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Although a $25 million grant for wheat development may help create crops that feed more people while using fewer resources, economists in Oklahoma say a genetically altered super-wheat may actually drive down prices for Oklahoma farmers.
The U.S. Department of Agriculture’s Agriculture and Food Research Initiative awarded a $25 million grant in January toward the development of a climate change-resistant wheat and barley variety designed to produce a 20% increase in yield while using 10% less water and nitrogen.
The grant allows 55 researchers and plant breeders in more than 20 states to research ways to improve wheat’s resistance to floods, droughts and pests.
“One thing to remember, all research and development takes time,” says Jonathan Willner, professor of economics in the Meinders School of Business at Oklahoma City University. “Being able to produce something like this on a global scale is a lot different than doing it in a lab.”
With an expected extra 2.3 billion people on Earth in 50 years, coupled with climate change, a higher-producing wheat may help feed more people, but Oklahoma agriculture experts say the impact to the state is modest.
If researchers develop a higher-yield wheat that is more resistant to extreme weather events, Oklahoma farmers may actually see the price for wheat plummet.
“There are good and bad sides to this,” Willner says. “Right now, Oklahoma farmers who manage to get through droughts are positioned to make profits. If you can dramatically increase crop yields for every farmer and all of them see a 20% increase in yield, then you’ll drop the price of that commodity.”
However, he says, the consumption of wheat in the U.S. won’t see the same increase, thus creating a surplus.
“This research is good in the sense that you can feed more people, but it’s going to be tough on individual farmers,” Willner says. “People don’t eat more bread just because the price goes down for wheat. In the United States, having more wheat does nothing but drive the price of that wheat down. The consumption doesn’t match the price.”
Ken Anderson, crop marketing specialist at Oklahoma State University, says farmers who are the first to adopt a new, genetically engineered wheat crop will be among those who make a profit.
However, he says, “As the product stocks increase and the price decreases, you’ll see the market bid the new profit out of it. Basically, early adapters profit. Then the prices drop because everyone else jumps on board. As the price drops, some farmers will turn to other crops and the price will balance back out.”
It’s the nature of the market, he says. “You will see big swings in net return because you take the variables out, like weather,” Anderson says. “If you reduce the variables in the crop yields, the more stable income means a more stable supply. It’s the natural market system working, and as long as the government doesn’t get in there and screw things up, it will work.”
In the long run, creating a crop more resistant to climate change can mean a more stable food supply to marginalized countries, says University of California researcher and project head Jorge Dubcovsky, in a USDA press release.If you can dramatically increase crop yields for every farmer and all of them see a 20% increase in yield, then you’ll drop the price of that commodity. Jonathan Willner
“Demand for wheat is increasing globally,” Anderson says. “I expect the price of wheat next year to go higher due to scarcity. When you allocate a scarce product, consumption of that product will decline.”
But that price has to be high, he adds. In 2008, exports of wheat from the U.S. didn’t stop until wheat reached more than $10 a bushel.
“Wheat is Oklahoma’s No. 1 crop,” he says.
Willner says creating a higher-yield crop has an upside when it comes to global supply, but that upside won’t be seen in the U.S. or Oklahoma.
“We’re kinda poor here in Oklahoma, but we’re also one of the fattest states, so we’re not starving. If you produce 20% more and the price of wheat drops 25%, we’re worse off in the state,” he says. “For the poorest countries that allow imports of agriculture commodities, a dramatic increase in food production means an increased amount of food, which is good.”
Using less water is also an upside to the project, Willner says.
“In order to get higher yields, you need more water from the aquifers and more fertilizer for nitrogen,” he says. “That’s why there’s that focus on reduced water. It relieves the pressure on the aquifers.”
One-third of the grant will be reserved for recruiting and training new plant breeders to implement the new technologies.