Northwest wheat farmers stand to benefit from a combination of global factors that have simultaneously boosted price and demand, according to one industry expert.
Steven Wirsching, vice president and West Coast office director for U.S. Wheat Associates in Portland, said sales of U.S. wheat to China surged last year, and he expects that will carry over in 2021 under the first phase of a trade deal struck by the Trump administration.
Meanwhile, Russia, the world's largest wheat shipper, is also looking to make permanent an export tax for the crop as the country wrestles with internal food inflation. The tax was initially implemented on Feb. 15, and is already driving grain prices to multi-year highs.
Between Aug. 28 and Feb. 19, the price for soft white wheat increased by approximately $71 per metric ton, from $222.30 to $292.94, Wirsching told the Oregon Wheat Commission during the group's virtual business meeting on Tuesday.
Soft white wheat is the predominant variety grown in the Northwest, with lower levels of protein used to make products such as cakes, crackers and noodles.
"You can thank strong world demand, you can thank China for meeting its commitments under the World Trade Organization and phase one trade agreement, and I think you can thank Russia for limiting some of their exports into the world market," Wirsching said.
While data show China failed to purchase the amount of U.S. agricultural products it promised to buy in the first year of the new trade pact, Wirsching said phase one went "pretty well," and saw China become the third-largest commercial buyer of U.S. wheat — ahead of longtime trading partners Japan and South Korea.
China will need to import another $45.8 billion of U.S. agricultural goods in 2021 if it intends to meet its phase one targets, Wirsching said.
"Certainly, wheat is a small and important part of that agreement," he said. "We do believe that we will hopefully see them continue to follow through on the commitments they've made into next year as well."
Wirsching said Russia is still on track to lead the world in wheat, but a permanent tax after June 1 will likely truncate some of its exports, boosting prices in turn.
The tax will be 70% of the difference between the export price and $200 per metric ton. So, if the export price is $300, that would amount to a $70 tax.
"So, with that, thank you, Vladimir Putin," Wirsching said.
In other business, commission members heard an update on a new research initiative aimed at boosting dryland farming production in low-rainfall areas of eastern Oregon and Washington.
The project is part of a $2 million federal appropriation awarded to the USDA Agricultural Research Service in Pendleton.
Kate Reardon, a microbiologist with the ARS, said they are still working toward hiring three scientists at the Columbia Plateau Conservation Research Center, and are more than doubling their lab and storage space.
Christina Hagerty, an assistant professor of cereal pathology at Oregon State University's Columbia Basin Agricultural Research Center, or CBARC, has taken over as the project's principal investigator. Both the ARS and CBARC share a facility north of Pendleton.
Though the first year did not go as smoothly as planned, Hagerty said the team did successfully establish field trials to study different alternative and cover crops for dryland production, including peas, lentils, mustard and barley.
Hagerty said data may reveal benefits for farmers who grow these crops in rotation with wheat, such as better weed control and higher nitrogen content.
"I'm excited that we have something salvageable from the first year of this trial," she said. "This investment that has come to this location is incredible. It was just critical that we had something resulting from this first year."