Today, the Washington Association of Wheat Growers (WAWG) submitted a letter to the U.S. Department of Agriculture (USDA) asking the agency to consider overall price volatility when determining eligibility for the Coronavirus Food Assistance Program (CFAP).
Under current rules, a commodity is considered eligible for CFAP if the price of that commodity fell at least 5 percent when comparing two, five-day time periods between January and April of 2020. The decline for soft white wheat, calculated this way, was 2.4 percent. Out of all the wheat classes, only durum wheat and hard red spring wheat are eligible. The Farm Service Agency began taking applications for CFAP on May 26.
About 80 percent of the wheat grown in Eastern Washington is soft white wheat. WAWG pointed out that never before has a farm program made an eligibility distinction based on the class of wheat. Furthermore, market history shows that all classes of wheat suffered severe price drops during the first quarter of 2020.
“…the soft white Portland price from January to April actually swung more than 8.5 percent from its highest price of $6.33 on Jan. 28 to its lowest point on March 16 of $5.79. That swing is more than 3 percent higher than USDA’s benchmark during a critical marketing time for wheat producers. The price loss experienced by producers who sold wheat during that period is not accurately reflected in the formula used by USDA. Soft red winter and hard red winter futures contracts both saw drops of more than 10 percent during this time frame,” the letter explained.
Another issue WAWG highlighted is the need to address the fact that USDA has not revealed what price series they used, only that cash prices would be used for commodities for which there isn’t a futures market.
Ryan Poe, WAWG’s president, said wheat organizations have heard that because depressed wheat prices existed before the rise of COVID-19, the wheat industry overall is less qualified for pandemic relief. “We look at our members, many of whom are struggling, and we don’t believe that is true. Every farmer, regardless of the crop they are growing, has been negatively impacted in ways that will be felt for months, if not years.”
The letter finishes by respectfully requesting that USDA “…consider overall price volatility during the entire January-to-April time frame for CFAP eligibility in order to account for the price drops all classes of wheat experienced in the 2019 crop year. We also urge you to consider providing assistance to growers of all wheat classes for the upcoming 2020 crop year. That harvest will begin in the next weeks and is being marketed in continued depressed conditions due to impacts from COVID-19 and retaliatory tariffs.”
To read the entire letter, click here.