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Posted on Oct 23, 2018

Russian gains in wheat markets challenge U.S. growers: Column

By Don Brunell 

Many of us remember the Soviet Union’s collective farms, which were a dismal failure. Joseph Stalin, the brutal Russian dictator, confiscated individual landholdings and enslaved workers. The farms were operated under government-established five-year production plans.
It destroyed the Russian farm system. Wheat production, which led the world under the czars prior to the communist revolution, plummeted and the communists imported grain to feed their starving people.
When the Soviet Union collapsed nearly 30 years ago, the Russians slowly started letting farmers have their farms back and modernize to compete with wheat growers in the United States, Canada and Australia. Recently, Russia’s government has focused on building modern grain elevators and trucking and railroad systems.
Russian farmers now buy modern American high-tech farm equipment, plant more productive seed, and, apply fertilizers and pesticides to increase yields. Many of those products were developed in our research labs.
The results are stunning, and Russia is now the world’s top wheat producer. While they are increasing the number of acres planted, U.S. farmers are losing money and sowing fewer fields. America is on the brink of the farm collapse our country experience in the 1980s when high interest rates and inflation ran rampant.
Today, large Russian investments, a weak ruble against our strong dollar, falling grain prices, high equipment costs, and the uncertainty of tariffs on U.S. agriculture products resulting from new trade negotiations, are hurting American farmers. It is particularly harmful for our farmers attempting to sell more wheat to China.
The burning question is: How will our farmers compete?
Alex McGregor, former Washington Wheat Growers Association president, believes American growers, especially those in Washington, have an advantage because of our high quality grain. He heads the McGregor Company, a 70-year old family fertilizer and crop protection enterprise based in Colfax.
McGregor believes our transportation network, ongoing research, farming experience and customer relationships give Washington growers hope. However, farmers worry that the ongoing trade war with its accompanying tariffs could damage trade relations that took decades to build and deepen our competitive disadvantages.
According to WGA, Washington has 2.3 million acres in wheat production and 90 percent of it is exported. Our wheat crop is heavily dominated by white wheat exported to Japan and other Asian countries to make Asian-style noodles, sponge cakes and cookies.
BNSF railroad hauls grains from as far as Minnesota to Washington and Oregon terminals. Our ports have developed efficient systems to transfer the grain onto ships. For example, the Port of Vancouver can off-load a grain rail car in 7 minutes.
McGregor believes WSU’s agriculture research gives our state an advantage. Researchers have developed over 100 wheat varieties, many of which are targeted for eastern Washington.
The Russians are indeed coming and they are rapidly upgrading their research and transportation networks. To compete, our country must continue our research, upgrading our infrastructure and not estrange our longtime customers.

Don Brunell is a business analyst, writer and columnist. He can be contacted at TheBrunells@msn.com.