The Biden administration, on Thursday, announced it introduced a proposal to Congress, pleading for additional funding to offset costs resulting from the war in Ukraine. Part of the proposed funding includes $500 million to aid U.S. producers in increasing crop volumes.
Candace Vahlsing, associate director for climate, energy, environment, and science with the Office of Management and Budget at the White House outlined the details with “AgriTalk” Host Chip Flory, saying the request has two components:
1. Increase loan rates for food crops including wheat, rice crops, soybeans and oil.
2. $10/acre incentive to increase wheat production through double-cropping wheat and soybeans.
According to Vahlsing, the administration estimates the program will make up 60% of the wheat exported by Ukrainian farmers.
Industry Responds
Iowa Farmer Mark Recker says he understands the administration’s desire to want to increase wheat acres, but he isn’t sure the proposal will do more than what the markets can do for themselves.
“If you take the loan, at the time you have the loan, you’re holding the crop off the market,” Recker says. “There’s a lot to understand about this program, but the market would typically incent the crops that it needs.”
Shaun Haney, host of RealAg Radio, says the proposed program has major shortcomings that merely provide the Biden administration an opportunity to lobby and promote policy to urban voters. He feels the plan “sounds really good” but won’t offer anything worthwhile in farm country.
“If the government is going to say we need to increase soybean acres because of food shortages, is that counter to what they’re doing when it comes to renewable diesel policy?” Haney says. “Because we’re going to see an uptick in those soybean acres in the long term anyway.”
Easing the Input Load
ProFarmer policy analyst Jim Wiesemeyer previously hinted USDA would develop a way for producers to pay for fertilizer. He believes this plan is the administration’s attempt at mitigating those costs but doesn’t believe it’s workable.
“If you’re looking at $17 beans, why would you want to put grain under loan at $8?” Wiesemeyer says. “It’s a liquidity issue that’s market distorting.”
Flory and Recker agree, saying the markets are providing enough liquidity on their own. However, Recker says inputs are still the primary concern at stake.
“In some areas, we don’t know if we’ll be able to get inputs, and that’s on top of what you’re going to pay for them,” he says. “I think mitigating input costs and availability is part of what this proposal does and will play a part in the conversation on the farm bill.”
Read more on the White House’s proposal to Congress:
> White House Asks Congress for Additional $33 Billion in Aid for Ukraine
> White House Asks Congress to Significantly Boost Some Commodity Loan Rates for Two Years
> Biden’s Plan to Boost Wheat, Soybean Acres Called ‘Baffling, Convoluted’ Without Much Impact
