As part of the $33 billion for Ukrainian aid, President Joe Biden is including a proposal for $500 million for American farmers to grow certain crops to offset diminished exports.
According to the Biden administration, the proposal is targeted toward crops experiencing a shortage due to the crisis and those that “are important crops often used for humanitarian assistance; while maintaining existing government support for U.S. feed and fiber production.”
Speaking on the request for additional Ukrainian aid, Biden asserted the war in Ukraine had hampered the movement of food “by land and sea to nations around the globe that need it,” which resulted in higher food prices.
“This funding is going to help ease rising food prices at home, as well as abroad, caused by Russia’s war in Ukraine,” Biden said. “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.”
Under the proposal, $100 million would go toward a $10-per-acre payment—paid through crop insurance premiums—to farmers who plant soybeans after a winter wheat crop in 2023. The remainder would fund a two-year increase in the loan rates for crops, including wheat, rice, pulse crops and edible oils such as soybeans, sunflowers and canola.
The higher loan rates provide access to credit to cover higher input costs and lower the risk to farmers. The proposal would increase the loan rate for wheat by 63 percent, from $3.38 to $5.52 per bushel, and for soybeans by 40 percent, from $6.20 to $8.68 per bushel. Oilseed loan rates would also be increased by 40 percent, and rice and pulse crops would increase by 21 percent.
According to Politico, Republican lawmakers are skeptical of the use of loan rates as incentives to increase production and how much the proposal will help farmers.
“I’m not exactly sure how loan rates are going to be helpful,” a senior Senate Republican aide told Politico. “Loan rates really give producers liquidity to hold onto a harvested crop until they market it. I don’t know if they encourage more production.”
The National Association of Wheat Growers (NAWG) said it “appreciates the administration’s creative efforts to ensure a stable food supply for the American people and the world.” NAWG said since the proposal “is refined through the congressional process,” it will work with Congress to help provide incentive payments through crop insurance to increase wheat production through double cropping.
USDA expects the increase in production by U.S. farmers would make up almost 50 percent of the wheat exported by Ukraine in the 2023 crop year. Ukraine is responsible for about 10 percent of global wheat exports and roughly 50 percent of sunflower exports. Ukraine is also a significant corn exporter.
According to a report by CoBank, the company sees “tight stocks-to-use and price volatility continuing for at least two growing seasons.” The volatility should remain regardless of whether the war ends, resulting in a lower available stocks-to-use ratio for wheat from 15 percent to 10.5 percent. High fertilizer prices, crop chemical shortages and ongoing supply chain problems will also contribute to the volatility. CoBank sees India, Europe and Australia filling some of the expected shortfalls in Ukraine’s wheat exports to the Middle East and North Africa. It projects that only 50 percent of the wheat will be planted in Ukraine for the next two years.
According to Reuters, on May 2, the Ukrainian agriculture ministry announced it had closed its four Black and Azov seaports “until the restoration of control.” Russia has captured some ports and blockaded others. Ukrainian President Volodymyr Zelenskiy said Ukraine could lose tens of millions of tons of grain due to Russia’s control of Black Sea shipping.
Food aid
The Biden administration announced the USDA and the U.S. Agency for International Development (USAID) are using $670 million from the Bill Emerson Humanitarian Trust (BEHT) to meet the needs of countries around the globe facing food insecurity as a result of the invasion.
“The world is suffering from historic levels of global food insecurity, which is being exacerbated by the impact Russia’s war on Ukraine is having on global food supplies. Available estimates suggest an additional 40 million people could be pushed into poverty and food insecurity as a result of Russia’s aggression,” USDA and USAID said in a joint news release.
USAID will use $282 million from BEHT to purchase U.S. food commodities for six nations in Africa facing food insecurity and will use $388 million in additional funding through the Commodity Credit Corporation to cover transportation and other associated costs.
This is the first time since 2014 the U.S. government has used this emergency funding authority. According to USDA, the Agriculture secretary has the authority to release funds from BEHT to provide emergency food assistance if the USAID administrator determines there are insufficient funds available for emergency needs under Title II of the Food for Peace Act for a fiscal year.
“America’s farmers, ranchers and producers are uniquely positioned through their productivity, and through the BEHT, to help directly feed those around the world impacted by these challenges,” said Secretary of Agriculture Tom Vilsack. — Charles Wallace, WLJ editor
