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Scarcity and increasingly higher prices for food may mean a windfall for Minnesota’s wheat farmers

The cost of everything from bread and cakes to noodles and pasta has risen in recent months as wheat prices soared on world commodity market – and prices are expected to continue to climb.

Normally, on average, about 30% of the wheat produced in Minnesota is exported.
Normally, on average, about 30% of the wheat produced in Minnesota is exported.
REUTERS/Amira Karaoud

WASHINGTON – Tim Dufault’s harvest has grown wheat on his farm near Crookston for 40 years, but this year is different. A lot is riding on his harvest as shortages and resulting high prices have raised the specter of famine in some parts of the world.

The price of wheat has soared, from an average of $6.82 a bushel last June to about $10.71 a bushel today. The U.S. Department of Agriculture predicts wheat prices will continue to rise. So Dufault will get record prices for the wheat he’s able to harvest … and he’s grateful.

“We’ve had a couple of tough years so this is going to help producers heal up some wounds,” he said. “It’s a godsend.”

Yet the global events that have led to a windfall for Minnesota wheat farmers are expected to have a devastating impact in some of the poorer regions of the world. The United Nations said there had already been a global food crisis because of the COVID-19 pandemic and climate change. That crisis rose to famine levels worldwide by the war in wheat-growing Ukraine and the resulting lack of grain exports, the UN says.

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“When war is waged, people go hungry,” said António Guterres, Secretary General of the United Nations, at a ministerial meeting last month.

Although the United States was once the dominant producer of wheat, Russia has surpassed us in recent years. And Ukraine became a breadbasket too as the world’s fourth-largest producer of wheat.

Before Russian waged war on Ukraine, wheat supplies from the two accounted for almost 30% of global trade. Not only has that trade been decimated, but other wheat-producing regions, like India, have suffered from bad weather and banned or sharply curtailed exports.

The cost of everything from bread and cakes to noodles and pasta has risen in recent months as wheat prices soared on world commodity market – and prices are expected to continue to climb.

Frayne Olson, a crop economist and marketing specialist at North Dakota State University, agreed with the United Nations that poor nations that rely on imports of wheat, like Egypt and other countries in the Middle East and Africa, could go hungry as prices escalate beyond their reach.

But Olson said Americans won’t suffer from shortages, as U.S. farmers usually produce more than enough for domestic consumption. “We will be all right,” he said.

If food prices continue to escalate in the United States, however, there may be pressure on the federal government to continue a COVID-induced expansion of the Supplemental Nutrition Assistance Program, also known as food stamps, to help low-income families. Those additional benefits are set to expire mid-July.

Another program, promoted by Rep. Ilhan Omar, D-5th, that let school districts provide universal meals is set to expire at the end of the month. Omar is pressing the Biden administration for an extension.

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“As a refugee and former nutrition educator, I am horrified by the looming global and domestic food crisis,” said Omar, who was born in Somalia. “Putin’s invasion of Ukraine, the ensuing increase in wheat prices, combined with supply change issues and a rapidly changing climate are threatening to create conditions for the most dire famine in years.”

Dufault’s family farm spans four generations and is now 1,600 acres planted in wheat and soybeans. To him, modern agriculture has always meant surpluses.

“Now there might be people who don’t have enough to eat,” he said ruefully.

Charlie Vogel, CEO of the Minnesota Association of Wheat Growers, echoed that sentiment. “We’ve gone 40 years without having to worry about food security. That’s going to be top of mind now,” he said. “People are going to be thinking about food security.”

Nervous farmers

Normally, on average, about 30% of the wheat produced in Minnesota is exported, Vogel said. That percentage may fall this year if yields are low and its harder for importing nations to pay the higher price of U.S. wheat.

But that’s not at the top of Dufault’s worries, even if he is the vice chair of the Minnesota Wheat Research and Promotion Council board. Like other wheat growers in the United States and around the world, Dufault has had to battle adverse weather this year.

A cold and rainy spring delayed planting – Dufault said he’s finished on June 6, the latest planting date he can remember. He also said there are concerns that a hot, dry summer can hurt this year’s wheat crop in Minnesota.

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“Our wheat doesn’t like heat very much,” he said. “There’s a lot of nervous producers this spring.”

Dufault, and most Minnesota and North Dakota wheat farmers, grow what is known as hard red spring wheat, which is usually planted in April and early May and harvested in August. This type of wheat is rich in protein and used in higher end bread products such as crunchy crusted French bread, as well as tortillas, cereal and Asian noodles.

Other regions in the nation produce other types of wheat with different growing seasons. Kansas, for instance, produces hard red winter wheat that is planted in the fall and harvested in the Spring.

Flour made from hard winter wheat is used to make softer types of breads. Other types of wheat grown in the United States are milled into flours that are used in baking cookies, cakes, crackers and frozen foods.

While they may end up in different baked goods, all types of U.S.- produced wheat has one thing in common – they have all risen in price.

That’s a boon to the Midwest.

According to the USDA, North Dakota produced the most wheat in the United States in 2020, followed by Kansas, Montana, Washington, Idaho and Oklahoma. Minnesota was ranked seventh, producing nearly 73 million bushels of wheat that year.

Wheat isn’t the only agriculture commodity whose price is increasing, although it may be rising at a faster rate than others. The price of corn, soybeans and cotton has also soared.

That’s not to say everything is rosy on the American farm. The cost of fertilizer, seed, machinery, diesel and other farm inputs have hit farmers, so much so that Dufault is glad he pre-bought some of the fertilizer he used on this year’s crop last summer

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“That kind of sheltered me a bit,” he said.

Vogel of the Minnesota Association of Wheat Growers said Russia and Ukraine are also major producers of nitrogen-based fertilizers – whose price has more than doubled – and other raw materials used in farming.

“There’s been a lot of disruption to that supply chain,” Vogel said.

Still, Minnesota wheat farmers are expected to benefit from the increased global demand on their harvest, especially if their yields are good.

“Commodity prices are going to be up for a while,” Vogel said.