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Farm Troubles Could Touch Consumer Prices

May 10, 1996

WASHINGTON (AP) _ Colorado wheat farmer Monty Wessler will probably harvest no wheat from the 3,000 acres he planted last fall. And the drought that ruined his crop is working its way into food prices.

Because of historic dry weather in the Plains and freeze damage in the Midwest, the Agriculture Department on Friday forecast a winter wheat harvest of 1.36 billion bushels _ the lowest since 1978. It said conditions were so bad that farmers have simply abandoned the crop in 23 percent of their fields.

``This will probably be the first year that I will not cut a bushel of wheat in 23, 24 years,″ said Wessler, who farms near Springfield in the southeastern part of Colorado, which shares the disaster with Kansas, Oklahoma and Texas.

Some farmers will plant corn, sorghum or other feed crops on the former wheat acres. But even so, the country’s grain supplies are the tightest in decades. Although grains generally make up a small part of food costs, that’s changing because of record prices.

Economist Paul T. Prentice just changed forecasts to predict food prices rising 5 percent in 1997 because of increases for bread, pasta, other grain products, red meat and poultry.

The increases will start this year but will be offset overall, at least this year, by short-term drops in meat prices as producers sell off animals rather than pay the high cost of corn and other feed. The slaughter turns to shortage in the long run.

``These price increases are in the pipeline to consumers,″ said Prentice, president of Farm Sector Economics Inc. in Colorado Springs, Colo. ``They’ll be showing up over the summer, in the next month or so.″

He now expects food prices to rise 2.7 percent this year, up from his previous estimate of 2.3 percent. Food prices rose 2.1 percent last year, the Labor Department says, and 2.9 percent the previous two years.

Bakery and cereal products could rise 6 percent this year because of skyrocketing wheat prices, with pasta leading the pack because it’s so dense in wheat. Although pasta is made with durum, a spring-planted wheat variety, the price of one kind of wheat drives another.

Breakfast cereal prices, on the other hand, will be held down by competition and high manufacturer margins, predict both Prentice and Donald Ratajczak, head of the Economic Forecasting Center at Georgia State University.

Ratajczak currently projects just a 3.8 percent increase in food prices for next year, but says the number could rise.

Winter wheat, used in bread, accounts for two-thirds of U.S. production. Because of the 12 percent decline from last year’s poor harvest, the overall wheat crop will fall 5 percent to 2.07 billion bushels this year, the Agriculture Department said.

The department also made some early projections about the corn crop, which isn’t even fully planted. Based on yield trends, planting intentions and some switchover of wheat to corn, farmers could harvest 9.4 billion bushels, up 27 percent from last year’s poor crop.

That could ease the pressure on corn prices, fueled by strong export demand, heavy domestic use and the lowest stockpiles coming into the harvest in nearly five decades.

``I would take those projections with a big grain of salt,″ said David A. Miller, grains and livestock analyst with the American Farm Bureau Federation, pointing to wet weather and even floods in the corn states.

To meet the demand for corn, he said, yields will have to be better than in recent years.

And even the wheat figure is early and questionable. The Kansas production numbers, for example, are higher than those forecast by industry observers who toured the state last week.

The drought has produced mirages _ of a sort.

Royce Lange, a Sumner County farmer in south central Kansas, plowed under a wheat field Thursday that looked lush and green from the road. Much of the green turned out to be weeds.

``It just ain’t there,″ he said.

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