Biden proposes $500M in farm subsidies to increase production
President Biden on Thursday, April 28, asked Congress to provide $500 million for farm subsidies to increase U.S. production of crops, particularly wheat and soybeans, to address the world’s expected loss of production from Ukraine due to the invasion and continuing war provoked by Russian President Vladimir Putin.
In remarks at the White House on his overall $33 billion request, Biden said, “Ukraine was one of the world’s largest agriculture producers. It typically grows 10% of all the wheat that’s shipped around the world.”
“Putin has asserted sanctions are blocking food from Ukraine and Russia getting on the market — the sanctions we’ve imposed on Russia. Simply not true,” Biden said.
“Putin’s war, not sanctions, are impacting the harvest of food and disrupting the movement of that food by land and sea to nations around the globe that need it.
“This funding is going to help ease rising food prices at home as well, and abroad, caused by Russia’s war in Ukraine.
“It’s going to help support American farmers produce more crops like wheat and oilseed, which is good for rural America, good for the American consumer, and good for the world.”
In a letter to House Speaker Nancy Pelosi, D-Calif., Biden wrote, “Additional food security and humanitarian assistance will provide wheat and other commodities to people in need, build countries’ resilience to global food supply and price shocks, and provide lifesaving aid to people displaced by or otherwise impacted by Russia’s war in Ukraine.”
Biden added that the request “includes funding to support the production of United States food crops that are experiencing a global shortage due to the war in Ukraine, for example, wheat and soybeans helping to address rising food prices here at home and around the world.”
A White House fact sheet said, “An additional $500 million in domestic food production assistance will support the production of U.S. food crops that are experiencing a global shortage due to the war in Ukraine, for example, wheat and soybeans. Through higher loan rates and crop insurance incentives the request provides greater access to credit and lowers risk for farmers growing these food commodities, while lowering costs for American consumers.”
The Food and Environment Reporting Network said in a report, “Some $400 million would be spent on higher loan rates for food crops, such as wheat, rice, pulses, and oil crops including soybeans, canola and sunflowers. Farmers would be encouraged to grow more wheat by double-cropping it with soybeans via a crop insurance incentive.”
FERN added that the Agriculture Department “estimated that wheat growers could harvest enough wheat next year to make up for as much as 50% of Ukraine’s wheat exports.”
“Ukraine exported an average of 19 million tonnes annually in the past two marketing years. Half of that volume — 9.5 million tonnes, or nearly 350 million bushels — would be equal to 18 percent of the USDA’s projected 1.94 billion-bushel crop this year. There are 36.7 bushels of wheat in a tonne.”
Under the White House proposal, loan rates for food crops would be increased for two years. The wheat loan rate would rise by 63%, oilseeds by 40% and rice and pulses by 21%. The loans would run for 12 months. At present, repayment is usually due in nine months.
To encourage more double-crop wheat, the administration proposed a $10-an-acre incentive on crop insurance premiums for soybeans that are planted after wheat.
Reaction to the proposal was muted.
Joe Glauber, a former USDA chief economist now with the International Food Policy Research Institute, told FERN that sky-high commodity prices already give farmers incentives to plant more crops. FERN said Glauber was skeptical of the near-term impact of the White House proposal. The wheat incentive was aimed at the 2023 crop, not this year’s, he said.
“It’s totally baffling to me,” said Glauber. The wheat incentive was convoluted, he said, because it is tied to crop insurance coverage of the soybean crop that would be planted after winter wheat is harvested in late spring.
The National Association of Wheat Growers told FERN it would work with Congress to refine the administration proposal for more double-cropped wheat.
“We would like to see wheat production encouraged throughout the nation and incentivize both spring and winter wheat growers,” said Chandler Goule, NAWG chief executive.
A spokeswoman for the American Soybean Association said, “We look forward to hearing more details. ASA appreciates the administration considering a role for agriculture and working with Congress on next steps.”
Staff for the Senate Agriculture Committee told DTN/Progressive Farmer at a Senate Agriculture Committee field hearing in Michigan today on the next farm bill that they were briefed on some of the details of the package on Thursday, but they had not seen the specifics of the request from the Biden administration.
DTN/Progressive Farmer also noted that the World Bank has projected commodity prices are expected to remain high for several years. A World Bank report said, “For most commodities, prices are expected to be significantly higher in 2022 than in 2021 and to remain high in the medium term.”
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