Sunday, February 12, 2012
Where Have All Of The Wheat Acres Gone?
The biggest threat to job security in agriculture is for the folks who are selling seed wheat in Kansas. Over the past 30 years, there has been a 40% decline in wheat acreage in Kansas, but for that matter, there has been a similar 39% decline in US wheat acreage in the period from 1981 to 2011. Maybe salesmen who specialize in small grain drills should also look for employment alternatives. What are the dynamics that are shaping this significant trend?
Wheat acreage is declining and the rate of decline is accelerating, believes Kansas State University economist Michael Langemeier. His research shows a 5.5 million acre decline in wheat acreage in Kansas since 1981, along with a nearly 2 million acre decline in sorghum acres. But during the same time frame, the acreage was nearly all replaced by corn and soybean production.
From 1981 to 2011:
• Kansas wheat acres declined from 13.9 million to 8.4 million
• Kansas sorghum acres declined from 4.25 to 2.35 million
• Kansas corn acres increased from 1.35 to 4.85 million
• Kansas soybean acres increased from 1.54 to 4.3 million
Langemeier says total crop production in Kansas dropped from 21 to 19.9 million acres during the 30 year period, with wheat acres slipping from 66% of the crop mix in 1981 to 42% in 2010. Grain sorghum dropped from 20% to 12% of the crop mix. In the same period, corn acres rose from 6% to 24%, and soybean acres increased from 7% to 22%.
During the same 30 year period, national wheat acres dropped from 88.3 million to 53.6 million, which is a 39% reduction. But corn has not displaced most of the lost wheat acres in that period. Langemeier says in the 30 years corn acres increased by 4 million and soybeans increased 10 million acres.
Using data from the Food and Agricultural Policy Research Institute at the University of Missouri, Langemeier from 2011 to 2017, corn acreage is expected to increase by 3.9%, while soybean acreage holds steady and wheat acreage declines by 2.6%. With the increased acreage, corn yields are expected to climb 4% through 2017. However, wheat yields are expected to increase only 1% while acres decline. The FAPRI economists expect wheat prices in the next five years to increase by 27.5%.
Langemeier says the relatively higher trend yield for corn is driving the increase in corn acres, while the relatively lower trend yield is driving the reduction in wheat acres, despite the higher potential price.
Within the state of Kansas, Langemeier says wheat will remain an important part of the crop rotation in all areas of the state. In the eastern area wheat and beans are double cropped, so a further decline is not expected. In central parts of the state, wheat production has the greatest chance of decline, but will be rotated with sorghum or rotated with corn and soybeans. In the western part of the state, wheat will continue with a fallow rotation or with a third year of a feed grain added to the rotation. That will drive a continued decline in acres in the middle of the wheat belt.
Summary:
It may not show it on the grocery store shelves yet, but wheat has sustained a 40% decline in acres in the past 30 years, both nationally, and in the prime wheat state of Kansas. Wheat acres have given way to both corn and soybeans. While wheat yields and prices are expected to increases, it will not be as fast as corn yields and prices, subsequently producers are opting for a more profitable crop.
Posted by Stu Ellis on 02/12 at 11:56 PM | Permalink
Comments
Posted by: Jib at February 14, 2012 2:02AM
The slogan in real estate and corn fields use to be LOCATION, LOCATION, LOCATION. That phrase currently does not seem to fit the times for either item. Real estate (non-farm), I am told is now terms, terms, terms. Corn fields, especially from those looking for over 95 million planted acres, can be anywhere. The 4.4 million acres that came out of CRP this fall has over 75% of the acres in the following 10 states: Texas, Kansas, North Dakota, Colorado, Missouri, Oklahoma, New Mexico, Nebraska, Minnesota and South Dakota. Over half the acres are in the top 4. In some parts of these states corn can grow nicely but that is not where the majority of the CRP acres are located.
Our model, when spring wheat and cotton acres where reduced by 3.1 million acres and allocated to corn or soybean ground, comes up with 1.9 to 2.3 million more acres planted to corn this coming spring. This seems to be the upper limit. The calculation allocated CRP, regardless of location in a state, and last year’s prevent plant acres to a state’s estimated planting level.
We can stretch corn planted acres to make 95 million acres but if there is still some “Old School” around where location means something, the “market” may be surprised by USDA’s acreage estimate. Then again, they may give me another “Get with the Program” Report Card.
Jib aka Gibberish
Ps Kansas could have a nice increase in corn acres this spring.