Hillsboro farmer interviewed on wheat prices by CNBC

Paul Penner, Hillsboro farmer and president of the Kansas Association of Wheat Growers, got the chance last week to tell the rest of America on national television how it is for Kansas wheat farmers with the current world shortage of wheat.

It also set him to thinking about what is in the future for farmers, and about their status in the developing global economy, commonly called ?globalization.?

Penner said farmers do need to think about their management and finances from year to year. But they do need to think about the challenges ahead, to double food output by 2050 to keep pace with global demand.

It seems that the Russian wheat fires, the Pakistani floods and other weather variables currently facing markets, may be only warning shots for how the world continues to develop.

Penner was contacted, and asked to appear on national television by Squawk Box, a CNBC morning coast to coast financial news show headquartered in New York.

A three-man crew out of Kansas City with a ?huge satellite van,? and direct feeds to all the networks came to Penner?s farm here for the production.

The crew arrived at 4:30 a.m. with the program in New York beginning at 7:30 a.m., Penner said.

Even though the interviewers were in New York, Bill Spiegel, KAWG director of communications, was able to listen by ear phone to a producer in Califor?nia give directions for the production.

Spiegel said, ?I was impressed with Paul. As the time got near, and the producer said, ?Kansas, we?re next to you after commercial,? Paul was calm. He smiled, and did a great job answering questions.

?Paul was really good, and looked to be enjoying himself. The Kansas City guys were very nice, very professional,? he added.

?The bottom line is that Paul rocked his interview, and he was a great spokesman for KAWG today. I was impressed with the on-air personalities, too. I think it?s obvious they enjoyed visiting with Paul, and I wouldn?t be surprised if they come back for more some day.?

The New York interviewers asked Penner if he?d ever seen the volatility in the wheat market like it is at this time, especially with the Russian drought and fires in the news all the time.

Penner replied that the most extreme wheat market he had seen was in 1980, but never had seen so much volatility as now.

Penner told them that wheat harvest is long over here, and that most farmers have sold at least 50 to 60 percent of their wheat. The farmers were taken by surprise with the market, he said.

Asked if farmers would gamble by growing more wheat next year, Penner said that farmers have to match the present gains against facts that wheat prices have been ?unacceptably low for a long time.?

Whatever farmers do, he said, they will have to make a decision what to do in the next 30 to 60 days to get the fall crop in. He noted that many like him had already reduced wheat acreage from normal because the unusually wet weather last fall wouldn?t let them in the field.

Penner pointed out that it takes nine months from planting wheat for a farmer to harvest and get revenue back. He said forward contracting is an option, but it?s a chance also because a farmer here could have a drought that wouldn?t produce the wheat, just like his counterparts in Russia.

Penner said farmers are somewhat protected by the safety nets of crop insurance and government subsidies.

The New York interviewers, noting a John Deere tractor in the background, asked if improved wheat prices might lead to farmers investing more in capital equipment.

Penner replied that some farmers took advantage of better prices in 2007 and depreciation rate for equipment is set to expire. He said that he tries to be stable in replacing equipment on a regular time frame.

Penner told the interviewers that he is a relatively small farmer in this area with 1,000 acres while several of his neighbors farm several times that amount.

Penner said later after the interview that the experience highlights the types of weather events worldwide and here that Kansas farmers are going to have to consider in their management efforts.

The Russian fires and Pakistani floods are only the current headlines, he said. Penner reminded that Canada, another major wheat producer, had its wheat acreage reduced by 13 million acres last year because wet weather prevented planting.

In 2007, Kansas farmers lost much of the wheat crop to a late freeze, he said.

?It?s always hard to make a prognosis, to look into that crystal ball to see the future. Nine of ten predictions don?t amount to much.

?I think we?re looking at 6 to 12 months of high prices.?

He said you only have to look at the local countryside to realize also that farmers are balancing raising wheat against the gains they can make raising improved varieties of short season corn and soybeans that have been bred for Roundup resistance for weed control.

This was, not very long ago, a county where the acres were 70 percent wheat, and much of the rest went to growing milo, he said. Soybeans and corn were unusual crops then instead of being the normal ones.

Penner said the United States is the biggest world supplier of wheat, and right now is the only country with a supply to sell. China produces a lot of wheat, he said, but it?s been too wet, too, and must preserve its supply for its own people.

Ukraine and Kazakhstan have had similar drought problems to Russia, he said.

For the long-term, Penner said, farmers need to support wheat breeding programs and technology to produce more wheat, or be caught in a future balancing act where there?s never enough wheat to go around.

The number of new consumers and the quality of life demand for food led by more people are increasing faster than production, he said. ?We have to increase production on fewer and fewer acres.?

That?s why KAWG has chosen to be one of the partners in Heartland Plant Innovations, a private biotech plant breeding group working from facilities headquartered at Kansas State University, Penner said.

It?s also why, in addition to his KAWG duties, he has chosen to serve on the HPI board out of Kansas City, he said.

Penner explained, ?We want to accelerate, and decrease the time line between discovering new productive plant traits, and introducing them into new varieties.?

He said it is worth it to not only take the time for better management on his own farm, but to offer the volunteer time for the future.

See the CNBC interview at cnbc.com/id/158402321video=1565598721&play=1

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