Wheat has played a major role in the development and continuing viability
of the Walla Walla economy. More
than one half of the wheat produced in the United States today is sent overseas,
of which twenty per cent comes directly from the soft white wheat grown in this
area. The overseas wheat trade is a
flourishing and volatile market all at the same time, influencing our local
economy in more ways than one.
To start off, a little background on wheat in general seems appropriate. There are six types of wheat grown for both domestic and export use in the United States. Wheat is classified in terms of color, hardness (literally), and growing season. To start off: Hard Red Winter wheat: grown in the Great Plains and California, this wheat accounts for 40% of the wheat the United States exports every year, and has a moderately high protein content (11-12%). Hard Red Spring wheat: grown in the north-central United States, this wheat comprises just over 20% of the wheat exported every year and has the highest protein content of all wheat (13-14%). Hard White wheat: grown in a variety of places, California, Idaho, Kansas and Montana, this wheat is mainly used on the domestic market, but there is an expected increase in export in the near future for Hard White wheat. Soft White wheat is grown in the Pacific Northwest, i.e. Walla Walla, and represents just over 20% of the exported wheat out of the U.S. every year, it is mostly exported to Asia and the Middle East. Soft Red Winter wheat is grown in the eastern third of the United States, and is a very low protein wheat (less than 10%). And, finally Durum wheat: used mainly for pasta, this hard wheat (hardest of all US wheat) comprises just 5% of U.S. exports. Those are the basic classifications of United States wheat production. From that breakdown it is obvious that Walla Walla wheat makes up a significant portion of the wheat exported by the United States every year. The soft White wheat produced in this area is used mainly for noodles, crackers, and pastries in Asia and for flat breads in the Middle East.
Despite high levels of mechanization in the wheat industry, most wheat
farm’s continue to be family owned and operated.
The level to which machinery has been developed for the entire wheat
cultivation process assists in this ability to remain local and largely small
business oriented. The personnel
required to maintain a wheat farm is surprisingly low, due to the fact that
nowadays all the harvesting and planting is accomplished through the use of
combines and tractors. After
the harvest the wheat will be transported to a grain elevator.
These grain elevators are either privately owned – which would
necessitate a farmer selling his wheat to the elevator owner at roughly standard
market prices – or a community grain elevator.
A community grain elevator is for storage purposes only, until market
prices or demand warrant moving it to port.
Once at port it will be sold and eventually shipped overseas.
There are many factors that influence the global wheat market, and
banking a farms economic livelihood on the international market conditions can
be tricky business. Export
demand for wheat fluctuates yearly, based on crop yields in import
countries. Domestic supply of wheat also is a major factor; for
example the last three years have been relatively poor years for Palouse (local,
eastern Washington) wheat growers due to climate fluctuations, therefore our
domestic supply has been down. The supply
of competitors wheat also plays a huge role; within the last five years
Australia has really boosted its production of wheat and therefore has begun to
impinge a little upon American markets. Wheat
quality: nobody wants to buy poor quality wheat, and the quality of your
product is affected by, sometimes uncontrollable factors, namely weather and
climate, a huge concern in any agricultural endeavor.
Logistical costs are also a concern; for example, Walla Walla has
an advantageous position geographically; local wheat is taken by rail to Wallula
Gap and then put on barges to go to port in Portland.
The logistical costs for that transportation cycle are much lower than
they would be for wheat grown in Kansas, for instance.
Income of consumers, deeply affects the price that international
buyers are willing to pay for your wheat. And
political instability also plays a part in determining the market
conditions; one good example of this is that Iraq used to be one of the largest
importers of Walla Walla wheat until recently when due to political disputes
there was an barrier placed on all trade with Iraq by the U.S. government,
cutting off that market completely.
While the United States exports more than one half of the
wheat grown here, we also import wheat. We
import 99% of our imported wheat directly from Canada, our neighbor to the
north. Talking with a
representative from the Columbia County Grain Growers Association provided some
speculation on the 2000-2001 global wheat market.
Ted S. Lowe, assistant manager CCGG, said that usually Pakistan is one of
the biggest purchasers of local Soft White wheat; however this year they are
expected to export 400-600 thousand metric tons of their domestic wheat supply,
which would indicate that they have a surplus and will not be importing as much
of our wheat this year. China,
which has had some interesting roles on the global wheat trade is said to be
“cutting their imports on everything from everyone”, which doesn’t sound
too promising for local growers. Egypt,
which has been a buyer of local Soft White wheat, continues to look for the
cheapest wheat on the market which can be found coming out of the Gulf ports and
is mostly Red wheat grown in other parts of the United States.
The Japanese Food Agency seems to be the most consistent buyer of local
wheat; the CCGG has weekly dealings with this agency, and hopes are that they
will continue to represent a beneficial market for local wheat.
China provides for an interesting discussion in terms of the global wheat
market. China is the largest wheat producing country in the world,
yet the wheat they produce is mostly low quality Winter wheat, so they purchase
wheat in order to use it in a mixing process designed to boost the nutritional
integrity of their domestic wheat. China
has long had a ban on Pacific Northwest Soft wheat, due to the possibility of a
contaminant known as TCK (tilletia controversa Kuhn), a smut contamination which
they fear would infect their Winter wheat crops.
As recently as February 23, 2000 China announced plans to buy a load of
soft white Northwest wheat and test it for this particular contamination, and
have since lifted the ban on importing our local wheat.
The National Association of Wheat Growers is lobbying heavily in congress
for China to be granted PNTR (permanent normal trading relations) in order that
they might begin to purchase more U.S. wheat more often.
The impending admission of China into the World Trade Organization would
also serve domestic wheat interests, in so far as trade would be bolstered again
with China, a major market for most commodities, including wheat.
In conclusion, the global marketplace is a volatile and shifting scenario
subject to many variables, none of which lead to a stable selling and buying
market for local Walla Walla wheat. There
are hopes that China’s impending ascension into the WTO will create greater
wheat demand on the Pacific Rim. It
seems that Japan represents a stable and dependable market for local soft white
wheat. But beyond that there seems
to be little credible evidence that would suggest that the international wheat
market is anything resembling stable. The
wheat economy is subject to many fluctuations and changes, which undoubtedly
keeps it interesting for local farmers who depend on wheat export to keep food
on the table and their families provided for by selling wheat to overseas
markets. One thing will always
remain the same through all changes, the need for food for the world’s
populations; it seems that while free market expansion continues to expand as
vigorously as it has in the last decade that wheat markets will also receive the
benefits of the growing connectedness of markets arising out of this impending
globalization. The economy is here
to stay and so are the wheat farmers.
a great source for up to date information on worldwide grain prices and
another great site for information regarding the fluctuating global wheat