USDA numbers reflected what farmers have known for awhile: much of the nation’s winter wheat land is bone dry and struggling to produce a crop.
In a crop progress report, the Department said wheat in 18 states rated 26 percent very poor or poor, 41 percent fair and 33 percent good or excellent. These are the worst ratings since 1985.
By comparison, last year at this point, 13 percent was very poor or poor, 35 percent was fair, and 52 percent was good or excellent.
The traditional breadbasket areas from Texas north to South Dakota seem to be faring the worst at this point in the crop season.
An estimated 21 percent of winter wheat in Texas is good to excellent; 14 percent of winter wheat in Oklahoma is good to excellent; 29 percent of winter wheat in Kansas is good to excellent; 14 percent of winter wheat in Nebraska is good to excellent; and just 2 percent of winter wheat in South Dakota is good to excellent. A bit to the west, 18 percent of winter wheat in Colorado is good to excellent, and 29 percent of winter wheat in Montana is good to excellent.
Unsurprisingly, these are also the areas blanketed in the tell-tale red of exceptional or extreme drought on the U.S. Drought Monitor. Not only has there not been enough rain for the crop, higher-than-usual temperatures are promoting evaporation of the moisture that is available.
Though drought in corn and soybean country made national headlines earlier in the year, many wheat farmers are now in their third or fourth crop year without adequate moisture.
After several years of drought, farm businesses are threatened by decreased protection in the crop insurance contract because of years with lower production history. Farmers are also faced with hard decisions about cropping plans and water and forage available for livestock herds.
This year, the uncertainty about the weather comes in addition to uncertainty about the farm safety net outlined in the farm bill. The 2008 Farm Bill expired on Sept. 30 with no replacement legislation, and haggling in Washington continues over whether or not there will be a farm bill in the foreseeable future, much less what it will contain. Farmers do have certainty in crop insurance contracts, which have been critical for many crop producers facing weather disasters this year, paying out more than $5 billion in indemnities so far.
Though effects of the drought are also apparent in wheat futures markets, consumer prices for wheat products in the U.S. should not rise significantly solely on the basis of a poor wheat crop. This is because so little commodity wheat goes into finished products, and there are so many other costs associated with getting wheat from the farm to the table.
For instance, only about 10 percent of the cost of bread comes from commodity wheat, unlike products that have a more direct route to consumers, like meats. About 60 loaves of bread can be made from a bushel of wheat, meaning a loaf made with wheat that cost $9 per bushel probably contains 15 cents of wheat.
The full crop progress report is at http://usda01.library.cornell.edu/usda/current/CropProg/CropProg-11-26-2012.pdf.