The News Tribune

A drought that’s left many American farmers praying for rain could be a blessing for Washington’s nearly $40 billion agricultural industry.

Washington farmers and food producers growing and making products ranging from apples to wine say 2012 could be a year to long remember.

The state’s favorable growing conditions – it’s one of a few states almost untouched by the drought – coupled with relatively high prices for crops could mean farm incomes may set records.

Four of Washington’s biggest crops – apples, wheat, hay and grapes – are selling at above average prices while production is at levels ranging from average to record-setting.

“I don’t like to celebrate someone else’s misery, but the drought has put our farmers in the catbird seat this year,” said Steve Yates, communications director of the Washington Grain Commission.

“It looks like we’ll be the beneficiaries of our friends’ misfortune,” said Dale Foreman, an Eastern Washington attorney and fruit grower.

Drought conditions of moderate severity or worse now exist in 53.2 percent of the country, according to the National Drought Mitigation Center.

From a consumer standpoint, only about 14 or 15 cents of each dollar a consumer spends on food is attributable to the farm, said Joe Glauber, chief economist at the Agriculture Department in an interview earlier this week with The Washington Post. The rest of the cost of food arises from processing, transportation and other factors such as demand.

The country may still have the third-largest corn crop in history because earlier good weather encouraged planting, but Tom Vilsack, the U.S. agriculture secretary, said Wednesday that the drought would increase food prices into 2013.

The cost of beef, poultry and pork may go down in the short term because those herds are being liquidated, putting more meat on the market, he said. But those prices will probably rise later in the year or early next year.

In light of the persistent drought conditions, farmers are expecting the shortage will put more dollars in their pockets in Washington.

The dry conditions are the greatest in the 12-year history of the National Drought Mitigation’s drought monitoring program, and, the worst in 50 years in some states.

Those conditions have devastated corn crops and left hay for animal feed almost unavailable in some states in the Midwest.

Soybean and corn fields are in the worst shape they have been in two dozen years, federal officials said Thursday.

Meanwhile, the United States Department of Agriculture reports topsoil moisture levels were adequate or better on 80 percent of Washington state farmlands.

Here’s a breakdown of how good fortune thus far this year is blessing Washington agriculture this year.

 • Apples. The state, which had its fourth-largest crop of apples in history in 2011, could set a record in 2012, said Todd Flyhover, Washington Apple Commission president.

“All indications are that we’ll have the largest crop in ever,” said the commission president. “The only downside is that we’re worried that we may not have enough legal workers to get it all picked.”

During last year’s harvest, some apples were left on the trees because there weren’t enough pickers to do the job.

Prices could be attractive in part because other apple-growing states have been hit by unfavorable weather, he said.

“We’re the nation’s No. 1 apple-growing state,” he said. “Michigan and New York trade places from time to time as No. 2 and No. 3.”

Both of those states’ orchards were beset by unseasonably warm weather early this spring followed by a freeze. Those conditions will mean substantially diminished crops in those states.

Apple grower Foreman said the USDA is forecasting the nation’s apple crop could be the lowest in two decades. Michigan’s output could drop from 15 million boxes to just five. New York’s could fall to 12 million from 30. West Mathison, president of Wenatchee’s Stimelt Growers, a family-owner fruit grower, packer and shipper, said he’s hesitant to predict a record year until the crop is in. The state’s apple-growing regions have been hit in recent weeks with several hail storms, which have damaged fruit and trees.

“I think the market will determine the prices,” he said. “The grocers will have to price the fruit high enough to make the supply last through the year, but not so high that customers buy something like mangoes instead.”

 • Wheat. Prices for soft white wheat, the kind most commonly grown in Washington, the nation’s fourth-largest wheat producer, have jumped considerably in recent weeks. That wheat is now selling in Portland for about $9 a bushel, up from about $7 a bushel last year.

The grain commission’s Yates said the rule of thumb in the business is that it costs growers between $4 and $5 a bushel to produce, depending on their efficiency and land.

The price of wheat is rising in part because wheat can be fed to cattle and chickens in place of corn, he said.

“The price of wheat and corn are locked together,” he said. “As corn prices are rising with the drought, so have wheat prices,” he said.

Brett Blankenship, a dryland wheat farmer in Adams County, near Washtucna in Eastern Washington and secretary-treasurer of the National Association of Wheat Growers, said wheat prices have risen more than $2 a bushel in the last month.

“We’ve had higher prices in the past, but this should be a pretty good year for Northwest wheat growers,” he said.

“Tight supplies can be a concern, but we think we can supply the world’s needs this year,” he said.

 • Hay. Drex Gauntt, past president of the Washington Hay Growers Association, said the hay prices have been steady, on par with last year at $200 to $245 a ton. That price is at the higher end of hay price’s historic range.

The shortages in the Midwest of hay could be reflected in still-higher prices here, he said. Little hay will likely be shipped from the Northwest to the Midwest, he said, because it’s relatively expensive to ship. But shortages there will mean less competition in export markets for Washington hay. Much of Washington’s hay is exported to Asia. The state’s hay business generates $509 million in an average year.

 • Wine. Reports of grape shortages in California mean higher prices for U.S. wines. That could translate to more income for grape growers and wine makers in Washington and Oregon.

Growers in California, burned by an excess of supply at the recession’s beginning, have planted fewer vines and taken some vineyards out of production.

Silicon Valley Bank, a California lender to many vintners, said in a report that wine demand will likely increase by 7 to 11 percent this year while California grape supplies are declining.

Rob McMillan, a founder of the bank’s division, said that combination of factors could be good news for Northwest growers.

“Domestically, the states of Oregon and Washington should see the most benefit because land costs are lower,” he said.