Cenex Harvest States and U.S. Hard White Winter Wheat have something in common: They are both searching for markets.
Since the late 1980s, Hard White Wheat has been and is still searching while Cenex Harvest States is zeroing in on the Asian market by way of Australia. CHS is partnering with Broadbent Grain to develop a new 80,000-metric-ton bulk grain terminal in Australia. The terminal extends the CHS supply line to the Asian Pacific region by exporting Australian Hard White Wheat to countries in Asia.
What’s not new
There are several interesting facts within this scenario. In 2019, I wrote an article about how there is an unwritten wheat trade agreement between the U.S. and Australia, basically giving Australia along with Canada the Asian Hard White Wheat market.
As a not so famous preacher once said, “The roosters have come home to roost.” Not only is a U.S. company going to Australia to help market Australian wheat, that company is a U.S. cooperative company owned primarily by U.S. farmers. In a sense, the way our U.S. standards are written, it is a market protected by our own U.S. Wheat Standards.
Two years ago, U.S. Wheat and National Association of Wheat Growers petitioned Federal Grain Inspection to open the grain standards. Those standards had not been visited for 10 years. FGIS agreed to open them, and most members of the wheat Industry wrote letters of support to change the wheat classes in order to promote more HWW production. Hard White Wheat production has been limited by allowing no more than 5% of other classes in a given wheat class.
Country elevators hurt
This has greatly handcuffed local country elevators in the U.S., causing them to not want to handle the HWW class for fear of being discounted in the marketplace. The local elevators then curtailed farmers from producing it by docking them up to 20 cents a bushel compared to Hard Red Winter Wheat.
A majority of the wheat industry supported opening the Wheat Standards and making the change; however, some members of our wheat family did not. Thus the change U.S. wheat farmers wanted and needed did not occur.
By not having the entire wheat industry speaking in favor of making a change in the wheat classification standards, wheat farmers are still locked in the same old grind of producing a commodity that has to compete with a low-cost Black Sea Hard Red Winter Wheat product.
There is no doubt that if a change had been made, the Hard Red Winter Wheat producers would have still been competing head to head with Black Sea wheat, but there would have been fewer bushels of Hard Red Winter available and more bushels of Hard White Winter Wheat to market. The HWW would not have been in competition with Black Sea wheat but would have been competing in the Asian market, a higher-end market.
Let’s compete together
Rather than placing blame on certain parts of the U.S. wheat industry for not supporting the change, it would make the situation more palatable if major companies, especially farmer-owned grain companies such as CHS, would not set up scenarios that cause U.S. farmers to compete directly with themselves in international trade.
This situation has caused a double whammy to U.S. wheat producers. We are still at a disadvantage compared to Black Sea wheat producers, and because of not getting the Wheat Standards changed we are at a definite disadvantage when it comes to competing with the Australian wheat farmers. Australian wheat farmers will now have a freight advantage as well as having no limit on the production of Hard White Wheat.
As stated earlier, “Now the chickens have decided to roost, but they are in the wrong hen house with the wrong farmers.”
Ron Suppes is a wheat farmer from Dighton, Kansas.
