Socially disadvantaged farmers will begin receiving letters this week alerting them of a Biden administration program to pay off loans they owe to the USDA — “historic debt relief” in the words of Agriculture Secretary Tom Vilsack. Loan forgiveness could total $4 billion by the time, later this year, the government retires bank loans made to minority farmers with USDA loan guarantees.
House Agriculture chairman David Scott, who helped shepherd debt relief through Congress, said he is working on the next step: legislation to offer tax credits to businesses that buy farm and food products from socially disadvantaged farmers, who make up about 5 percent of what is an overwhelmingly white occupation. Legislation also is pending in Congress to overhaul USDA handling of civil rights complaints and to purge discriminatory practices from its operations.
Debt relief has become a lightning rod in rural America. Two lawsuits, one with Texas Agriculture Commissioner Sid Miller as the plaintiff, say it is unconstitutional to exclude white farmers from loan forgiveness. Proponents say debt relief will counteract decades of systemic discrimination. In legal settlements since the late 1990s, the USDA has acknowledged bias against minority groups.
The USDA paid more than $23 billion in pandemic relief to producers during 2020, and almost all of the money went to white producers. Pandemic payments were linked to volume of production and white farmers tend to have larger operations and to concentrate on the comparative handful of crops that are part of the farm program.
“This is a major step,” said Sen. Raphael Warnock, Georgia Democrat, on social media. “Now in the wake of the pandemic, we can finally start to level the playing filed, helping socially disadvantaged farmers in Georgia and beyond.” Vilsack joined Warnock at a news conference on a Georgia farm on Saturday to discuss the debt-relief program.
In a statement on Friday, Vilsack said USDA would “deliver historic debt relief to socially disadvantaged farmers and ranchers beginning in June.” Vilsack also said loan forgiveness “will be “one of the most significant pieces of civil rights legislation in decades. The law directs USDA to pay off the farm loans of nearly 16,000 minority farmers and begin to address long-standing racial equity challenges that have plagued farmers of color for generations.”
A formal notice of the debt-relief program will be published this week, said the USDA. Also beginning this week and continuing through June, the USDA will send letters to eligible farmers and ranchers who hold loans made directly by the USDA. Producers will be asked to sign and return the letter if they want debt relief. Payments would begin in June. Debts would be retired and producers would receive an amount equal to 20 percent of their total qualified debt, which can be used to pay tax liability and other fees.
The USDA intends, before the end of August, to spell out how it will handle guaranteed loans as well as direct loans that were previously referred to the Treasury Department for debt collection.
Loans covered by the debt relief program include operating loans, farm ownership loans and conservation loans. The program is restricted to loans made by USDA and by private lenders with USDA repayment guarantees. Loans from commercial lenders are not eligible if they did not include a USDA guarantee.
Socially disadvantaged farmers include Blacks, Hispanics, Native Americans, Alaskan natives and Asian and Pacific Islanders.
The USDA homepage for the debt relief program is available here.