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Wash. Wheat Farmers Rolling in the Dough by Nicholas K. Geranios, Associated Press Capital Press, September 30, 2007

ROCKFORD, Wash. -- When wheat prices hit $6.67 a bushel this year, farmer Michael Sargent decided to sell his supply because he'd never seen prices that high.

Too bad he didn't follow the example of his wife.

She held her share of the wheat crop back, and now is selling it for a record price of around $9.50 a bushel.

"She was more patient," Sargent said. "I hear it every day."

So it goes in Washington's farm country these days, where worldwide shortages have produced record prices that have people speculating this will be the first $1 billion wheat crop in the state's history.

While typically associated with high-tech products or apples, Washington is also a major wheat producer, with much of the crop grown in the fertile soil of the Palouse region. Washington ranks fourth in wheat production, after Kansas, North Dakota and Montana.

In 1950, the highest per capita income in the state was in Lincoln County, a wheat center west of Spokane. But times have been tough in more recent decades, and the average age of wheat farmers is around 60 years old, as young people in farm country seek other careers.

Still, the state's nearly 4,000 wheat farmers produce about 130 million bushels per year.

Tom Mick, president of the Washington Wheat Commission, said the crop could bring in a little over $1 billion as drought and heat have reduced crops in other major wheat-producing nations.

The reason it's not worth more is because many farmers sold their wheat before the recent price surge, sometimes against their will when bankers called in loans, Mick said.

Much of the wheat crop sold for less than $5 a bushel, which at the time seemed like a reasonable amount after prices had hovered around $3.50 to $4 a bushel for years, Mick said.

"Nobody knew it was going this high," Mick said.

Sargent sure didn't. Besides farming near Dusty - he calls himself a Dustyite - Sargent is a Whitman County commissioner.

Whitman County is the largest wheat producing county in the nation, but its small towns are not yet reaping the benefits of higher prices, Sargent said.

One reason is that farmers had piled up so much debt over the years that much of this year's income is simply paying that down, he said. Farmers are also building up their savings accounts, he said.

"We have to see this sustained over a time," Sargent said.

Another issue is that many farmers had joined a federal program in which land was set aside as wildlife habitat, reducing the amount of wheat grown. As recently as 1996, Washington produced 182 million bushels of wheat.

Jay Pennick, president of Northwest Farm Credit Services, a Spokane company that loans money to farmers, said that while many may have missed out on the booming prices this year, there is always next year.

And farmers are making enough money to pay down debt, purchase new equipment and improve their farms, he said.

The most lucrative wheat crop of recent years was in 1996, selling for $755 million. Last year's wheat crop sold for about $615 million, although that is not a final figure, said Linda Simpson of the Washington Agricultural Statistics Service.

She said there is a good chance the 2007 crop will join apples as the only Washington farm commodity to bring $1 billion to farmers in one year.

"Growers will tell you the price of fertilizer and fuel and everything else is going up," she cautioned.

But there is no denying that there are a lot more smiles in farm country than when wheat prices averaged $2.63 a bushel in 1998.

Prices this year started to surge in mid-May, when it became clear that drought and heat had ravaged the crop in other parts of the world.

At least 50 percent of the Washington crop was sold early in the surge, Mick said.

That's because bankers who were anxious to have loans repaid started calling in loans when prices reached around $4.50 per bushel, he said.

"Farmers had been selling wheat at $3, so when it got to $4 and $4.50 it looked attractive," Mick said.

As of late September, about 70 percent of Washington's wheat crop had already been sold, leaving about 30 percent to garner the premium prices, Mick said.

The rising prices are primarily the result of drought in Australia, Argentina and parts of Europe, Mick said. The Canadian crop is also down as more farmers are planting oil seeds for biofuels, he said. Rice stocks are also down, driving demand for wheat.

Washington's soft white wheat is nearly all exported, primarily to Asia and the Middle East, where it is used to make cookies, cakes and flatbreads, Mick said.

Mick doesn't think prices will remain this high in the future, though he hopes it doesn't drop below $5 a bushel. Sargent said that no matter what, this year's prices will save some farms and keep the industry viable.

"If this price hadn't turned around, you would have seen a number of producers shaken out," Sargent said. "It gives people hope."