King wheat? Wheat on the Northern Plains continues to decline as interest in corn and soybeans is strong again this spring
GRAND FORKS -- Wheat is a big part of Brian O'Toole's life.
The Crystal, N.D., farmer grows it, handles it in his family seed business and promotes it as a member of U.S. Wheat Associates, which develops export markets for the crop.
So O'Toole takes a strong interest in a powerful trend that's reshaping agriculture on the Northern Plains. Wheat, once the region's dominant crop, keeps losing ground, literally, to corn and soybeans.
"I'm not panicking yet," O'Toole says. "But there are challenges."
Wheat -- so important in the Upper Midwest that for generations it was referred to as "King Wheat" -- is tottering on its throne, if it hasn't fallen off already.
Farmers increasingly prefer corn and soybeans to wheat because of greater potential profit. Corn's popularity, in particular, is rising because of attractive prices and new varieties that allow the crop to be grown in areas where it once was considered too risky.
In 2012, North Dakota farmers raised 422 million bushels of corn and 339 million bushels of wheat. Fifteen years earlier, farmers in the state raised 269 million bushels of wheat and only 58 million bushels of corn.
In other words, North Dakota in 1997 produced roughly five bushels of wheat for every one bushel of corn. Last year, the state raised roughly four bushels of corn for every three of wheat.
Wheat remains a big deal in most of North Dakota, South Dakota, Montana and northwest Minnesota. The crop continues to be a good fit for the region's soil and climate, and most farmers in the region have a long history of growing it successfully.
North Dakota typically ranks first or second in U.S. wheat production; the state vies annually with Kansas for the top spot. Montana, South Dakota and Minnesota normally are in the top 10.
What's more, wheat generally remains profitable for farmers who grow it, particularly in the past few years, says Jim Peterson, marketing director for the North Dakota Wheat Commission.
"Farmers have had good returns on wheat," he says.
But as he and others note, corn and soybeans have been even more profitable, encouraging area farmers to grow those crops instead of wheat.
Arguably the most popular topic of conversation at area farm show meetings and conferences this winter was the extent to which corn acres will increase again this spring.
The North Dakota State University Extension Service's projected crop budgets for 2013 illustrate corn's appeal relative to wheat. Though the numbers are only estimates and producers' profits ultimately will depend on actual yields and prices.
In northwest North Dakota, traditionally a stronghold for wheat, corn is projected to provide a return to labor and management of $149.09 per acre, compared with a return to labor and management of $33.86 per acre for wheat.
In southeast North Dakota, an area where corn is well established, corn is projected to provide a return to labor and management of $176.20 per acre, compared with a return to labor and management of $85.85 for wheat.
Though raising corn generally involves more work and expense than growing wheat, the huge gap in potential profit inevitably will encourage farmers to produce corn, wheat supporters say.
"People have a bottom line (financially)," O'Toole says.
But ultimately, if too much corn is produced, its price will decline, making wheat more attractive, Randy Englund, executive director of the South Dakota Wheat Commission.
"I think wheat will rebound some as the economics take over, on the supply and demand side," he says.
A 'battle,' but pluses, too
Wheat's staunchest backers acknowledge that their crop faces tough competition from corn and soybeans.
"It's an uphill battle," says Erik Younggren, a Hallock, Minn., farmer and president of the National Association of Wheat Growers.
He lives in Kittson County, in extreme northwest Minnesota, an area where late springs and early falls historically made corn too risky.
But wheat retains a number of advantages, including:
-- Promoting soil health and improving pest and weed control as part of an annual crop rotation.
-- Spreading out the workload. Spring wheat typically is harvested from late July to early September, with soybean and corn harvest beginning in late September.
-- Holding up relatively well in drought.
-- The ability to be planted relatively late and still be harvested before fall frost becomes a major danger.
Wheat versus corn prices
Corn typically yields two to three times as many bushels per acre as wheat. Traditionally, higher prices for wheat have helped offset that yield disadvantage, encouraging farmers to continue growing wheat.
In recent years, however, wheat's premium over corn has been relatively small. That's particularly true after massive drought in the heart of the U.S. Corn Belt hammered corn yields and pushed up the crop's prices.
But expectations that U.S. corn production will rally this year likely means lower corn prices.
Wheat prices are dropping, too, but not nearly as much as corn.
The larger premium for wheat over corn will encourage some farmers to plant more of the former, wheat advocates say.
But if wheat's average price should again fall to within a dollar of corn's, "Then there's no question that wheat acres will continue to decline," Peterson says.
His best guess is that spring wheat acreage will hold steady in North Dakota this year.
Also boosting wheat's outlook this year is improvement in the price at which area producers can insure their 2013 crop under yield and revenue protection policies.
Wheat can be insured at $8.44 per bushel, up from $7.86 per bushel in 2012.
In contrast, the price at which corn can be insured this year fell to $5.65 per bushel from $5.68 per bushel a year ago.
Past it's peak
In Minnesota, a record 4.1 million acres of wheat were planted in 1976.
South Dakota farmers planted a record 4.3 million acres in 1993.
In Montana, a record 6.6 million acres of wheat were planted in 1996.
North Dakota farmers planted a record 12.7 million acres of wheat in 1996.
Wheat may never return to those record-setting days, advocates say.
"Unless wheat prices are double those of corn, we're probably not going to go back to those kinds of levels," Peterson says.
But new research, including work in biotech wheat, holds considerable promise, boosters say.
"There is still tremendous demand for the wheat we grow here in North Dakota," Peterson says.
Wheat remains a vital player in northern areas because of the short growing season, O'Toole says.
Though wheat's brightest days may be in the past, its future is encouraging, advocates say.
"I don't think we're going to see mile after mile of waving amber fields (of wheat) anymore," Younggren says.
"But wheat still has an important place."