Newhouse Joins Call to Include Wheat Growers in USDA Coronavirus Aid Program
WASHINGTON, D.C. –Rep. Dan Newhouse (R-WA) joined Rep. Frank Lucas (R-OK), House Agriculture Committee Chairman Colin Peterson (D-MN), House Agriculture Committee Ranking Member Mike Conaway (R-TX), and XX Members in sending a letter to U.S. Department of Agriculture (USDA) Secretary Sonny Perdue requesting he utilize funds provided in the CARES Act to support 2020 wheat crop losses for all classes of wheat.
"Wheat farmers have experienced significant economic harm resulting, in part, from COVID-19. Given the unique nature of the wheat production cycle, which entails harvest starting in May in the south and running into early fall in the northern states, 2020 production impacts should be covered by USDA's COVID relief funds provided by Congress," wrote the lawmakers. "Specifically, we request that you use funding provided in the CARES Act to immediately begin providing assistance for COVID-19 losses on 2020 production for all classes of wheat."
Washington state is the fourth largest producer of wheat in the United States, producing 153.2 million bushels in 2018. Wheat farmers support 8,168 jobs in the state, resulting in a total of $1.22 billion in economic activity.
"Washington's wheat growers proudly produce and harvest some of the most high-quality wheat in the country. As Congress continues to work to ensure a strong and stable food supply chain throughout the COVID-19 pandemic, they must work to make sure our producers – for all classes of wheat – remain as whole as possible, so our food supply does not experience disruptions now or in the future. Thank you, Congressman Newhouse, for continuing to advocate for our producers to be treated fairly throughout this pandemic," said Michelle Hennings, Executive Director of the Washington Association of Wheat Growers.
You can find the full text of the letter here and below:
Dear Secretary Perdue:
As Members of Congress representing wheat farmers across the country, we write regarding the deteriorating economic conditions being experienced on the ground now with the 2020 wheat harvest almost complete. Whether it's farmers who wrapped up harvest in May, those in the field harvesting their crops now, or those looking ahead to harvest in the coming weeks and trying to manage risk by forward contracting their crop, COVID-19 and other factors outside their control are depressing local cash prices and futures prices. So far, relief programs have had minimal applicability to wheat farmers. We ask that you use the resources available through the CARES Act to provide support for 2020 crop losses and to include all classes of wheat.
The Coronavirus Food Assistance Program (CFAP) is providing important assistance to hard red spring and durum wheat farmers for at-risk 2019 crop losses; however, farmers of hard red winter, soft red winter, and white wheat have also suffered lower prices due to the pandemic. Of 2019 harvested wheat acres, hard red spring and durum wheat comprised only 30% of production, so the majority of wheat farmers have not had access to assistance through this program.
The economic impact of COVID-19 has been experienced by all wheat farmers, particularly with the 2020 wheat harvest wrapped up in most areas of the country. As of August 14, 2020, the hard red winter wheat harvest was 90% complete, soft red winter wheat was finished, and close to half of the soft white harvest was wrapped up. Hard red spring harvest was 75% complete in South Dakota, 19% in Minnesota, 15% in Montana, and 7% in North Dakota. Durum harvest is just getting underway in Montana and North Dakota.
According to USDA's August 12, 2020, World Agricultural Supply and Demand Estimates (WASDE) report, demand for wheat for food use has been negatively affected by COVID-19 given a drop in food consumption away from home. Additionally, COVID-19 has affected markets all over the world, with the projected world-ending stocks being increased to a record
316.8 million tons (approximately 11.64 billion bushels). Record world ending stocks, caused in-part by the impacts of COVID-19, are expected to significantly depress wheat prices and also impact farmers' marketing tools by depressing futures prices. This is demonstrated by the WASDE report reducing the estimated season average farm price by $0.10 per bushel to $4.50 per bushel, as compared to the July WASDE estimate. Additionally, as shown in the table below, each of the three existing wheat futures contracts for September 2020 experienced at least a 12% drop between January and August.
September 2020Futures Contract (per bushel) | Hard Red Winter | Soft Red Winter | Hard Red Spring | |
January 13-17 average | $ 5.17 | $ 5.76 | $ 5.79 | |
August 3-7 Average | $ 4.23 | $ 5.07 | $ 5.00 | |
Percent change | -18% | -12% | -14% |
Apart from the 2016 marketing year at the height of the recession in the farm economy, the average price for wheat in 2020 is shaping up to be the worst in the last 14 years, including both 2018 and 2019 when the Market Facilitation Program provided much-needed relief.
Wheat farmers have experienced significant economic harm resulting, in part, from COVID-19. Given the unique nature of the wheat production cycle, which entails harvest starting in May in the south and running into the early fall in the northern states, 2020 production impacts should be covered by USDA's COVID relief funds provided by Congress. Specifically, we request that you use funding provided in the CARES Act to immediately begin providing assistance for COVID-19 losses on 2020 production for all classes of wheat. We understand that more resources from Congress will surely be needed to address the breadth of economic losses resulting from COVID-19, and we are committed to pursuing additional resources to help farmers as part of any larger aid package developed by Congress. In the meantime, use of existing resources to help wheat farmers is needed now.
Thank you for your attention to this matter.
Background:
On June 5, Rep. Newhouse and Rep. Cathy McMorris Rodgers (R-WA) sent a letter to the U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA) to protect Washington wheat growers by urging USDA to include three classes of wheat (soft white, hard red winter, and soft red winter) for coverage under the Coronavirus Food Assistance Program (CFAP)
The CFAP includes eligibility for just two of six classes of wheat grown in the U.S.: hard red spring wheat, and durum. This map shows generally where each class is grown. Of 2019 wheat production, HRS and durum comprised about 30% of total U.S. wheat production, and so a majority of wheat farmers have not had access to assistance through CFAP for losses on their wheat crop. Additionally, the production cycle of wheat is unique in that harvest starts in May in the southern states and last through early fall in the northern states.
The National Association of Wheat Growers asked USDA in April when the details were being finalized to incorporate price volatility during the early months of the year in evaluating price conditions. After CFAP was announced, NAWG submitted comments through USDA's NOFA process asking that the program be expanded to include all classes of wheat. In July after USDA announced some additional commodities for eligibility but not additional classes of wheat, NAWG asked that USDA to begin providing assistance for 2020 crop losses. USDA has not taken action to that effect.
As of August 24, 2020, approximately $9.2 billion has been expended through the Coronavirus Food Assistance Program (CFAP). In announcing the program, USDA allocated $16 billion, and the deadline for sign-up is soon approaching September 11, 2020. The CARES Act also included replenishment of spending authority through the Commodity Credit Corporation (CCC) of $14 billion which became available in July and has not yet been tapped for COVID-relief purposes.