Plenty of Nothing

The U.S. has $2.6 billion tied up in its wheat-support program, and the storage costs amount to $150,000,000 a year. But last week, as the harvesting of the new winter wheat crop got under way in the Southwestern states, it looked as if the U.S. would face a wheat shortage of a kind; it might not have all the high-quality wheat that U.S. bakers need. Of the U.S.'s billion-bushel stockpile of wheat, farmers and bakers estimate that only 10% to 25% is usable in its present form by the breadmaking industry--the single biggest wheat user. The rest would have to be upgraded by blending it with strong-gluten wheat.* But there is comparatively little strong-gluten wheat available with which to do the blending. Said Nebraska Wheat Farmer Herb Hughes, member of a five-man board that advises Agriculture Secretary Ezra Benson on the operations of the Commodity Credit Corp.: the breadmaking quality of the Government's stockpile is "fantastic and deplorable." This week Secretary Benson was scheduled to go to Hutchinson, Kans. for a conference with some 5,000 farmers, millers and bakers to outline an incentive plan under which farmers might be paid premiums for strong-gluten wheat, and possibly even penalized for weak-gluten grain.

Benson has long been aware of the downgrading of U.S. wheat surpluses, but doing something about it has seemed an almost insoluble problem. Quality controls are highly complex to administer and would be a political headache, since many farmers can grow nothing but weak-gluten wheat.

Weird Workings. The low quality of the Government's hoard is due largely to the weird workings of a price-support system under which farmers for years have produced not for the market but for Government storage bins, ranging from mothballed ships to tents (see cut).

Commercial millers are willing to pay a premium of 25-c- a bushel for strong-gluten wheat. In a free market, this premium would encourage farmers to produce the high-quality grain. But it has not worked that way under the support program. While drought and a siege of rust have cut down on the output of strong-gluten grain, the price-support program has encouraged wheat farmers to sacrifice quality for quantity.

Under the program, the U.S. does not distinguish between strong-gluten wheat and weak; it will pay the same price for either type. And since more weak-gluten wheat can be produced per acre, most farmers have concentrated on it. Even the relatively few farmers who produce strong-gluten wheat are no help to the Government; since they get premium prices on the open market, most of them do not bother to enter the Government price-support program. Furthermore, the shortage of strong-gluten wheat is so great that whenever a shipment of it does go to a commercial elevator for Government storage, it rarely gets into a Government bin. Reason: elevator operators are free to sell the wheat at a premium, and replace it with equal-grade but weak-gluten wheat purchased at lower cost.

Growing Mountain. In the past, the U.S. has been able to sell some of its weak-gluten surpluses abroad, where much bread was made by hand. Now European bakers, rapidly mechanizing their industry, are turning to Canada and the Argentine for the strong-gluten wheat they need.

Because of the strong-gluten shortage, many farmers like Nebraska's Herb Hughes, who formerly sold their wheat to the Government, have quit the support program. They are planting all the strong-gluten wheat they want and selling it on the open market. If enough other farmers follow Hughes's example, it may wreck the delicate mechanism of the whole price-support program. Next month wheat farmers will vote on whether to accept acreage restrictions again this year, and many experts think they will vote against them. If so, it will be up to Ezra Benson to figure out a way to avert a sudden market collapse.

In any case, unless the U.S. begins raising more strong-gluten wheat, it looks as if the nation will be stuck with a growing mountain of wheat that it will have little use for.

* While bread can be made at home with weak-gluten wheat flour, the big mechanized bakers need the strength, elasticity and gas-retaining qualities of strong-gluten wheat flour for their bread, though they can use weak-gluten wheat for cakes and pastries.

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