CHICAGO, Oct 4 (Reuters) - The U.S. Department of Agriculture said on Tuesday it will pay farmers more than $7 billion this fall to keep them afloat in the face of low crop prices.
The payments have started going out to growers of corn, soybeans and other crops, who had enrolled in U.S. safety-net programs to protect themselves from market downturns covering harvests last year, the USDA said in a statement.
They will account for about 10 percent of what the agency has projected for U.S. net farm income for 2016.
Prices for crops, including corn, soybeans and wheat, have tumbled 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 USDA’s 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” to growers.
In August, the USDA predicted net farm income in 2016 would be $71.5 billion, down 11.5 percent from 2015. If realized, that would be the lowest since 2009.
The payments to farmers will be made under two programs, called Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). They “primarily allow producers to continue to produce for the market” when crop revenues or prices decline, according to the USDA.
Payments will be made to farmers who enrolled acres of corn, soybeans, wheat, barley, grain sorghum, lentils, oats, peanuts, dry peas and canola in the programs. Additional payments for producers of other commodities, such as rice, will be announced later, the USDA said. (Reporting by Tom Polansek; Editing by Sandra Maler)