May 26, 2022

Ukraine emergency funds calls for $500M for US producers

Ukraine emergency funds calls for $500M for US producers

By: Sydney Sheffield 

The Biden Administration recently requested Congress to supply emergency supplemental funding, due to the war in Ukraine. In the $33 billion supplemental requests, the administration is seeking $500 million in food production assistance for U.S. farmers to incentivize additional production to offset potential shortfalls from Ukraine’s crop.

“My Administration is committed to providing the Ukrainian people the assistance they need.  Our assistance to date has made a difference on the battlefield, helping Ukraine win the battle for Kyiv,” Biden said in the letter. “Additionally, the request includes funding to support the production of United States food crops that are experiencing a global shortage due to the war in Ukraine, for example, wheat and soybeans helping to address rising food prices here at home and around the world.  The request also would help increase domestic production for strategic minerals and materials produced in Russia or Ukraine and respond to global shortfalls and reduce price pressures.” 

The White House released a fact sheet, outlying the funding request. In relation to American farmers, through higher loan rates and crop insurance incentives, the legislative proposal to Congress would provide greater access to credit and lower risk for farmers growing soybeans and other commodities while lowering costs for American consumers. The request includes boosting some commodity loan rates for two years, extending the loan term to 12 months for 2022, and providing a $10 per acre incentive paid through crop insurance premiums to a soybean crop planted after a winter wheat crop in 2023.

Some do not agree with the funding, though. Joe Glauber, former chief economist at the United States Department of Agriculture (USDA) during Agriculture Secretary Tom Vilsack’s previous tenure during the Obama administration, told Politico, “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.” The lines are drawn politically, as well. A senior Senate Republican aide said “I’m not exactly sure how loan rates are going to be helpful. 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.”

USDA estimates the incentives would help U.S. farmers make up for up to 50% of the wheat typically exported by Ukrainian farmers. However, many of the wheat-growing regions in the West are still recovering from last year’s devastating drought. Experts warn if growers did not plant a fast-maturing soybean, it would be unlikely the producers will be able to get a winter wheat crop this year.

"Time is of the essence. The next two to three weeks are going to be very pivotal and very decisive in this war, and I don't think we have a lot of time to waste," said Michael McCaul,( R-TX), ranking member of the House Foreign Affairs Committee, in regards to the funding.