April 29, 2022

The US government seeks US$500 million to encourage farmers to grow more wheat

US President Joe Biden's administration has asked Congress to approve US$500 million for the domestic agriculture industry, to encourage farmers to grow more wheat and increase federal government expenditure on short-term loans to farmers who grow certain food crops, Reuters reported.

The request is part of a larger US$33 billion proposal to Congress to support Ukraine, a substantial increase in US funding for the war with Russia.

Following Russia's invasion into Ukraine, which disrupted supplies of corn and wheat from both countries, global grain prices have risen. Russia and Ukraine are major corn and wheat exporters.

An official from the US Department of Agriculture (USDA) said the proposal aims to boost production of US food products, notably wheat, which are facing a global scarcity as a result of the conflict.

The USDA official said the expenditure will assist US farmers in replacing up to 50% of the wheat normally exported by Ukraine onto the global market, lowering food costs for American consumers.

The official also said the request includes around US$100 million to pay for a US$10 per acre incentive to farmers for soybean crops seeded after a winter wheat harvest in 2023. This will be covered through crop insurance premiums. The subsidies are intended to encourage farmers to increase wheat output while still being able to provide a spring crop.

In addition, US$400 million would be channelled through USDA's marketing assistance loans, which give producers interim financing and allow them more time to sell their products at a larger profit margin.

The Biden administration wants a two-year hike in USDA loan rates for food commodities such as wheat, rice, and edible oils like soybean and sunflower oilseeds. Wheat loan rates would increase by 63%, oilseed loan rates by 40%, and rice and pulse crop loan rates by 21% under that proposal.

-      Reuters