Agricultural credit conditions are likely to remain strong through the end of this year, although bankers expect farm income and loan repayment rates, now the healthiest since 2010, to soften in the months ahead, said the Kansas City Federal Reserve on Thursday.
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.
Farmers faced higher expenses and earned less money from their crops and livestock than initially expected in 2020, due to market disruptions caused by the pandemic, said a USDA Covid-19 working paper. By many standards, such as debt-to-asset ratio, the financial strength of the sector softened in 2020, despite $45.7 billion in federal subsidies — the largest ever — said USDA economists.
The farm sector would gain $27 billion for climate mitigation, including payments for planting cover crops, from the social welfare and climate change bill passed by the House, said Agriculture Secretary Tom Vilsack. "Agriculture can lead the way in the fight on climate with climate-smart agriculture and forestry practices that sequester carbon, reduce emissions and create new and better market opportunities for producers."
Stymied by lawsuits that contend USDA debt relief for farmers of color is actually reverse discrimination, House Democrats proposed an alternative: full or partial forgiveness of USDA loans to limited-resource farmers. The multi-billion-dollar proposal, which does not mention race, is directed toward economically distressed farmers and ranchers in high-poverty areas.
Lawsuits to block $4 billion in loan forgiveness for minority farmers show a lack of historical awareness, said Agriculture Secretary Tom Vilsack at the BIO online convention on Wednesday. "It's a wonder where those farmers were over the last 100 years, when their Black counterparts were being discriminated against and didn't hear a peep from white farmers about how unfortunate that circumstance was."
A dozen white farmers "have established a strong likelihood" that a loan forgiveness program for minority farmers is unconstitutional, said the federal judge hearing the lawsuit in Green Bay, Wisconsin. District judge William Griesbach issued a nationwide order blocking debt-relief payments by USDA while he decides — possibly next week — whether to issue an injunction against the program enacted by Congress in March.
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.
With federal pandemic aid in their hands, farmers and ranchers borrowed far less money than usual from ag bankers during the opening months of this year for equipment, livestock, and operating expenses, according to a Federal Reserve survey of commercial lenders.
With Republicans complaining of discrimination against white farmers, the House passed a coronavirus bill on Wednesday that would provide an estimated $4 billion in debt relief for socially disadvantaged farmers.
Congress is poised today to pass one of the most sweeping relief programs for minority farmers in the nation’s history, through a provision of President Biden’s pandemic stimulus bill. Although the landmark legislation, which would cancel $4 billion worth of debt, seemed to emerge out of nowhere, it actually is the result of more than 20 years of organizing by Black farmers.(No paywall)
In just one month, a proposal for $4 billion in debt relief for Black and other socially disadvantaged farmers went from just-introduced legislation to a near-reality, needing only a final vote in the House as early as Tuesday. The Democrat-authored initiative to retire the farmers' debts on USDA loans is part of the $1.9 trillion American Rescue Plan backed by President Biden.
A three-month extension of higher SNAP benefits and $4 billion in debt relief for minority farmers are in the hands of the Senate following a 219-212 vote by the House over the weekend. "We are one step closer," said President Biden, who used the phrase to describe elements of the $1.9 trillion American Rescue Plan, from funds for coronavirus vaccinations and unemployment benefits to "helping millions of Americans feed their families."
The Biden administration on Wednesday announced a temporary suspension of past-due debt collections and foreclosures of farmers who borrowed money from the USDA and are in financial distress.
Farm income recovered this summer from the steep coronavirus-driven declines of last spring, according to ag bankers in the Plains and Midwest who took part in Federal Reserve surveys. "An influx of government payments and higher prices for agricultural commodities provided greater support for farm finances in the third quarter and seemed to limit demand for financing," said a summary by two Kansas City Fed economists.
The margin for error is shrinking in the farm sector as financial stress, measured by rising debt loads and the erosion of working capital, is rising, said Todd Van Hoose, chief executive of the Farm Credit Council on Wednesday.
An array of factors, from foreign competition to slower economic growth at home and abroad, will constrain U.S. farm income in the near term, notwithstanding the impact of trade war and bad weather this year, said a panel of economists on Tuesday. One of them, Seth Meyer of the University of …
Farmers and ranchers are taking out fewer loans from agricultural banks, and asking for smaller amounts of money when they need cash to pay for equipment, livestock or day-to-day expenses, said the Federal Reserve in its quarterly Agricultural Finance Databook. "Weaknesses in the sector persisted, continuing to pressure farm cash flows and agricultural credit conditions," reports the Fed.
Pinched by continued declines in farm income, producers are tightening their belts this year rather than borrowing money from the bank, says a quarterly report by the Federal Reserve. The volume of new non-real-estate loans issued by ag bankers from January-March was down 16 percent compared to the same period in 2016, and it followed a significant decline in the closing months of 2016.