White House seeks $500 million for farmers to grow more wheat, pay for market loans

© Reuters. FILE PHOTO: A combine harvests wheat in Corn, Oklahoma, U.S., June 12, 2019. REUTERS/Nick Oxford

By Leah Douglas and P.J. Huffstutter

WASHINGTON (Reuters) - The Biden administration is asking Congress to approve $500 million for the farm sector, in a bid to woo U.S. wheat producers to double-crop their fields, and boost how much the federal government will spend on short-term loans to farmers who grow certain food crops.

The request is part of President Joe Biden's broader $33 billion request on Thursday to lawmakers to support Ukraine, a dramatic escalation of U.S. funding for the war with Russia.

The effort comes as global grain prices have surged, following Russia's invasion of Ukraine which disrupted shipments of corn and wheat from those key suppliers. Meanwhile, food inflation is surging worldwide.

The request aims to increase the production of U.S. food crops - particularly wheat - which are experiencing a global shortage due to the war, according to a U.S. Department of Agriculture official.

USDA estimates it will help U.S. farmers replace up to 50% of the wheat typically exported by Ukraine onto the global market, and lower food costs for American consumers, the official said.

The request includes about $100 million to pay for a $10 per acre incentive to farmers - paid through crop insurance premiums - for a soybean crop planted after a winter wheat crop in 2023, the official said.

These payments are designed to encourage farmers to add more wheat production, while still being capable of producing a spring crop, the official said.

In addition, $400 million would be routed through USDA's marketing assistance loans, which provide interim financing to growers and buy them more time to sell their crops at a higher profit.

The Biden administration is seeking a two-year increase in these USDA loan rates for food commodities including wheat, rice and edible oils such as soybean and sunflower oilseeds. Under that proposal, wheat loan rates would go up 63%, oilseed up 40%, and rice and pulse crop up 21%.