Ag Policy Blog

Twenty one senators from 14 wheat-producing states on Wednesday wrote Agriculture Secretary Sonny Perdue asking for more aid for farmers growing all classes of wheat, citing that COVID-19 and other factors are depressing wheat prices.

The letter said wheat farmers are facing "deteriorating economic conditions" as the wheat harvest wraps up. USDA's Coronavirus Food Assistance Program provides payments for farmers who grow hard red spring wheat and durum wheat. Other classes of wheat, however, are not eligible, having not met USDA's revenue loss standards for the early part of 2020. That means roughly 70% of the wheat crop is not eligible for aid. The senators stated, "The economic impact of COVID-19 has been experienced and felt by all wheat farmers across the country."

The letter comes as USDA is preparing to roll out the details for a second round of aid under the Coronavirus Food Assistance Program (CFAP). Perdue said the details are pending.

As of now, USDA has paid $9.4 billion to all the commodities eligible under CFAP, out of a pot of $16 billion set aside for initial funding.

The senators state that from mid-January to the first full week of August, the average futures price dropped 18% of the hard red winter September 2020 contract. Soft red-winter wheat contracts have dropped 12% and the hard red spring contract has dropped 14% as well, the senators wrote to USDA. The senators also cited the World Agricultural Supply and Demand Estimates (WASDE) report showing demand for wheat for food use has been negatively affected by COVID-19.

In a 1.92 billion bushel crop, USDA has increased domestic wheat use for food by 7 million bushels since February, going from 955 mb to 962 mb in the August WASDE. Globally, USDA also has increased world exports of the 2019-20 crop by 7.2 million metric tons since February as well.

The senators also pointed to the 2020-21 WASDE forecast in August that world ending stocks will reach a record 316.79 million metric tons, an increase of 1.95 mmt from the July forecast. Senators cited this prompted USDA to project a 10-cent lower wheat price for 2020-21 to $4.50 a bushel. The wheat price is 30 cents below USDA's baseline projection released in February, the senators noted.

The senators noted the average wheat price is projected to be among the lowest in the past thirteen years, aside from 2016's price.

Citing "this unprecedented time," the senators stated, "Wheat farmers have experienced significant economic harm from COVID-19. We request that you use funding provided in the CARES Act to immediately being providing assistance for COVID-19 losses for all classes of wheat."

The National Association of Wheat Growers thanked Sen. Pat Roberts, R-Kansas, chairman of the Senate Agriculture Committee, and Sen. Amy Klobuchar, D-Minn., for spearheading the letter. Dave Milligan, president of NAWG and a wheat farmer from Cass City, Mich., thanked the senators and reiterated that aid should go to a broader group of wheat farmers.

“Again, we want to thank the USDA for getting CFAP quickly off the ground but stress that it does not do enough for all wheat farmers,” Milligan said. “NAWG urges USDA to provide assistance to farmers of all classes of wheat and to consider 2020 crop losses and price decline when developing any future aid plan.”

The senators' letter and the list of those who signed it can be viewed at https://www.wheatworld.org/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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