The whole world is struggling with rising prices for almost every commodity. These problems are spilling over into agriculture and food prices are soaring to record highs, as we reported in our previous article.
U.S. President Joe Biden decided to take this step so that farmers would increase their planting areas and reduce the risks of new plantings. He also wants to increase the amount the federal government spends on short-term loans to farmers who grow certain food crops.
What specifically would the money go for?
The request includes about $100 million to pay for a $10-per-acre incentive for farmers. This funding would be paid through crop insurance premiums, specifically for the soybean crop planted after the 2023 winter wheat crop.
The aid consists of a temporary increase in crop insurance loan rates to encourage farmers to grow wheat and soybeans. Improved access to these loans should reduce the risk for farmers growing these food commodities while reducing costs for U.S. consumers.
An additional $400 million would be channelled through USDA marketing assistance loans, which provide temporary financing to growers and buy them more time to sell their crops at a higher profit, better access to credit and reduced risk for farmers growing these food commodities, while lowering costs for American consumers.
In an earlier article, we mentioned that farmers need cash to pay for seed and fertilizer before spring planting, as well as for land rent and tax bills due. This move will help farmers a bit, but it is unlikely to solve the current crisis in the industry.