Wheat growers are known for doubling down to eventually come out as winners. From the worst Texas drought in nearly half a century to weeks of flooding in the Dakotas, 2011 ended with devastating losses for those who were forced to cope with too little rain or too much standing water. Yet wheat growers remain optimistic and are increasing acres planted in 2012 to perhaps a three-year high.
That enduring optimism despite uncontrollable weather challenges is par for the course for U.S. wheat growers. After more than a decade collecting data on cereal crop losses, DuPont Crop Protection has a unique window on what growers have been facing. DuPont has been tracking weather-related crop data since 2000 through the DuPont Crop Protection Plus product cost replacement program. The program gives growers herbicide replacement credit when treated acres are uneconomical to harvest due to drought, hail, flood, frost/freeze or fire.
"Across 11 years of producer reports, 2011 saw the second highest number of cereals claims, said John Chrosniak, regional director, North America, DuPont Crop Protection. "It was second only to 2007, when a late freeze and drought devastated wheat crops in Kansas and Oklahoma.
Those observations correlate with shifts in the marketplace. In 2007, when wheat stocks hit a 60-year low, the Crop Protection Plus program worked with growers reporting losses on more than 750,000 acres. "2011 was the first time we came close to that record, compensating nearly 700 growers for losses on more than 216,000 acres, said Chrosniak.
Despite staggering crop losses in 2011, high grain prices are encouraging growers to increase wheat acreage. According to a Bloomberg survey of growers, bankers and analysts, additional acres will likely come from fields left fallow last year including nearly 6 million prevented-planting acres in flooded regions of North Dakota, where sunflower and wheat growers could face increased weed pressure in fields left unplanted.
The study also pointed to the millions of expiring Conservation Reserve Program (CRP) acres as potential areas for crop expansion. The majority of those CRP acres are in the Great Plains, which include key cereal-producing states Texas, North Dakota and Kansas, according to 2011 USDA data.
The 2011-2012 Grain Market Analysis and Outlook report produced by Kansas State University highlighted the risks of pushing westward to develop expiring CRP acreage. It pointed out for winter and spring wheat, the challenge lies in cultivating poor soils in drought-prone areas.
With this planned growth comes risk. "Fluctuating weather and its lasting effects are expected to continue and that signals continued production uncertainty, said Chrosniak. "Risk management, always a core element of crop planning, will be crucial to producer success in 2012. He advises growers to be flexible with production practices, strategic about marketing and vigilant in pest control, which will help them achieve the maximum return on investment. He adds that product cost replacement programs, including Crop Protection Plus, can help growers maintain more control in the face of uncertain conditions. All are sound business tactics for producers looking to even the score this year.