Agriculture Secretary Tom Vilsack is tapping into a $500 Million discretionary fund in order to continue to meet the demand for guaranteed farm ownership loans.
“USDA is entering a brief period where there is a gap in funding earlier than normal,” said USDA’s Farm Service Agency (FSA) spokesman Kent Politsch.
The department does normally run short on funds near the end of the fiscal year, which ends on September 30th, but 2016 has seen the funds run out sooner than usual. The department has already handed out most all of the $2 billion Congress approved for the guaranteed loan program. There is also a projected shortfall in federally assisted farm operating loans.
The USDA has been providing loans to farmers since the Consolidated Farm and Rural Development Act authorized an expansion of USDA lending activities in 1972. Currently, the Farm Service Agency services or guarantees 113,000 borrowers with loans through the agency, totaling $23 billion dollars.
“We realize the importance of a safety net to sustain families in good times and bad,” FSA spokesman Kent Politsch said. “Our farm loan programs are there to ensure access to credit to more than 43,000 farmers and ranchers annually […] to cover operating costs and to purchase or refinance farms.”
Over the past two years, low commodity prices and a dramatic decline in farm income have prompted banks to be more discretionary in their lending practices, while also increasing the need and demand for USDA guaranteed loans.
Strengthening U.S. farms and bolstering them through hard times has always been a priority of the USDA’s Farm Service Agency. Additionally, positioning farmers to take advantage of international trade is another way to strengthen farms now and give them the help and assistance they need to stay operational.
If the Cuba trade embargo is lifted, U.S.- based farms will be in a prime position to resume exports to the country. Currently, Cuba imports around 80 percent of its food and it’s still is not meeting the needs of its people. With small-scale Cuban farms relying on antiquated farming practices and organic farming techniques, they’re struggling to keep up with local demands. If and when the embargo is lifted, U.S. farmers will be able to provide more rice, black beans, milk, and poultry to the impoverished nation.
In addition, the imminent Trans-Pacific Partnership deal, expected to eliminate tariffs and other trade barriers on U.S. products in numerous countries, will make it easier for agricultural producers, and other businesses, to engage in trade with the current Asia-only region.
All of these reasons make it even more important to ensure that America’s farms are thriving. The various loans available for farmers through the FSA enable farms to correctly position themselves to take advantage of these upcoming opportunities for international trade as they develop.
The expanded funding for federally assisted farm operating loans includes funds used to purchase or enlarge farms and/or farming equipment, construct new buildings and/or improve structures on the farm property, pay closing costs, and promote soil and water conservation.
For more information regarding the FSA loan programs currently available, please visit the FSA’s website at fsa.usda.gov
According to the 2012 Census of Agriculture there are now 3.2 million farmers operating 2.1 million farms on 914.5 million acres of farmland across the United States. Experts agree that the FSA loans are a vital support for the agriculture industry, ensuring additional access to financing in rural America even as the banks avoid the risks.
The use of the additional discretionary funding for FSA loans marks a continued investment in America’s rural communities. It’s part of an investment that is strengthening housing, community facilities, businesses, and infrastructure – empowering small towns, rural communities, and America’s economy.