Biden plan: Boost U.S. food production to fill in for Ukraine
The Biden administration said it would put $500 million into farm supports, boosting U.S. wheat production by up to 18% and expanding production of food grains and edible oils in an effort to fill the gap created by warfare in Ukraine. “This funding is going to help ease rising food prices at home as well as abroad caused by Russia’s war in Ukraine,” said President Biden on Thursday.
The funding was part of a White House request for $33 billion in emergency spending, two-thirds of it in military aid to Ukraine. About $8.5 billion in economic assistance would be provided to Ukraine, and $3 billion in humanitarian assistance would address food security needs worldwide.
“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,” said the White House.
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.
The USDA 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% of the USDA’s projected 1.94 billion-bushel crop this year. There are 36.7 bushels of wheat in a tonne.
“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,” said Biden at the White House, referring to Russian president Vladimir Putin. “This funding is going to help ease rising food prices at home as well as abroad, caused by Russia’s war in Ukraine. It’s going to help support American farmers to produce more crops like wheat and oilseeds, which is good for rural America, good for the American consumer, and good for the world.”
Sky-high commodity prices already give farmers incentives to plant more crops, said Joe Glauber, senior research fellow at the IFPRI think tank. He 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 said 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.
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.
The administration also requested $1.6 billion for USAID for hunger relief, $100 million for the USDA’s Food for Progress program, and $20 million to replenish the Bill Emerson Humanitarian Trust, said NAWG. Food for Progress donates U.S. commodities to recipient countries to promote free markets. The Emerson Trust is an emergency fund to respond to food crises.
A fact sheet on the White House proposal is available here.
To read President Biden’s letter asking for $33 billion in supplemental funding, click here.