Financially distressed farmers have received $800 million of an anticipated $1.3 billion to reduce their debts on USDA farm loans, said Agriculture Secretary Tom Vilsack on Tuesday. “Today, I’ve got to think there are thousands of producers out there who can breathe a little easier,” he said during a teleconference.
An additional $1.8 billion will be devoted to oversight and new administrative tools, yet to be designed, allowing USDA to intervene in the future and help borrowers before loans go bad, he said.
Congress appropriated $3.1 billion to help financially distressed producers as part of the climate, health and tax law enacted in August. It also allotted $2.2 billion, to be administered by outside entities, for payments of up to $500,000 each to farmers, ranchers and forest landowners who experienced discrimination in USDA farm loans in the past. The program is still being designed.
Some 34,000 to 35,000 of USDA’s 110,000 farm loan borrowers would receive assistance from the $1.3 billion pool, either in automatic payments to cure delinquencies and resolve uncollectable debts or through case-by-case review of more complex cases, said the USDA.
With the remainder of the $3.1 billion, USDA would “chart a new pathway and new tools” for management of its loan portfolio, said Vilsack. USDA loan officers would step in sooner and help borrowers through a difficult patch, rather than demand crippling payments or propose foreclosure when loans are seriously delinquent.
“The star of the show is the farmer” and the USDA would try to keep farmers on the land, said Vilsack. “The government’s job is to serve.”
At the same time it set aside $3.1 billion for financially distressed farmers, Congress repealed a $4 billion loan forgiveness program for farmers of color that has been tied up in court virtually since it was authorized in March 2021. Minority farmers filed a class action lawsuit last week to force the government to carry out the repealed programs.
“It’s a completely different program,” said Vilsack when asked if farmers could still expect a complete write-off of USDA loan debt, as proposed in the 2021 initiative. The USDA has acknowledged discriminatory treatment of borrowers and paid billions of dollars in restitution since 1999.
USDA officials said the average debt-relief payments were $52,000 for loans directly from USDA, $101,000 for loans that went through foreclosure and $172,000 on USDA-guaranteed loans, which have higher loan limits. Farmers throughout the country and with all sizes of operations would be aided, said Vilsack.
“For farmers and ranchers who have been taking it on the nose the last few years, this is welcome news,” said Rob Larew, president of the National Farmers Union. The National Sustainable Agriculture Coalition said the assistance would help “farm families at particular financial risk, including small- and medium-scale and diversified farmers, especially those historically under-served by USDA.”
A USDA fact sheet on the assistance is available here.