The list of reasons Arkansas farmers cut wheat acreage by almost 50 percent in the past five years isn't long. Prices have averaged as low as $2.35 a bushel; input prices, especially for fertilizer, continue to go up; and the difference between profit and loss is a little too narrow for comfort.
In many cases, farmers haven't abandoned wheat but have cut back on their acreage. For the 2000 harvest, Arkansas growers planted 1.18 million acres of winter wheat. In the fall of 2000, they planted 1.1 million acres. The next year, they planted 950,000 acres. During 2002 planting, acreage fell to 700,000 acres, and in 2003, only 670,000 acres were planted.
With fertilizer prices up as much as 25 percent this year, most economists expect wheat acreage to fall again.
On Triple T Farm near Stuttgart, Ark., the downward trend in wheat acreage mimics the statewide trend. Brothers Sam and Will Tarkington farm in a three-way partnership with their father, John Ed. They harvested about 800 acres of wheat this summer, but as they head to the fields to plant the 2005 crop, they will only plant 400 acres.
Triple T Farm includes about 5,000 acres of rice, wheat and soybeans. The wheat is planted after early-maturing soybeans. The Tarkingtons are able to make money on wheat for several reasons: they have the water reserves needed for the early beans due to their dedicated efforts to build tailwater recovery systems and reservoirs; they have their own drying and storage facilities; and they contract with Delta King as certified seed growers of the popular Delta King 9410 variety. This past season they grew about half their acreage to the DK variety, and the other half, which was for commercial production, in Pioneer 26R24
“DK 9410 is without a doubt the highest-yielding wheat we can grow,” says Sam. “We cut some fields that yielded as high as 99 bushels an acre. We had a hail storm before we could get the rest harvested, and we lost some yields in a hurry. Still, we cut 86 bushels an acre on some damaged fields.”
Bill Rushing, seed production manager for Delta King Seed Co., says DK 9410 is popular with growers for several reasons, including an excellent disease resistance package and consistent yields. “It's in the top 10 percent of the university variety trials every year,” says Rushing.
The popularity of the variety is one reason Delta King is selective about the growers they contract with to grow their certified seed. Rushing says when they sell wheat seed to growers, especially in this downsized market, they have to know the seed are not just of good quality, but are the best the market can offer.
The Tarkingtons soil test regularly, keep their fields clean of weeds and insects, have the ability to keep the wheat segregated and can dry and store wheat on the farm.
“We pay additional fees to the growers if they can store the wheat, and that helps them out as well,” says Rushing, “but the bins have to be inspected, sprayed for insects and the wheat seed must be kept segregated.”
The Tarkingtons contract with Delta King at market prices and have the flexibility of any other grower to hold off booking if they think prices will go up. They get a premium for growing the wheat, but they are also subject to discounts for things such as low cup weight, presence of disease or wheat with excessive trash.
Rushing says Delta King found more head scab and stripe rust in the 2004 harvest. DK 9410, like most other varieties, doesn't have a resistant package to head scab.
“We think we are more likely to see the disease when we have wet conditions before or after pollination; most varieties can get it if the conditions are right. DK 9410 does have resistance to stripe rust, which can be another yield-robbing disease.
“Our state average stays around 50 bushels of wheat an acre and right now about $3 a bushel is a fair price for wheat.”
Price in 2000 and 2001 averaged about $2.35 a bushel, was $2.90 a bushel in 2002 and averaged $3.10 an acre in 2003.
“Growers can make some money on wheat, but the biggest factor for many of them is the time factor. If they have the land and are set up to grow wheat, they can cash flow money in the summer when their resources are tied up with other crops,” says Rushing.
Tarkington agrees. Selling wheat at a time of the year when he is spending on everything else is one reason he grows wheat, even though he is cutting back acres.
“This fall we are cutting our wheat acreage because we converted more land for rice, and we don't like to put wheat behind rice,” says Sam.
The Tarkingtons plant beans from maturity groups ranging from 4.4 to 5.5. They grew some earlier beans this year to hit the August market. They had cut and delivered those beans by Aug. 17.
“We started planting beans the last week of March and had the early beans planted by the first week of April. We cut 60 to 70 bushels an acre on some fields that we never watered. We will probably experiment a little more with earlier-maturing beans,” says Sam. The Tarkingtons usually don't complete planting of the later-maturing beans until June.
On the land behind early beans, they can begin wheat planting by Oct. 1. They fertilize based on soil tests, this year putting out 400 pounds of 0-26-26 to the acre. They run a cultivator over the fields and plant the wheat with a drill.
About the end of February they put out the first of three applications of 100 pounds per acre of urea (45 percent nitrogen). The urea must have moisture to be activated.
While contracting with Delta King provides the Tarkingtons a price incentive, they must follow guidelines to grow wheat within the quality requirements of Delta King.
“Growers who grow increase seed for us must follow some guidelines for cleaning equipment and keeping seed segregated. Sam has great drying and holding facilities, which are also a plus for him,” says Rushing.
“We inspect before harvest, and we require insecticide treatments of the bins. Our growers book with us based on market prices, and they are subject to grading premiums or discounts just like they would if they sold at the local elevator.”
Rushing and Tarkington say wheat acreage continues to decline in the state due to lower prices, higher fuel costs and increasing concerns over controlling ryegrass. A farmer who applies 115 to 120 units of nitrogen — considered about average — will have to make good yields to offset the costs.
This fall, Arkansas economists are warning growers to figure all fuel-related costs, including nitrogen, into their budgets before making final planting decisions.
Projections to help farmers estimate the cost of producing the 2005 wheat crop are now available on the University of Arkansas Cooperative Extension Service's Web site at www.aragriculture.org/farmplanning.
“The projections indicate energy costs are expected to take a big bite out of farmers' budgets for the coming year,” says Tony Windham, UA Extension economist.
The projections include direct or out-of-pocket expenses such as fertilizer, seed, labor, diesel repair, maintenance and fixed expenses such as ownership cost of equipment, depreciation and interest on equipment.
“In our estimates for the coming year, we project fertilizer expenses to go up about 15 percent over the 2004 crop and diesel fuel to go up about 25 percent,” Windham says. “Nitrogen-based fertilizer expenses are tied to the price of natural gas, which is used to manufacture the product.”
Higher energy costs could also impact a producer's hauling costs or custom charges,” Windham warns.
“Given these higher costs, we recommend producers take time to modify the projections to reflect their individual situation and plan accordingly.”
To reduce energy costs, Windham says, farmers can minimize field operations by using conservation tillage. He also suggests farmers take soil samples to their county Extension agents for an analysis to help insure they apply only the nutrients their crops need.
Tarkington says he's already concerned the profit margin on wheat will be tight, but he'll save where he can.
Drying and storing his seed on farm saves him money and he believes increases his milling yield on rice and grading quality on wheat. Delta King picks up the wheat from his on-farm storage bins, which saves him hauling expenses. And, if he can produce yields as good as or better than those of the past few years, he can make a profit on wheat.
“Come June and July, when we have the extra cash flow, we never regret our decision to grow wheat,” says Sam.
Eva Ann Dorris is an ag journalist from Pontotoc, Miss. She can be reached at 662-419-9176 or [email protected].