Spring wheat tightness triggers controversy in N.D.

by Josh Sosland
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GRAND FORKS, N.D. — It may be expected record high prices for spring wheat would trigger unequivocal celebration throughout the state of North Dakota. Not exactly.

The North Dakota Mill & Elevator, a state-owned flour mill located in Grand Forks, found itself in the midst of a controversy after gaining permission to import wheat from Canada in the event local supplies dry up.

With spot cash prices for high-protein spring wheat flying past $20 per bu and many market observers raising the possibility that supplies of certain grades of wheat could be completely depleted before harvest, the North Dakota Mill sought the waiver from the North Dakota Industrial Commission. The commission, which includes the state’s governor, agricultural commissioner and attorney general, serves as the mill’s board of directors.

"In the end, the mill must stay in business," said Roger Johnson, the agricultural commissioner. "The mill has to retain its customers. Not to do that is to hurt all of us in the long term, and by us, I mean wheat producers in particular."

Erica Peterson, a marketing specialist with the North Dakota Wheat Commission, affirmed that producers were upset to learn that the mill could purchase wheat from Canada.

"We’ve had producers calling the office," Ms. Peterson said. "They’ve all expressed concern just because the Canadian wheat situation has been so difficult and because of a long-standing feeling that Canada has been selling wheat in our state to other millers to undercut the North Dakota producer. It’s very sensitive. When producers hear that the state mill has the go ahead, they worry that it sets a bad precedent. They’re asking, ‘Will they be able to buy Canadian spring wheat next year? Maybe they don’t need my wheat and I should plant something else.’"

Asked for the wheat commission’s view of the waiver, Ms. Peterson said, "We’re somewhat disappointed in the decision." An official statement from the commission used the term "dismay."

Vance Taylor, president and general manager of the North Dakota Mill, acknowledged that the waiver triggered "a little stronger reaction from the producers than we expected."

Mr. Taylor said part of the controversy stemmed from a misunderstanding that purchases of Canadian wheat by the North Dakota Mill are imminent.

"The producers are concerned," he said. "I think we have them satisfied. We have approval, but we won’t use it unless we absolutely have to do it. Right now, we are still able to buy North Dakota spring wheat. We have good inventories, but like everyone else we are concerned about what will happen during the late spring and summer months."

Established in 1922, the North Dakota Mill has transformed itself over the last 20 years from a mill focused principally on grinding durum wheat into a large supplier of flour milled from spring wheat. In fact, with daily capacity of 34,900 cwts (32,700 cwts of flour and 2,200 cwts of semolina), the mill is the nation’s largest.

Having worked to establish itself as a reliable supplier of flour milled from North Dakota spring wheat, Mr. Taylor said the company is committed to meeting its customers’ needs even in a tough year like the present one.

"We will find a way to make sure we have the supplies to get our customers through this year," Mr. Taylor said. "We have a large elevator (5 million bus of storage capacity), solid inventories, and we’re situated in North Dakota. If stocks get super low, we will reach beyond North Dakota. Located in spring wheat country, we will be able to find the wheat we need."

Even this strong commitment to meet customers’ needs was at least somewhat controversial in the state, if meeting those needs requires imports from Canada.

A Feb. 13 editorial in the The Jamestown Sun appeared to question Mr. Johnson’s assertion that buying Canadian wheat as a last resort was justifiable.

"Johnson is right when he says that ‘in the end, the mill’s got to stay in business,’" the editorial said. "But the question is, at what cost? Is making even a one-time purchase of Canadian grain worth the negative feelings from North Dakota producers and the change — even temporarily — of the philosophy of marketing products from the mill as having origins in North Dakota?"

Similarly, Ms. Peterson said the wheat commission was unwilling to answer at this time whether or not importing wheat from Canada was preferable to a shutdown, a choice that increasingly appeared to be within the realm of possibility.

"We don’t have a direct view on that question," she said. "We would hate to see them shut down. We’d rather see them reach out to other states for spring wheat or to look for other grades of U.S. wheat. Producers would take it very hard if they bought Canadian. It’s my understanding that they will try any other means. Producers have been in discussion with the mill, even trying to find wheat that still is in growers’ hands. We hope that in the near term, these alternatives will meet their needs. If, later in the year, they begin running out of wheat, we need to look at the situation."

Ultimately, the debate could be moot since supplies of wheat in Canada are very tight as well.

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