Ag-ruminating about New Wheat

Spring is traditionally what we think of as being the season of renewal, the time when things turn green and new life flourishes. But, here in the Texas Panhandle, even in the midst of traditional fall weather, we experience what I consider a “second spring.” Take a drive into the country, and you’ll see plenty of new green growth  ̶  freshly emerged winter wheat, its emerald hue proclaiming youthful vigor.

Thanks to the ample rains that preceded planting time, area wheat is off to very good start. It’s beautiful to look at, for sure. But, financially speaking, from a farmer’s perspective, the bottom line for wheat right now is not pretty. Not by any means.

For a long time now, the grain industry has witnessed the mounting buildup of what has become an enormous surplus of wheat around the world. And the law of supply and demand is coming down hard on those who grow it. The situation’s little better, if any, for other commodities raised on Panhandle farms. But numbers I’ve received from Texas Wheat Producers provide an exceptionally grim outlook for the season ahead, dollars-wise.

Economists who have analyzed the situation believe the cost of production for winter wheat raised in our area comes out to about $6 per bushel. Productions costs include seed, fertilizer, equipment, labor, the price of acquiring land, etc. Obviously, those are costs that cannot be avoided if you’re going to grow a crop. And here’s the dilemma: At the present time, local farmers can expect about $4 per bushel when they sell their wheat as grain.

Those numbers above are approximations, and the experience will vary on a farm-by-farm basis. But even accounting for some generalizing, losses in the vicinity of roughly $2 a bushel are very conceivable. Illuminating the situation further, Texas Wheat Producers tells me economic analysis suggests losses of $28 per acre are plausible for irrigated wheat in the Texas Panhandle, based on typical yields.

Farmers can hope that things will continue going sufficiently well this season to deliver some above average yields that will give them more grain to sell and enable them to move closer to profitability. They are also hoping the next farm bill will give them price supports better than the $5.50 a bushel reference price currently offered through the Price Loss Coverage program  ̶  a price that is not only below cost of production but is also support that, by law, is restricted to covering only 85 percent of a wheat farmer’s total planted acreage.

Is anybody getting rich in farming? Certainly not those who grow wheat.

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