BIOTECHNOLOGY has the potential to help reverse the loss of wheat acres in the United States and help ensure that there will be adequate supplies to feed a hungry world.
That is the conclusion of a new wheat industry analysis.
Organisations collaborating on the paper included the National Association of Wheat Growers, US Wheat Associates, North American Millers' Assn., Independent Bakers Assn. and Wheat Foods Council.
Over the past three decades, US wheat acres have dramatically declined.
As an example, Kansas and North Dakota, the two powerhouse wheat states, have seen wheat acreage decline due to better risk/return trade-offs in other crops. Kansas, despite being known as the "wheat state", now produces more corn than wheat.
The report notes that producers can earn more than $US400 per acre in net returns with corn or soybeans but less than $200 for wheat (Figure). This will continue to drive the long-term decline in wheat plantings.
The divergence among net returns for these three crops is present for all seven years in the Figure, with net returns for wheat never exceeding those for either corn or soybeans.
"The competitive problem is, therefore, a longer-term structural problem, not a symptom of recent volatility in commodity markets," the report states.
The annual growth rate in yield for corn is four times that of wheat, so the longer the industry remains on the current trend line, the deeper the competitive hole becomes from which wheat must extract itself.
The advent of drought tolerance traits in the first half of the next decade is expected to expand the Corn Belt farther west at the expense of wheat acres.
Dr Bill Wilson, an agricultural economist from North Dakota State University, estimated that drought tolerance in corn and/or soybeans will result in a 60 cents/bushel opportunity cost for wheat production on the same land. In other words, if the market wants to bid an acre away from these drought-tolerant corn and soybean varieties and back into wheat, the market price of wheat will need to rise 60 cents/bu.
Dr Wilson also estimated that the introduction of RoundUp Ready 2 Yield soybeans in 2009 will increase the opportunity cost of wheat production by approximately $US1.49/bu.
"Those spreads will translate into significant costs for food companies, and if new traits continue to be introduced in other crops while wheat is left behind, those opportunity cost spreads will widen," the analysis says.
No silver bullet
The problems of declining acreage and production, slow yield growth and market opportunities and threatened profitability will not be wholly solved by biotechnology.
Many industry organisations are supporting the National Association of Wheat Growers' goal to increase national average wheat yields 20 per cent from 2008 to 2018 through both biotech and non-biotech efforts.
However, there is a general understanding in the industry that if the competitiveness problem is to be successfully addressed, the application of technology that is available in other crops but not presently available in wheat will be necessary.
The analysis recognises that no single technology can deliver on a promise to make a crop competitive.
"However, the rapid adoption of biotechnology traits in other crops in many producing countries around the world and grower testimonials in support of these traits lend credence to the idea that biotechnology can make a significant contribution," the report notes.
The highest priorities for trait development, as indicated by an informal poll of various wheat industry sectors participating in the Wheat Summit discussions, were in the area of abiotic stress tolerance and, in particular, drought tolerance.
Water availability is becoming a major sustainability issue for agriculture, and traits that allow production of more wheat with less water would be very beneficial to farmers and to society as a whole.
Other priority traits of interest include tolerance of other sorts of abiotic stress (heat, cold, freeze), increased yields, nutrient use efficiency (particularly nitrogen) and resistance to plant diseases like stem rust, stripe rust, head blight and others.
Lower on the list but still important include specific end use or nutritional properties and herbicide tolerance.
It is unstated but assumed that new varieties will meet or exceed existing standards for quality. Productivity is the overriding theme of all of these traits.
Consumer choices
Some customers will embrace the availability of technology that makes food production more efficient, but others will make different choices and will be prepared to pay the necessary costs of producing food without using new technology.
This dynamic is already a part of the wheat industry as some consumers place a higher value on organic production and are willing to pay the premiums necessary to obtain organic wheat products.
"Perceiving a market opportunity, some farmers, millers and food companies have chosen to operate in this niche and are running profitable businesses to meet organic demand," the report outlines. "The dynamic is also present in corn and soybeans with respect to biotechnology traits, and the wheat market is expected to develop in a similar fashion."
Half of US wheat production is exported to offshore markets, and it will be critical to meet the needs of these buyers as biotechnology moves forward.
US Wheat Associates is engaged in discussions with foreign buyers through established relationships to identify and address their concerns and communicate the production, acreage and competitive trends driving the need for new technology.
The industry recognises the important complexities of accepting the use of biotechnology in wheat but also sees it as a necessary tool to keep this essential food crop grown domestically and around the world.
Here's the point
WHEAT production and area are on a long-term downward trend in the US. Net returns per acre to farmers favor other crops in areas where options exist, and the differential is widening.
Unless the wheat industry can successfully change the equation and restore its competitiveness, wheat is on a path to becoming a minor crop. This outcome would be unfortunate for every sector of today's wheat industry, from input suppliers to producers to consumers.
A new wheat industry analysis outlines the competitiveness problem facing global wheat production and the wheat industry itself, which is increasingly vulnerable to short-term supply shocks and a long-term cycle of decline.
The paper explains why this matters for the entire food chain: wheat growers, wheat users at home and abroad and consumers in both industrialised and developing worlds.
While there are no silver bullets, biotechnology can make a significant contribution to changing this competitiveness equation, positioning wheat as a viable production alternative for producers.
Fundamental to this entire effort is a commitment to choice in the marketplace: choice for customers who wish to procure non-biotech supplies and for producers who meet this demand. Choice will be provided through market mechanisms between buyers and sellers and will be a critical part of this path forward.
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