CHICAGO (Reuters) - The U.S. Department of Agriculture will pay more than $7 billion of taxpayers’ money to farmers this fall to keep them afloat in the face of low crop prices, agency officials said on Tuesday.
The USDA released the total on the same day that payments started going out to more than 1.5 million growers of corn, soybeans and other crops, who had enrolled in U.S. safety-net programs to protect themselves from market downturns last year.
Prices for the crops have stayed low in 2016 as massive harvests around the world have increased inventories and intensified competition for exports.
U.S. farmers recently started bringing in their latest corn and soybean harvests. Both of which are expected to be record-large due to favorable weather.
“The program payments being announced today will provide a needed cushion for farmers during these tough economic conditions,” said Gordon Stoner, president of the National Association of Wheat Growers, which represents wheat producers.
In August, the USDA predicted net farm income in 2016 would fall 11.5 percent from 2015 to $71.5 billion because of low commodity prices. If realized, that would be the lowest since 2009.
It also would mean that USDA’s safety-net payments accounted for about 10 percent of net farm income for 2016.
The payments will help farmers “who are standing strong against low commodity prices,” USDA Secretary Tom Vilsack said in the statement. He added that the agency will “continue to ensure the availability of a strong safety net” for growers.
Payments will be made to farmers who enrolled acres of corn, soybeans, wheat, barley, grain sorghum, lentils, oats, peanuts, dry peas and canola under two USDA programs, called Agriculture Risk Coverage and Price Loss Coverage.
They “primarily allow producers to continue to produce for the market” when crop revenues or prices decline, according to the agency.
Additional payments for producers of other commodities, such as rice, will be announced later, the USDA said.
Last year, the agency paid farmers $5.2 billion under the programs to cover weak markets in 2014.
Reporting by Tom Polansek; Editing by Sandra Maler and Tom Brown