Emptying the Breadbasket

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Struggling to Fill the World's 'Breadbasket'

Across America, changes that are transforming U.S. agriculture have sent prices of bread, pasta, noodles, pizza, pastry and bagels skittering upwards.

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"With low stocks and a weak dollar, things fly off the shelf faster than they used to," said David Brown, chairman of the American Bakers Association's commodity task force. "There's just not enough acreage coming back into production to replenish these stocks."

The reverberations were felt from Strickler's farm to Fleishman's shop -- and far and wide across world wheat markets. When Strickler checked his records recently, he found he had sold 850 bushels, about a truckload, for a record $20 a bushel. That's a receipt he plans to frame and hang on his wall.

But the same events put a squeeze on Vance Taylor, general manager of North Dakota Mill, the huge state-owned flour mill that looms over Grand Forks. Taylor's mill processes the spring-planted wheat grown along the Canadian border and prized by bakers of bread, bagels and other premium flour products. This spring wheat is high in protein and gluten, which helps breads rise and imparts texture. Among the mill's products are the bags of Dakota King flour that Fleishman uses to give his bagels their special chewy quality.

Suddenly Taylor couldn't find enough wheat. On Feb. 4, the state's Industrial Commission, headed by the governor, approved a rare waiver allowing the mill to buy spring wheat from Canada if needed. But in late March, the commission rescinded the waiver, which was highly unpopular with U.S. farm organizations. That left Taylor with a shortage of 1 million bushels before the August harvest. Since then, he said, he has found enough domestic wheat to get him through.

But prices rose rapidly down the supply chain.

"We raised our selling prices after the flour mills raised theirs," said Ted Lentz, president of Lentz Milling of Reading, Pa., which distributes North Dakota flour to bakeries from New York to Virginia. "Some of our baking customers have reduced their flour purchases up to 20 percent because of the higher prices."

A Return to Wheat?

Whether 2008's high prices will lure many farmers back to wheat is still a matter of debate.

The ethanol boom, in particular, is providing strong incentives to keep former wheat acres in corn. Within a year, Braaten will be able to truck his corn to three modern ethanol refineries, one already built and two others near completion. These huge distilleries will need corn from an area about the size of Rhode Island, and many of the acres will come at the expense of such traditional crops as wheat and sugar beets.

Corn has even begun to make inroads in the western part of the state, where sparse rainfall and the short growing season traditionally have ruled out most crops except wheat, barley and oats. Spurred by the availability of cheap coal for power and a local cattle industry that will buy the dry byproducts for feed, a new ethanol plant opened last year in Richardton, west of Bismarck, the capital.

"There's getting to be more and more corn all the time," said Clark Holzwarth, the refinery's commodity manager.

At current prices, farmers like Braaten can make more money from an acre of corn than from an acre of wheat, according to North Dakota State University economist Dwight Aakre. But wheat's biggest problem is susceptibility to disease, which has turned many farmers against it.

They remember the 1990s, when fusarium head blight, commonly called "scab," devastated successive wheat crops. After that, many farmers switched to new varieties of hybrid corn and genetically modified soybeans.