Wheat leaders explore new approach to capturing value

ENID, Okla. — Oklahoma’s wheat industry leaders are putting together a foundation they hope will create opportunities for the next generation to capture more value from new and improved varieties and deliver improved nutrition and bread quality to consumers.

The centerpiece of that effort is a new genetic line with exceptional milling and baking characteristics. But there’s a catch. As a specialty ingredient, it will require a dedicated marketing channel.

Board members of Oklahoma Genetics Inc., the entity responsible for licensing new varieties developed by Oklahoma State University, are currently exploring how to best accomplish that.

Seeds of innovation

The idea of capturing a premium by segregating grain on the farm and delivering it directly to the end-user is nothing new, according to J.B. Stewart, who farms near Boise City.

“We’ve been doing that for a long time,” he said. “In the Panhandle, if you have any fertility at all in your fields, it’s pretty easy to get high protein wheat, because of the arid conditions. So we’ve been gearing for quality for many years. In fact, everything we grow goes directly to the end-user.”

Now OGI is ready to take that concept to the next level. A new experimental line developed by OSU has four times the typical dough strength, which could allow select bakeries to completely revolutionize how they turn wheat into bread.

The trait — technically referred to as Bx7oe — originally was introduced by Colorado State University in 2009 in a variety called Snowmass.

The trait currently is being bred into several existing Oklahoma varieties suited to different environments and management systems around the state, beginning with what OSU wheat breeder Brett Carver calls “a new caliber Gallagher.”

This super-charged version is so high performing it would allow bakeries to eliminate vital wheat gluten and other conditioning agents and still get a fluffier loaf, Carver said.

Removing additives also would satisfy a consumer trend toward cleaner ingredient labels, according to Mike Schulte, executive director of Oklahoma Wheat Commission, a shift that could become even more pronounced if the potential health effects were better understood.

Since early 2019, Schulte and Carver have been collaborating with dietary experts at OSU to study wheat’s nutritional profile and its impact on gluten sensitivities and human health. Those studies are ongoing.

In the meantime, this higher-caliber Gallagher already is being grown by 25 farmers on roughly 5,000 acres under production contracts with three designated grain elevators. Part of the resulting 200,000 bushels from the pilot project will be held back for seed, while the rest will be used for commercial flour tests.

After being approached by his local elevator, Richard Wuerflein, of Kremlin, agreed to grow 300 acres, equivalent to around 15 to 20% of his total acreage. He hasn’t been paid for it yet and doesn’t have a price locked in. Early on, he said, the wheat looked “puny,” which was likely a function of dry weather conditions and late planting.

Due to an exceptionally dry fall, many farmers weren’t able to get their wheat planted until November. Early-to-mid October is considered ideal.

The drought only intensified over the winter, reducing U.S. winter wheat conditions to their lowest level in at least four decades and leaving many farmers questioning how much wheat would actually be harvested.

Developing new markets

Adverse growing conditions aren’t the only challenge. As competitive pressures drive farmers, grain handlers, mills and bakeries to keep prices low through increased speed and volume, identity preserved marketing has become more difficult.

Wuerflein notes his local elevator tried doing a value-added identity-preserved program in the past, segregating other OSU varieties known for exceptionally milling and baking qualities, such as Baker’s Ann and Smith’s Gold. But the modern milling industry demands wheat in such high volume that even Farmers Grain Cooperative, one of the state’s largest grain elevator networks with 13 branch locations, had a difficult time segregating and delivering enough grain to make the program effective.

Other attempts also have fallen short.

Don Schieber, a farmer from Ponca City, recalled being involved in recent years with an investor-funded start-up called Indigo Ag that was trying to capture more value through online marketing.

“They just couldn’t find the market they thought they would,” he recalled. “Our local co-op was storing 100,000 bushels for them, but they couldn’t get it moved by the time the contract ran out. So they sold it to the co-op at a $2 a bushel loss.”

Schieber got his money for growing the specific wheat they wanted, but Indigo took the hit and has shifted out of grain marketing and into generating and selling carbon credits and fine-tuning biological seed treatments.

Some mills, such as Grain Craft, do offer a small premium for preferred varieties. In Colorado, Snowmass and newer derivatives are being grown under contract for the nation’s largest flour miller, Ardent Mills, in exchange for a base premium of 40 cents per bushel with protein incentives that can push it up above 60 cents.

OGI leaders want to build a program of their own that is less restrictive and open to multiple end-users. To do that, they’ve brought in Farm Strategy LLC, a specialized marketing firm based in Kansas.

Founder Andrew Hoelscher, who grew up on a farm, was surprised when he first got involved in grain merchandizing to learn how siloed the milling and baking industry is from the farmers who grow the product.

“The millers and bakers were talking about things that we were never incentivized to think about back on the farm,” he said.

He started Farm Strategy to figure out how to change that.

According to Hoelscher, rapid communication technology and better information sharing and collaboration within the industry are keys to delivering stronger market signals back to growers and rewarding them for improved quality.

OSU’s new line is perfect for constructing what he calls a “convoy marketing system,” which begins with identifying the advantage the trait provides to the bakery and relaying that value back to the farmer.

Based on Hoelscher’s estimates, the trait could be worth significantly more than ordinary wheat by eliminating the need for costly additives in standard bakery recipes and improving milling performance.

Interested millers and bakers will have a chance to conduct their own sample runs after the first wheat from the new line is harvested in early June.

A foundation for the future

Stewart and Schieber say many questions remain. Will the value of the trait change from year to year, based on crop supply and overall quality, especially in a climate as variable as Oklahoma’s? Who will assume the risk if the crop fails?

“The farmer needs to know when that wheat goes in the wheat drill what his potential return is,” Stewart said. “Will he know that then or is he going to have to finish out the process of growing and harvesting it before he knows? The higher cost of that seed is going to be there whether you can net the premium or not.”

But OGI leaders are committed to moving forward. They recognize it’s not enough to release outstanding varieties; it’s also necessary to shepherd these new traits into the marketplace in a way that creates value for producers and consumers.

“We’ve never been able to fully capture the added value for producing a quality product, and it looks to me like this might be the way to go for farming in the future,” said Tom Null, of Hobart, a charter board member of OGI since its inception in 2002.

Null has completed an estate planning process to ensure his family farm will continue for the next generation. But he’s also thinking beyond his own farm to the future of groups like OGI and the wheat industry as a whole.

The new marketing project is ambitious, with some details that could take years to sort out. But it’s also essential, he believes.

After all, there’s already more specialty wheat in the pipeline. Among other innovations, OSU’s breeding program is exploring the potential for wheat with purple kernels that contain the same antioxidant compounds found in super health foods like blueberries.

“In the coming years, I think the opportunities are endless,” Null said. “I’m excited to see the younger generation come on board and take over what we’ve started.”