As of early 2012, beginning farmers looking to purchase land from retiring farmers have another tool at their disposal: the Beginning and Socially Disadvantaged Farmer and Rancher Land Contract Guarantee Program, now available nationwide.

As Juli Obudzinski, policy associate with the National Sustainable Agriculture Coalition (NSAC), says, “the Land Contract Guarantee Program offers a good option for retiring farmers looking to work with new farmers directly, and helps beginners access the land they need to grow a viable farm.”  NSAC, with which NYFC is affiliated, pushed for this program’s inclusion in the last two US Farm Bills.

 How Does it Work?

This program, started in 2002 as a pilot program in nine states, reduces the risk associated with selling farmland to beginning farmers. The intent is to make land more affordable. It reduces the financial risk for retiring farmers who sell their farmland to beginning or socially disadvantaged farmers or ranchers by providing a federal guarantee for three years of “prompt payments” should the beginning farmer be unable to pay. There is also a second option of a standard 90 percent guarantee of the outstanding principal on the land contract. The retiring farmer has the option of choosing the prompt payment guarantee or the regular guarantee on the value of the asset.

In order to be eligible for this program the seller needs to self-finance the sale of their land. The buyer of the farm or ranch must meet four criteria: be a beginning or socially disadvantaged farmer or rancher, operate on a scale no larger  than a family farm (in which most of the management and labor is provided by family members), be the owner or operator of the farm when the contract is complete, and have an acceptable credit history and be unable to obtain sufficient credit elsewhere.

 Interested parties should contact their local FSA office.