million tons
Oregon 39.2 million bushels 1.2 million tons
Total 237.8 million bushels 7.1 million tons

A River of Wheat

Farmers in wheat growing areas of the country served only by the railroad are called "captive shippers" because they have no other way to get their wheat to market and transportation prices are correspondingly high. Washington farmers aren't captive because of the 360-mile long Snake/Columbia River system between Lewistion, Idaho and Portland Oregon. Barge traffic on the river is the most efficient - and cleanest -- frmm of transportation available. A tug pushing barges can haul a ton of wheat 576 miles on a single gallon of guel, compared to 413 miles by rail and 155 miles by truck. And tugs have one-third the emissions of rail and one-twentieth the emissions of truck, per ton-mile. An average of 60 percent of Washington wheat moves by barge to Portland. Two companies, Tidewater and Shaver, compete for farmers' barging business.

(bluefish notes: the US taxpayer pays for lock repairs and BPA electric rate payers lose energy when locks flush water otherwise used for power production. To say that barging is "most efficient" leaves out a substantial piece of the conversation.)

Top Ten Wheat Producing States
State Production
million bushels
Production
million tons
Average Yield
bushels/acre
North Dakota 370.0 11.1 46.7
Kansas 321.9 9.6 37.0
Montana 185.4 5.6 35.2
Washington 111.1 3.3 50.4
Texas 106.5 3.2 30.0
South Dakota 103.4 3.1 46.2
Oklahoma 98.8 2.9 26.0
Minnesota 88.3 2.6 59.9
Idaho 87.9 2.6 77.4
Colorado 79.6 2.4 37.1
Total 1553
million bushels
46.6
million tons
41.2
average yield

Conversion Factors: (from U.S. Grains Council)
60 pounds per bushel

Wheat that makes waves

In 2014/2015 the United States exported nearly 835 million bushels of wheat to 68 countries around the world. That’s almost 50 percent of the wheat produced in America. About 49 percent of U.S. wheat is exported from seven ports located in Washington and Oregon. Cargo ships known as bulk freighters transport 2.4 million bushels of wheat at a time to quality conscious customers in Asia, Latin America and North Africa. Smaller shipments of wheat leave the country in containers, those steel boxes used to transport goods around the world. Although a container only holds about 750 bushels of wheat, some buyers prefer smaller quantities of the highest quality wheat for specialized uses. Other millers in remote locations use containers because they also serve as convenient storage facilities.

White Wheat
Top Markets from USA
Country thousand metric tons thousand tons million bushels
Japan 893.2 984.6 32.8
Phillipines 873.5 962.9 32.1
South Korea 523.8 577.4 19.2
Yemen 320.9 353.7 11.8
Indonesia 175.1 193.0 6.4
Thailand 171.4 188.7 6.3
Guatemala 141.3 155.8 5.2
Taiwan 120.1 132.4 4.4
Sri Lanka 109.4 120.6 4.0
Chile 80.9 89.2 3.0

Bells, Whistles and Wheat

BNSF, which dominates the rail shipping needs of Washington wheat farmers, has turned to shuttle train loading facilities as a more efficient method to move grain as inexpensively as possible. These facilities are set up to load 110 cars in 15 hours or less, and they move to market as a unit. Washington has four shuttle loading facilities. BNSF boasts a network of 233 shuttle loaders across the U.S., a 200 percent increase since 2000. Union Pacific, the other Class I railroad operating in Washington, does not have access to a shuttle train loading facility.

by Washington Grain Commission, 2015 / 2016


Eric Mortenson
Wheat Exports Ride on Pacific Northwest's Reputation for Quality
Capital Press, December 18, 2016

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