Wheat industry awaits coronavirus aid expansion

Published 5:15 pm Friday, September 11, 2020

American wheat farmers are waiting to see if all classes of their crop will be included in USDA’s expanded COVID-19 assistance.

Currently, only soft red spring wheat and durum wheat farmers are receiving payments under USDA’s Coronavirus Food Assistance Program. Those classes represent 30% of U.S. wheat production in 2019.

“We think there is justification for wheat to be included here,” said Josh Tonsager, vice president of policy and communications for the National Association of Wheat Growers.

Letters signed by 21 senators and 26 representatives recently went to Agriculture Secretary Sonny Perdue asking that the program be expanded to include all wheat classes.

At $4.50 per bushel, the average wheat price for 2020 is shaping up to be the lowest in 13 years and 22% below the 13-year average, according to the letters.

USDA accepted applications for the CFAP program through Sept. 11.

So far, NAWG hasn’t gotten a response, Tonsager said.

When considering eligibility for CFAP, USDA compared prices during two five-day periods between January and April of 2020. Calculated this way, the decline for soft white wheat was 2.4%, below USDA’s 5% benchmark.

All wheat futures prices have dropped at least 12% since the pandemic began, Tonsager said. Local cash prices have dropped as well, he added.

According to the letters, from mid-January to August, weekly futures prices for the September 2020 contract dropped 18% for hard red winter wheat; 12% for soft red winter wheat and 14% for hard red spring wheat.

Low prices are expected to continue, Tonsager said.

USDA’s recent world supply and demand estimate indicated initial increases in consumption at home, but not enough to offset losses in restaurants, Tonsager said. USDA projects record high world ending stocks, which also will depress prices.

Studies haven’t delved deeply into specific market impacts, and how much lower prices are due to COVID-19 or the large global supply, Tonsager said.

“A lot of those things, there’s some cross impacts,” he said.

NAWG continues to talk with members of Congress about the need for additional resources and replenishment of the Commodity Credit Corp., which serves as the line of credit for COVID-19 assistance, crop insurance and CRP payments.

“Whether we’re included or not, I think there’s a clear indication that additional resources from Congress are going to be needed to fully address the economic impacts of COVID on the ag industry,” Tonsager said.

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