“As part of a $33 billion funding request for Ukraine, the Biden administration last week proposed sending $500 million to American farmers with a goal of boosting production of wheat, soybeans, rice and other commodities, in order to make up for some of Ukraine’s food exports that have dried up since the Russian invasion.
But some agricultural economists say they’re unsure why the administration would move to boost subsidies for crops that are already fetching high prices, our Meredith Lee reports.
“I don’t think that this sort of intervention from the government makes any sense, other than to read it in a pure political sense, that this is something they feel like they need to do,” said Joe Glauber, former chief economist at USDA during Agriculture Secretary Tom Vilsack’s previous tenure during the Obama administration.
The funding request includes food aid programs that buy U.S. commodities and send them to countries in need, including many in Africa and the Middle East that relied on Ukraine and Russia for staples like wheat and sunflower oil and are now reeling from shortages and price spikes.
By the numbers: Under the Biden administration’s proposal, $100 million would go toward providing a $10-per-acre payment to farmers who plant a soybean crop after a winter wheat crop in 2023. Another $400 million would fund a two-year increase in loan rates for U.S. producers to encourage them to grow more select food commodities, including wheat, rice and oilseeds like soybeans, sunflowers and canola.
The Agriculture Department claims the proposal would help stabilize rising U.S. food prices and provide food for foreign countries in need, by helping American farmers grow 50 percent of the wheat normally exported by Ukraine, among other things. That plan, however, would probably also require the U.S. to step up funding for federal aid programs that buy and ship U.S. commodities abroad. Otherwise, wealthier countries like China would likely buy up the extra supply on the open market.
Biden’s proposal comes despite prior statements by key White House and USDA officials that high commodity prices alone would encourage U.S. farmers to increase their crop production and help meet global demand in the wake of Russia’s invasion of Ukraine. The president on Thursday described the plan as “good for rural America, good for the American consumer and good for the world.””