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Emptying the Breadbasket


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"Last summer it looked like Iowa around here," Braaten said.
Science, weather, economics and farm policy have all played a part in the changes.
U.S. wheat yields per acre have increased little in two decades, partly because commercial seed companies have all but abandoned investments in improved varieties, preferring to focus on the more profitable corn and soybeans. Subtle warming changes in the climate and the recent availability of new plant varieties that thrive in cold, dry conditions have pushed the corn belt north and west.
In 1996, Congress gave a strong nudge to these changes by passing legislation allowing wheat growers for the first time to switch to other crops and still collect government subsidies. The result is that farmers received federal wheat payments last year on 15 million acres more than were planted.
"Every year now, we're in a battle for acres," said Neal Fisher, administrator of the North Dakota Wheat Commission. "We have a lot on our plates as we try to manage the challenges that wheat faces."
"If our comparative advantage is corn and soybeans and Russia's is wheat, having these shifts occur over time is not the end of the world," said Edward W. Allen, a senior economic analyst at the Agriculture Department.
But in the long run, said USDA wheat analyst Gary Vocke, "The forces leading to the trends are still in place." Though supplies may rebound, he and other experts doubt that prices will drop to prior levels.
That poses serious concerns for countries that historically have counted on the United States to have inexpensive wheat on hand to cushion shocks.
A Run on American Grain
The U.S. government stopped holding large stocks of wheat in the 1980s, but the United States, nearly alone among wheat producers, allows countries to shop here even when others have shut off exports.
This free-trade policy resulted in a run on the 2007 U.S. wheat crop this year by foreign buyers taking advantage of the favorable dollar exchange rate to stock up, even as Ukraine, Argentina and Kazakhstan blocked exports.
"It was a perfect storm," said Jochum Wiersma, a grains specialist with the University of Minnesota.
Problems started last summer with poor European harvests and a disappointing winter wheat crop in the southern Great Plains. U.S. prices moved above $7 a bushel, then crossed $10 after Australia harvested yet another drought-damaged crop in December. As supplies of wheat ran low, foreign countries began grabbing limited stocks of premium wheat from the northern plains -- the variety used to make the flour for Fleishman's bagels. Morocco, its own harvest of wheat to make traditional couscous inadequate, jumped in with a purchase of 127,000 tons.



