President Joe Biden is proposing to spend $500 million to encourage U.S. farmers to increase production of crops such as soybeans and wheat to address global food shortages.
The plan, which is part of a $33 billion supplemental spending request that the White House sent to Congress on Thursday, would consist of a temporary increase in marketing assistance loan rates and crop insurance incentive payments to encourage farmers to double-crop wheat with soybeans.
The marketing loan rate for wheat would be raised from $3.38 to $5.52 per bushel, according to the Agriculture Department. Loan rates for soybeans and other oilseeds would be increased by 40%. Rates for rice and pulse crops would be increased 21%.
Farmers who plant a winter wheat crop this fall and follow that by seeding soybeans next spring would receive a $10 an acre incentive through their crop insurance premiums.
The increase in loan rates would cost $400 million, compared to $100 million for the double-cropping incentive.
The higher loan rates would be "targeted to food commodities experiencing a shortage due to the crisis and that are important crops often used for humanitarian assistance; while maintaining existing government support for U.S. feed and fiber production. The higher loan rates provide greater access to credit and lowers risk for farmers growing these food commodities," according to a USDA summary provided to Agri-Pulse.
The increase in U.S. production would make up half of the wheat Ukraine typically exports, the summary said.
At the White House Thursday, Biden said the war is "impacting the harvest of food and disrupting the movement of that food by land and sea to nations around the globe that need it," Biden said. "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."
The supplemental request also includes $1.6 billion earmarked for the U.S. Agency for International Development for emergency food aid and humanitarian assistance.
The Agriculture Department would get an another $100 million for the Food for Progress program and $20 million for the Bill Emerson Humanitarian Trust.
Under Food for Progress, U.S. agricultural commodities are sold on local markets in low-income countries, with the proceeds used to fund agricultural, economic, or infrastructure development programs.
The Bill Emerson trust is used to fund the purchase of U.S. ag commodities for distribution to countries in need of food. The administration announced Wednesday that it would spend $282 million to buy wheat and other commodities that will be shipped to Yemen and five African nations experiencing severe drought and food insecurity. It is the first use of the Bill Emerson trust since 2014.
USDA is spending another $388 million from its Commodity Credit Corp. account to cover the shipping and handling expenses, including the cost of ocean transportation.
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Chandler Goule, CEO of the National Association of Wheat Growers, told Agri-Pulse his group would ask lawmakers to modify the crop insurance incentives, which he said would primarily benefit a relatively small number of farmers in Alabama, Kentucky, Michigan and Ohio who double-crop soybeans and winter wheat. Most U.S. winter wheat is grown in the Plains states and Pacific Northwest.
Farmers would have to plant a short-maturing soybean crop this spring in order to follow it with winter wheat this fall, he said.
"We will work with Congress to create incentives for all wheat growers," Goule said.
He said NAWG welcomed the additional funding for food aid. The group wasn't consulted during development of the crop incentive plan.
The 2022 marketing loan rates, which are $2.20 for corn and $6.20 per bushel for soybeans, are far under the market prices for those crops. The rates serve as a floor under prices; when market prices fall below the rates, growers can claim a payment for the difference.
Chicago soft red winter wheat futures for July were trading at about $10.92 at mid-day Thursday, while corn futures were at $8.13 a bushel, and soybeans at $16.86.
Agriculture Secretary Tom Vilsack briefly addressed the supplemental request during a hearing with the House Agriculture Appropriations Subcommittee on Thursday, but he didn't provide any additional details.
"We're ... looking for ways in which we can increase productivity here at home, which is why you'll see in this proposal additional resources to increase the marketing assistance loan program and also to incent double cropping in areas where that may make sense for producers," he said.
A letter from Biden to House Speaker Nancy Pelosi that accompanies the request highlights the funding for crop production and food aid.
"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. Additionally, 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."
In a tweet Thursday afternoon, Senate Majority Leader Chuck Schumer, D-N.Y., said of the $33 billion request that he would "make sure the Senate prioritizes this important funding package so we can get help to the Ukrainian people fast."
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