Young Farmers Take to Washington!

Lindsey and Maisie in front of capitol - Farmer Fly-in 2013The halls of Congress heard ringing of cowboy boots and the stomping of mud-stained muck boots this past week as farmers from across the country descended on our nation’s capitol.

On Monday and Tuesday, the Young Farmers Coalition brought five beginning farmers from California, South Dakota, Colorado, and New York to Washington, DC to meet with Senators and Congresspeople to urge them to support beginning farmer programs in the next farm bill.  

In all, over fifty farmers participated in the Farmer Fly-In, organized by the National Sustainable Agriculture Coalition.  The Fly-In is an annual event, but this year had a particular emphasis, given the way that beginning farmer programs and many other helpful USDA provisions were left high and dry in January’s farm bill extension.  Given that urgency, this year was also the largest fly-in ever, with about one hundred legislative visits taking place over the two days.  Of those, NYFC’s crew organized and took part in sixteen meetings, ranging from left-leaning Democrats to tea-party-aligned Republicans.

Farmer Fly-in 2013 Stabenow and farmersSometimes speaking with elected officials themselves and sometimes with their agricultural policy associates, meetings covered a large spectrum of topics, from personal stories about how specific programs were essential in the formation of a new business to practical discussions about the likelihood of different bills being able to pass.  Legislators were selected for meetings based on their positions on the House and Senate Agriculture and Appropriations Committees.

As many of the farmers new to political advocacy found, most elected officials took quickly to the beginning farmer message: that the government needs to ensure the next generation of farmers and ranchers receive the training and support they need.  We shared stories about how USDA services like the Beginning Farmer and Rancher Development Program allowed for business training courses, how SARE grants helped fund grassroots technical innovation on the farm, and how the Conservation Stewardship Program helped farms become more sustainable while not breaking the bank.

Senate CR action picThis fly-in was just the start to the 2013 advocacy season.  With sequestration making its impact known, with the debt ceiling debate coming up, and most importantly with the Farm Bill extension expiration looming ahead of us, there is plenty of work cut out for us.  Get ready: in the coming months, we’ll be asking many of you to write letters, make phone calls, and come with us on in-person meetings, so please stay in touch and get ready to make history! 

In fact, you can take action right now!  Click the image to the right to learn more.

Action Alert – Fund Beginning Farmer Programs in the new C.R.

Hey all-
Merrigan meetingWe want to give out a huge Thank You! to the intrepid young farmers who came from the four corners of the country to speak with Senators and Representatives earlier this week about the importance of beginning farmer programs in the USDA budget.  (Stay tuned to the blog for a reportback on that adventure soon.)

Didn’t get a chance to be there, but want to get involved?  Well you are in luck!  News just came down the pipeline that the Senate is going to be voting on Monday on a general government budget (called a “Continuing Resolution, or C.R.”) that could also include funding for those amazing programs that were left high and dry in the New Years Eve farm bill extension.  (Read more about the whole dirty mess that was the 2012 Farm Bill here.) 

These include the Beginning Farmer and Rancher Development Program, which funds countless training programs, Organic Cost-Share, and many more*.  Take just a minute to make a call to save these programs!

Head over to the NYFC action page right now and make your call!  (Can’t do it right now?  You’ve got until Monday, so don’t forget!)

* Some of the programs currently stranded without funding include:

    Beginning Farmer and Rancher Development Program       
    Value-Added Producer Grant Program
    Rural Microentrepreneur Assistance Program
    Rural Energy for America Program
    Organic Agriculture Research & Extension Initiative
    National Organic Certification Cost Share Program
    Organic Production & Market Data Initiatives
    Farmers Market Promotion Program
    Outreach & Assistance for Socially Disadvantaged Farmers & Ranchers
    Conservation Reserve Program – Transition Incentive Program

  

A Brief History of the 2012 Farm Bill

We get a lot of questions about exactly what went down with the Farm Bill last year.  (Honestly, it was head-spinning confusion even for seasoned policy experts.)  To help shed a little light, here’s a play-by-play recap:

Creating a Farm Bill 1

How the process should work

For starters, what is the Farm Bill and how does it affect me?

The Farm Bill is an omnibus bill (that is, one that incorporates many different topics) passed every five-ish years by the US Congress and dictating US food and farm policy on the federal level.  It covers everything from Supplemental Nutrition Assistance Program (SNAP) benefits to conservation to crop insurance and subsidies.  Most important for our purposes, it dictates spending on all the USDA programs that help the next generation of American growers thrive.  This includes such programs as:

  • Beginning Farmer and Rancher Development Program, which supports education programs for beginning farmers and ranchers
  • Farm Service Agency programming, including loans for farmers to purchase land and run their operations
  • Conservation Stewardship Program, which helps to encourage farmers to install more ecologically sound systems that would otherwise be cost-prohibitive
  • and many more (here’s a longer list, if you are interested in reading further)

How is the Farm Bill created?

Like any such bill, the Farm Bill gets crafted simultaneously in the House and Senate Agriculture Committees.  (See graphic on right.)  This process ideally takes place long before the currently operating bill is set to expire.  Once each of those proposals make it through their respective committees, they are introduced to the houses of Congress as a whole.  There they are debated and eventually passed.  Finally the two bills, which most likely differ on some points, are reconciled in conference (ie, a joint committee compares the two and comes up with a compromise).  Both houses approve the final bill and then it goes to the President’s desk!  Simple, right?  

Now let’s look at the 2012 Farm Bill, a case study in how not to produce a bill.

Creating a Farm Bill 2

How the process did work in 2012

2012 Farm Bill Timeline

2008: Congress passes the 2008 Farm Bill, set to expire September 30th, 2012.

flash forward four years…

Early 2012:  The House and Senate begin “marking up” a Farm Bill.  In non-technical terms, they begin debating and writing the new bill.  Concerns start to be expressed that in the highly polarized political climate of the day and with a mandate for all bills to reduce spending, it won’t be easy to pass a bill (plus it’s an election year, to boot!)

April 26, 2012: The Senate Agriculture Committee passes their Farm Bill proposal 16-5.  While not perfect, it’s pretty good for beginning farmers, given the political climate.

June 21, 2012: The Senate as a whole then passes its version of the Farm Bill 64-35.  Meanwhile the House Agriculture Committee continues to delay, as concerns with health care law trump other issues.

July 12, 2012: The House Agriculture Committee approves its own Farm Bill with a vote of 35-11.  The bill has many more cuts than the Senate version, including cuts to nutrition, conservation, and beginning farmer programs.

late July, 2012: Speaker of the House John Boehner states concerns with the House Ag Committee’s bill and expresses doubt that it will come to a vote in the House before September 30th, when the old Farm Bill expires.

even later in July, 2012: Many House members publicly push for Boehner to allow the bill to come to a vote.  

at the very end of July: The House instead tries to pass a one-year extension of the current bill that cuts a lot of spending for beginning farmer and other important programs.  The bill is immediately pulled, given widespread opposition to it.

August 10th, 2012: Congress goes on recess without any Farm Bill in place.  Meanwhile, a summer drought
destroys crops across the Midwest and sends feed prices soaring.  Congress was unable to pass an emergency relief package before leaving for recess, so the USDA has its hands tied in terms of being able to help.

August 12th, 2012: Congress comes back from recess, with only eight working days before the end of the month’s session.  Hopes for beating the expiration deadline evaporate.

October 1st, 2012: The Farm Bill expires.  Nothing has been put in place to replace it.  Programs are affected differently, depending on the specifics of where their funding comes from and how they operate:

  • Thanks to the Continuing Resolution that is was recently passed (this is a six-month general budget that Congress passed on September 20th, good through March 27, 2013) SNAP and crop insurance are unaffected until then.
  • Some programs, such as price supports for milk, are good until the end of the year because they were written to cover the entire calendar year.
  • Many programs, however, are left with no money.  This includes the Beginning Farmer and Rancher Development Program, Organic Cost-share, Value-Added Producer Grants, and a whole slew of other great programs.

October, November, and early December, 2012: NYFC and the National Sustainable Agriculture Coalition, among many others, repeatedly push for Congress to pass a bill.  (Thanks to those of you who made phone calls, sent letters, and signed petitions!)

December 29th 2012: With only a few days left, Senate Ag Committee Chair Debbie Stabenow and House Ag Committee Chair Frank Lucas work out a reasonable one-year extension of the Farm Bill.  Time is short: at the end of the year many more programs will lose their funding (and some, such as milk supports, will revert to 1949 law and prices will skyrocket).  NYFC supports the extension: read the press release here.

December 31st, 2012: Undercutting Stabenow’s and Lucas’s work, Senate Minority Leader Mitch McConnell and Vice President Biden work out an alternate deal that gets included in the eleventh-hour fiscal cliff bill.  The extension cuts funding to a huge range of beginning farmer programs and makes none of the other necessary reforms.  Read NYFC’s coverage here

————————–

And so there it is!  In less than one thousand words, a concise history of the 2012 Farm Bill.  As the winter of 2013 wears on, both the Senate and House are already starting to think about the next Farm Bill.  Both sides say they are committed to passing a real five-year bill before September 30th, when the current extension expires.  (I know, it sounds like deja vu).  Meanwhile, NYFC will fight like hell for the amazing programs that were left behind.

How the Sequester Affects Agriculture

Thanks to the National Sustainable Agriculture Coalition for helping us understand sequestration’s impact on food and agriculture:

Originally Published by NSAC on March 1st, 2013

Yesterday, the Senate voted 51-49 on the Mikulski-Murray-Reid bill to replace the across-the-board automatic budget cuts (sequestration) of $85 billion for the current year, and reduce the deficit by $110 billion.  The measure failed because under Senate filibuster rules, a simple majority is not sufficient and a 60-vote super majority is needed to pass most bills.  The bill included:

A Republican alternative to the Mikulski-Murray-Reid bill failed by a vote of 38-62.  The Republican proposal would have kept sequestration in place but provided greater flexibility to the Administration to determine what to cut and by how much.

Sequestration now goes into effect by the end of the day today.  According to the Congressional Budget Office, sequestration will reduce GDP growth by 0.6 percent during this calendar year and will result in a net loss of 750,000 jobs.  Sequestration will require cuts of about 12 percent in the remaining seven months of the fiscal year on all discretionary programs.  Those cuts come on top of the roughly eight percent cut for this year’s discretionary spending that Congress approved in 2011 as part of the Budget Control Act.

If Congress does not revisit the issue, sequestration will remain in effect for the next nine years.  Congress, however, could come back at any time to either eliminate the across-the-board cuts or modify them in any number of ways.

The Triple-Headed Budget Monster Revisited

In the three-step process proposed by House Republicans earlier this year that subsequently became enacted, this March 1 date was the first fiscal crisis date to be reckoned with.  The second is March 27, the day the “continuing resolution” runs out and must be replaced or extended to avoid a government shutdown beginning the very next day.

It had long been thought that the late March date was the more likely of the first two to force a comprehensive budget deal.  Those hopes have now been dashed, with the President and Democratic leaders in Congress indicating that they will not try to force a bigger deal at that time.  They will simply concentrate on the difficult job of reaching an agreement on how to factor the sequester cuts into the funding bill for the rest of 2013.

That leaves the third fiscal crisis date — May 18 — as the last remaining time to reach a comprehensive deal.  That is the date by which the debt ceiling deal from earlier this year expires.  In the lead-up to that date, the House and Senate will be busy passing their respective budget resolutions, both of which are expected to put more comprehensive — but wildly different — deals on the table.  Those budget resolutions are not likely to be vehicles from which Congress could reach a deal, but rather statements of the Senate Democratic and House Republican starting points.  Whether the budget process or the political fallout from sequestration going into effect will yield a debt ceiling-triggered deal in May or June very much remains to be seen.

So, what happens next for agriculture?

Farm Bill: The sequester will reduce farm bill spending by over $6 billion over the coming years, with the largest amount of cuts from commodity programs and the second largest from conservation programs.  Both food stamps and crop insurance are exempt, the former by statute and the latter by administrative decision.

It is highly likely that a new five-year farm bill will cut farm bill spending by significantly more than the sequester amount.  If and when that happens, the new larger cuts could be written to replace the sequester cuts or to simply add to them.

It seems highly unlikely that any significant action on a new farm bill could happen before the May budget and debt ceiling battle comes to some kind of conclusion.  At this point in time, there is still no indication that the House leadership has any intention of bringing a farm bill to the floor this year.  (The farm bill process stopped last year when the House leadership failed to bring the House Committee-passed bill to the floor.)

(Note – Today the Congressional Budget Office provided new estimates for what the Senate-passed and House Committee-passed farm bills from last year would cost if re-enacted this year.  In both cases, the amount of funding saved would decrease substantially.)

If a comprehensive budget deal were reached in May or later, and if it included clear instructions for the size of farm bill spending cuts, that might in fact be the best hope for getting a new farm bill deal this year.

Agriculture Appropriations:  The House Appropriations Committee and the full House will next week take up a continuing resolution to fund the government for the last six months of the current fiscal year.  The bill will include the sequestration cuts, which for this year’s discretionary spending total $69 billion.  House Chairman Hal Rogers (R-KY) intends to bring forward a second continuing resolution to fund all of the federal government for the rest of fiscal year 2013, with some major revisions to defense spending but more across-the-board cuts on the domestic spending side of the budget.  We will report on all the details for food and agriculture next week, once the bill becomes public.

In a bit of a partisan oddity, there appears to be more, though not uniform, interest within the House majority and Senate minority to simply allow the across-the-board cuts to be reflected in the continuing resolution, but provide some flexibility to the Administration to make adjustments.  The Senate majority and House minority, on the other hand, in general seems more interested in writing regular appropriations bills that reflect congressional spending choices, within the new much lower limits, rather than Administration spending choices.

Earlier today, USDA Secretary Tom Vilsack illustrated the impact of these coming cuts for the rest of this fiscal year.  Among the examples he provided in a speech to the Commodity Classic were:

  • a $35 million decline in farm loans, the biggest slice of which go to beginning farmers to help them get started in agriculture;
  • a decline in conservation technical assistance that will result in 2,600 fewer farmers getting conservation plans;
  • a $60 million cut in agricultural research;
  • a cut to rural housing programs that will result in 10,000 low-income rural people losing rental assistance; and
  • a reduction in the WIC feeding program that could ultimately affect 600,000 women and infants.

Two things seem clear about sequestration and the overall budget situation.  It cannot continue on the path that it is now on without huge damage to economic growth, public investment, and social services.  There is also no clear path out of the mess given the current state of politics in the country and in Washington, D.C.   We will continue to track the implications for food and agriculture policy and spending, and keep readers appraised.

A possible fix to stranded farm bill programs (and sequestration) announced in the senate

Harry Reid pic

Senator Harry Reid. Image courtesy of www.reid.senate.gov

Late last week, Senate Majority Leader Harry Reid (D-NV) released the Senate Democrats’ proposal to avoid the upcoming sequestration through spending cuts and revenue increases.  Included in this “American Family Economic Protection Act” proposal were a number of changes to USDA spending, many addressing shortcomings of the terrible Farm Bill extension passed in early January.  

The proposal would restore funding to a number of farm programs that were left out of the extension, including programs that support conservation, value-added, and young and beginning farmers.

“We applaud Senator Reid for proposing to fix the fiscally irresponsible and unfair farm bill extension that was slapped together behind closed doors at the end of 2012,” said Ferd Hoefner, Policy Director of the National Sustainable Agriculture Coalition, of which NYFC is a member. “The package outlined today is a first step toward restoring both a sane fiscal policy and a fair farm bill extension.

The bill would cut spending to USDA and the Department of Defense by $27.5 billion each over the next ten years.  In agriculture, it would include both the elimination of direct commodity production subsidies (saving $31 billion) and increased spending for programs stranded after last month’s extension (costing $3.5 billion).  The bill also increases tax revenues by $110 billion, and pushes off the sequestration for another year.  Unless this or another bill passes Congress, sequestration will go into effect on March 1st, thereby reducing every USDA discretionary program by five percent, among other effects.

Got Animals? Apply for a small grant from FACT for on-farm improvements

Deck Family Farm - awardee in 2012.  Photo courtesy of FACT

Deck Family Farm – awardee in 2012. Photo courtesy of FACT

Got an animal-based operation?  The Food Animal Concerns Trust is once again calling for applications for its Fund-A-Farmer small grant program to qualifying livestock and poultry farmers who wish to improve their farm animal welfare.  Grants of up to $1,500 for projects are allocated for projects designed to:

  • Help farms transition to pasture-based systems, or
  • More generally enrich the conditions in which the farm animals are raised, or
  • Improve the marketing of their humane products

A list of eligibility rules and previously funded projects is available at www.fundafarmer.org.  A few examples of potentially qualifying projects are: for projects focusing on improving access to pasture could include building portal housing, revamping fencing, or bettering pasture nutrition; for general improvements to welfare it could be providing the ability to sate natural instinct, such as with foraging areas or cow scratcher; and in terms of better marketing it could be improving websites, value-added lines, and training.

Check out the FACT grant program website for more information.  Applications are due by May 1.  While NYFC has no role in this program, we are sharing it with you because we see it as a fantastic opportunity for beginning farmers who have animal operations.

More About the Food Animal Concerns Trust

FACT Fund A Farmer logoFounded in 1982, FACT is a national nonprofit organization based in Chicago that promotes humane and healthy farms through science-based advocacy, consumer education, and support for humane farmers.  FACT believes that all farm animals should be granted adequate space, access to the outdoors, clean water and air, the opportunity to express their natural behaviors, and safe feed.

Years ago, FACT pioneered successful projects working with farmers to create markets for humanely raised veal and eggs produced by uncaged hens.  The Fund-A-Farmer Project builds on those past successes and FACT’s belief that one of the best ways to improve farm animal welfare is to work directly with farmers.

FACT’s Fund-A-Farmer Project is designed to empower farmers to positively impact farm animal welfare. Farmers often want to make on-farm changes to give their animals a better life, but sometimes need financial assistance to make it happen.  We recognize that farmers have the needed technical expertise to make farms more humane, and can effectively use small grants to make these changes.

Washington Young Farmers Coalition Lobby for local food next week!

WAYFC Carrot FistGood luck to the Washington Young Farmers Coalition (an NYFC affiliate) as they join forces with other Washington food and farming groups in pushing for positive change in state programming!  Here is more about the event from WAYFC:

WA Young Farmers Coalition is joining forces with Tilth Producers of WA, the Washington Sustainable Food and Farming Network, and the Good Food Coalition to ask our state legislature to restore funding for the WSDA’s Small Farms and Farm-to-School Programs. Join us at Good Food and Farming Lobby Day in Olympia February 4th to talk to your legislators face-to-face about the importance of small farms and local food systems in Washington!

I have found this kind of face-to-face citizen lobbying super empowering and enjoyable, and it’s a great way to get involved in advocacy. Once you register, we’ll help make appointments with your elected officials and coach you through the process of meeting with them. It’s easier than weeding carrots! :) Hope you can come!

Register for the lobby day!
Endorse the effort to restore funding for the WSDA’s Small Farms and Farm-to-School Programs here.

NYFC applauds Farm Service Agency’s New Microloan Program

usda-fsa-logoThe final rule for the Farm Service Agency’s micro-loan program (ML) is now available on the Federal Register. We’ve taken a look and are pleased with the outcome. NYFC has been advocating for credit opportunities for small and beginning farmers for some time. We got policy makers thinking about this in 2011 and then proposed it in the Beginning Farmer and Rancher Opportunity Act. NYFC thanks the Farm Service Agency (FSA) for making this important change!

The final rule makes a few changes to the proposed rule released in May 2012 in response to submitted comments by organizations (such as NYFC and the National Sustainable Agriculture Coalition, NSAC), individuals, and FSA employees. Normally a 30-day delay between publication and effective date is applied. But the FSA believes for ML to meet the needs of farmers this season, it is necessary for it to be effective immediately! 

The ML application process operates within the existing Operating Loan (OL) program framework but is simplified to reflect the smaller loan amounts and unique needs of small farmers. The final rule streamlines the application process, modifies security provisions, provides flexibility in meeting the management experience requirement, and updates the apprenticeship option:

1. Farm Assessment Requirements for ML applicants are substantially reduced

The assessment for an OL evaluates farm organization and key staff qualifications, type of farming operation, goals for the farm, adequacy of real estate and chattel property to conduct the farming operation, historical performance, farm operating plan, loan evaluation, supervisory plan, and training plan. The assessment for an ML applicant will be simplified and in the form of a narrative that will address the type of operation, assistance needed, goals of the operation, marketing plan, supervisory plan, financial viability of the plan, and training plan. Note: chattel property: items of movable personal property, such as equipment, livestock, etc.

We are thrilled the FSA is not requiring an itemized cash flow budget for ML applicants. For diverse vegetable growers, developing cash flows for each crop is tedious and not a representative measurement of success. To reduce undue burden, the FSA believes that “For applicants new to FSA who may produce non-traditional crops or with production practices where yield per acre may be less important, other factors, such as the production capacity, the consistency of income and expenses, and the timely harvest and selling of produce, may be more appropriate measurements to use in establishing actual productivity and projected plans.”

Reporting past yields will also not be necessary. Applicants can provide other forms of documentation such as operator’s sales receipts, financial statements, contracts, and tax returns. This benefits beginning farmers especially, who may not have operated a farm in the previous year.

2. ML’s will allow for flexibility in meeting the managerial ability requirement

The proposed rule allowed applicants to meet the managerial eligibility requirement though the traditional means (traditional education and farm management experience) OR experience managing their own farm through a self-directed apprenticeship OR past association with an agriculture related organization.

Comments to the proposed rule appreciated this flexibility but argued applicants should have at least one-full season of on-farm experience, not solely an association with an agricultural organization. The FSA agrees applicants should have at least one-year on farm experience and the final rule, therefore, “adjusts the proposed alternatives to require sufficient prior experience working on a farm or small business management experience combined with participation in a self-directed apprenticeship.”

NYFC recognized confusion between an apprenticeship and mentorship in the proposed rule that persists in the final rule. An apprenticeship generally runs for one season and is essentially farm labor with added training. A mentorship means an established, formal relationship between an individual who receives applied guidance and input from another individual with the skills and knowledge pertinent to the successful operation. Therefore, the FSA should use the term “self-directed mentorship.”

The FSA wants to ensure that applicants who have only had farm labor positions available to them are able to apply for an ML. A self-directed mentorship will allow applicants an alternative way to gain farm management experience for one season (“by seeking, receiving and applying guidance on how to manage their own start-up farm operation.”) Mentors will not be evaluated in the application process, to avoid burden on both applicant and mentor.

3. Manageable Security Requirements

The proposed rule suggested that MLs must be secured by collateral worth at least 100% of the loan amount to prevent barriers to meeting loan security requirements. In the final rules, FSA maintains that a security of 100% should always be sufficient. The requirement for additional security up to 150%, when available, will be limited to MLs for annual operating costs.

In addition, a lien on real estate (the right of the FSA to possess/sell real estate if loan is not repaid) is not required unless the value of farm products (equipment, livestock, other assets) is not at least equal to 100%.

4. Training

NYFC commented that to ensure local field offices serve growers with diversified, organic and direct market farm operations, loan officers should be given special training in new farm business models. FSA maintains that in order to ensure a successful implementation of the program, local offices will be provided training when the program is introduced, and further training will be provided on a periodic basis. We hope this will training will allow state offices to be helpful resources for beginning farmers. We believe it would be tremendously helpful to have a state specialist on Community Supportive Agriculture.

5.  Making sure the ML meets young farmers needs

NYFC and NSAC believe FSA should be required to track and publish information on microloan borrower participation to identify whether this program meets their credit needs. We urge the FSA to collect information on the type of operation, gross sales, years of experience, etc. to determine who is using the program and how to better meet borrowers needs. In response to our comment, the FSA reports that it is implementing changes into the system so that MLs can be evaluated separately from OLs. State offices will also compile the prices and yields of agricultural commodities, data on non-traditional and direct sales, and organic operations and make them available to the Service Center staff. We hope this information will be used to evaluate the ML program to best meet small and beginning farmers’ needs.

Resource Spotlight: USDA’s Organic Literacy Initiative

The USDA recently launched its Organic Literacy Initiative, a program designed to connect organic farmers, ranchers, processors with the Department of Agriculture resources they could use.  Resources go over what the it means to be organic and how certification works, as well as resources for current certified farmers and ranchers.

The matericals include factsheets for producers considering the transition to organic – check out the sheet for farmers here and for ranchers here.  There is also a video to introduce current organic producers to USDA resources – watch it here.

Newer to the idea of organic certification?  The two new training modules – Organic 101, covering the fundamentals of organic agriculture, and Organic 201, covering standards, certification, and enforcement.

Check out the entire initiative directory and let us know what you think.

FSA logo

USDA launches new microloan program aimed at small and beginning farmers

spot_microloansFrustrated with traditional loans not suited for your diverse, small-scale operation? The USDA’s Farm Service Agency (FSA) released a rule today modifying its Farm Operating Loans (OL) program to include micro-loans. These micro-loans are smaller, require less paperwork, and allow for a longer payment period to better address the needs of small and beginning farmers. The National Young Farmers’ Coalition applauds the FSA for developing a loan program that accommodates the unique credit needs of young and beginning farmers.

FSA’s current Operating Loans program has typically offered larger loans up to $300,000 to cover large farm expenses. The maximum loan limit for the new micro-loan program will be $35,000 and is intended for smaller purchases such as seeds, livestock, small equipment, as well as insurance and other operating costs including family living expenses and building repairs– investments desperately needed to launch a small farm business. Many lending programs only give out sums of $100,000 or more, which can be an overwhelming amount to a new farmer.

The micro-loan program has several features that differ from the Operating Loans program making it more appropriate for small-scale and beginning farmers. It calls for a shorter application process in comparison with the OL program and conventional farm loans. “Paperwork would go down from about 30 pages to seven” the Associated Press reports. And the loan doesn’t have to be repaid for up to seven years. Beginning farmers have struggled in the past to meet farm experience and managerial requirements– the new micro-loan program accepts apprenticeship and mentorship programs, non-farm business experience, and farm labor experience as acceptable alternatives!

Agriculture Department Secretary Tom Vilsack announced the program publicly today and said the new loans are an effort by the USDA to expand credit to minority, socially-disadvantaged, and young and beginning farmers and ranchers. The interest rate will be around 4.9 percent, Vilsack says.

The final rule establishing the microloan program will be published in the Jan. 17 issue of the Federal Register. Stay tuned for a more complete analysis of the rule. We believe applications will be accepted as soon as January 18th! Anyone interested in applying should contact his or her local Farm Service Agency office.