The Fence Post published an article discussing the White House proposal sent to Congress to provide an additional $500 million in domestic food production assistance through higher loan rates and crop insurance incentives. Senior research fellow Joseph Glauber issued a series of tweets in which he said that it would not be good policy for marketing loan rates to dictate what to plant.
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Glauber (@JoeGlauber1) Tweets:
9:45 AM, Apr 29, 2022
Is this Another Handout to Farmers? by @ASmithUCD
In addition to the points raised by @ASmithUCD, I have a couple more… Is this Another Handout to Farmers? by @ASmithUCD
First, raising the wheat loan rate to $5.52 (from $3.38) means it now EXCEEDS the reference price for PLC ($5.50). Likewise, the proposed new soybean loan rate ($8.68) exceeds the $8.40 reference price for PLC. 2/
So, this means that there would be no PLC payments for those crops (PLC is based on the diff between the reference price and HIGHER of the avg market price OR reference price). Presumably, farmers would think about switching from PLC to ARC as a result.
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