American wheat growers eye unrest

By Jason Margolis

One group of Americans is watching the unrest in the Middle East very closely: wheat growers in the Pacific Northwest. Wheat is one of the biggest American exports to several countries in the region.

Egyptians and Arabs like what’s called soft white wheat. That’s what’s used to make pitas and flat bread. Egyptians have long been able to get those breads cheaply, largely because of the abundance of foreign-grown wheat.

“The government in Egypt for years encouraged wheat imports as a part of a plan to keep the price of bread in Cairo artificially low,” said Wellesley College political scientist Robert Paarlberg. “Bread was so cheap in Cairo that I used to go to Cairo, and at a café they’d wipe up table spills with a loaf of bread.”
Egypt, Washington, Oregon and Idaho

This policy of food abundance kept many Egyptians well fed and happy. The Egyptian policy has also made wheat growers in Washington, Oregon, and Idaho happy. That’s where soft white wheat is grown in the US.

About 90 percent of wheat from the region gets exported. Historically, it’s been sent to Pacific Rim nations such as Japan, South Korea, and Taiwan. In recent years, Egypt has become an increasingly important customer for American wheat growers.

“As early as 2003, Egypt purchased a significant part of our crop, up to 40 percent of the soft white wheat crop,” said wheat grower Dana Herron in Washington State. “This last year, due to international weather events, they are back in the market in a very big way.”

Mother Nature has been kind to American wheat exporters of late by punishing the competition. Drought in Russia and floods in Australia have sent Middle Eastern Nations flocking to American wheat.
Political instability

But Robert Paarlberg says American exporters do have something to fear: political instability.

“If you’re an exporter, you’re worried about a sudden interruption in the mechanics of trade,” said Paarlberg. “If there’s a dock strike somewhere, or if there are riots in Alexandria, or if there’s a train strike, that’s what can get in the way of your business if you’re moving wheat around.”

Tens of thousands of Egyptian workers have gone on strike during the past month. The Egyptian military has warned though that it will prevent any disruptions to commerce. So far, the flow of wheat into Egypt has been largely uninterrupted.

But Tom Micks, the CEO of the Washington State Grain Commission, says he remains concerned about the long term.

“Mainly because we remember in 1979, when the Iranians overthrew the Shah, that was our largest market taking over a million metric tons annually,” said Micks. “Since that time, virtually no US wheat has gone into the country.”
Al Qaeda

Micks says he feels encouraged by what he’s seen so far in Egypt. But Yemen is another matter.

“Yemen every year takes anywhere from 12 to 14 percent of our total soft white wheat exports out of the Pacific Northwest. They are definitely not a pro-American type of demonstration taking place. And if these people get into power, with strong ties to Al Qaeda, we’re very concerned about our future exports to that country,” said Micks.

It’s not clear how strong the ties are between the Yemeni protestors and Al Qaeda. But Micks and other American wheat growers still have plenty of reason to worry. All they can do for now is sit back and watch the developments unfold, along with everybody else.