Moines Des Register 10-10-06 Farms eschew oats; millers blame farm bill By PHILIP BRASHER Register Washington Bureau Washington, D.C. - The oatmeal that may have been eaten at breakfast isn't American anymore. Neither are the oats in that granola bar. As for Cheerios, that most American of cereals, its chief ingredient is likely an import, too. The oats that Americans eat are no longer grown domestically but instead come from Canada or in smaller amounts from Europe. U.S. farmers have all but quit growing the grain, for the simple reason that they can make more money growing corn and other crops. Millers blame federal subsidy programs that guarantee farmers a much higher return for crops such as corn and soybeans than for oats, and the processors want Congress to do something about that in the next farm bill. "We cannot compete with the treasury of the U.S. government," said Rick Schwein, senior vice president of Grain Millers Inc., which processes oats in St. Ansgar, Ia. Grain Millers, based in Eden Prairie, Minn., is spending $20 million to expand its mill at St. Ansgar, but the oats don't come from Iowa; they're imported from Canada. Quaker Oats also uses imported oats to produce oatmeal and cereals at its 1,400-employee plant in Cedar Rapids. The oats that farmers do grow in Iowa are cultivated mostly for animal feed and as a cover crop to protect newly planted fields of alfalfa from weeds. Iowa will harvest 9.6 million bushels of oats this year, less than one-quarter of the state's production in 1990. Nationally, oats production has fallen from 357 million bushels in 1990 to 107 million bushels this year, the lowest amount since the U.S. Agriculture Department began keeping records in 1866. Imports are expected to reach 100 million bushels this year, nearly equaling U.S. production. Most of the imported oats, which arrive from as far away as Finland, will go for food. Oats isn't the only crop that has fallen out of favor with American farmers - U.S.
production of wheat has fallen to its lowest level since 1972 - but farmers still grow more wheat that can be used domestically. Minneapolis-based General Mills Inc., maker of Cheerios, normally doesn't comment on where it gets its ingredients, a but company spokesman made an exception on the issue of oats, acknowledging that the company has to rely on imports. Having to import ingredients raises shipping costs, and the Canadian dollar also has strengthened, making the imported grain more expensive. The Canadian dollar has gained more than 40 percent in value against the U.S. dollar since 2002. General Mills representatives have held meetings with farmers to recruit them to grow oats for the company, but the crop isn't an easy sell. Hardier varieties of corn and soybeans are making it easier for farmers to grow those crops in states like North Dakota that have shorter growing seasons. Corn is especially attractive now that the booming ethanol industry is pushing up demand. Farmers have been cutting back on their oats acreage for decades, well before the recent farm bills or the developments in corn and soybean genetics. "To lay it all on the doorstep of the farm programs is not totally accurate," said Mike Duffy, an Iowa State University economist. Grain Millers will pay about $2.50 a bushel for food-grade oats at St. Ansgar, nearly 40 cents more than the current price of corn in Mitchell County. However, a farmer can produce more than twice as much corn per acre than oats. After paying for seed, chemicals and other expenses, farmers netted an average of ...