Overgrown, grass seed farmers switch to wheat

| Print |  Email
Articles - February 2010
Thursday, January 21, 2010

Wheat2Converting to more profitable crops can be a smart move for farmers in rough economic times, and grass seed farmers are doing just that by growing wheat, making the most significant crop switch in the state.

“Growers are playing with other things, but not on such a significant scale” as switching to wheat, says Brent Searle, a policy analyst at the Oregon Department of Agriculture.

The grass seed industry generates $1.35 billion of economic activity each year and takes ups 55% of the cropland in the Willamette Valley; it hovers between being the third- and fifth-largest crop in Oregon.

But prices began dropping precipitously in the fall of 2008 by as much as 50%. Demand remains low because of housing construction’s slump. “There is a surplus in warehouses right now,” says Roger Beyer, the executive secretary of the Oregon Seed Council.

The council is calling for a 30% reduction in grass seed acreage in 2010, while wheat is being grown at levels not seen in Oregon since the 1970s.

Jerry Marguth, the owner of Nixon Farms in Junction City, grows both grass seed and wheat, and says he has cut his grass seed acreage from 1,500 to 1,100 and increased his acreage for wheat from 400 to 700.

“[During] normal times, grass seed is slightly more profitable than wheat,” he says, adding that he’s not sure anybody in the grass seed industry knows when prices will go back up again.

Geoff Horning, executive director of the Agri-Business Council of Oregon, says switching crops is not economically viable for most farmers because of high up-front costs associated with changing equipment, what the farm’s soil is able to sustain, how much water is needed and a farmer’s learning curve when growing something new. “There are few farming operations changing what they do,” he says.

Wheat prices are not doing much better at $4.10 per bushel after transportation costs, which is $2 per bushel below production costs. That’s a far cry from when wheat sold for $16 per bushel in 2007.

But Tammy Dennee, the executive director of the Oregon Wheat Grower’s League, says cash-flow opportunities with wheat are still better.

“[Grass seed farmers] are sitting on inventory,” says Dennee. “There’s no cash flow opportunity.”

Grass seed is typically grown under a contract, which stipulates when it will be bought. The time of sale and harvest time may differ, and farmers can find themselves storing large quantities of seed for up to a year before selling it.

Wheat producers, on the other hand, can sell immediately after harvest. “There’s a lot of advantages to wheat,” Searle says.

“This is one of the best cash crop options available for growers,” says Dennee.

AMANDA WALDROUPE
 

More Articles

VIDEO: The 2015 100 Best Companies to Work For in Oregon

The Latest
Friday, February 27, 2015

videothumbVIDEO: 2015 100 Best Companies to work for in Oregon


Read more...

Money Talks

March 2015
Saturday, February 21, 2015
BY LINDA BAKER | OB DIGITAL NEWS EDITOR

Will community banks survive the digital age? Three CEOs peer into banking's crystal ball.


Read more...

Downtown flower shop readies for the Valentine's Day rush

The Latest
Monday, February 09, 2015
021015-giffords-thumbBY MEGHAN NOLT

VIDEO: Gifford's Flowers brings family approach to PSU-area shop.


Read more...

Raising the Stakes

February 2015
Monday, January 26, 2015
BY LINDA BAKER

The 2014 Bend Venture Conference set a record for the most cash, investments and prizes awarded at an angel conference in the Pacific Northwest. Investments in the six winning companies exceeded $1 million. The 11th annual conference was hosted by Economic Development of Central Oregon.


Read more...

The Carbon Calculus

February 2015
Friday, January 23, 2015
BY KIM MOORE | OB RESEARCH EDITOR

Carbon pricing is gaining momentum in Oregon, sparking concern for energy-intensive businesses — but also opportunity to expand a homespun green economy.


Read more...

Editor's Letter: Tortoise and the Hare

February 2015
Monday, January 26, 2015

The day after this issue goes to press, the city of Medford will host its annual business conference. The event features Minoli Ratnatunga, co-author of the Milken Institute’s annual “Best-Performing Cities” report. Preliminary data suggests that Medford is likely to retain its No. 1 ranking among best-performing small cities for having a higher concentration of high-tech firms than the national average. 


Read more...

MBA Perspective

February 2015
Tuesday, January 27, 2015
BY KIM MOORE

Robin Anderson, dean of the Pamplin School of Business, University of Portland: "You need people who are comfortable leading in ambiguity."


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS