The House Ag Committee heard calls Thursday to raise the limits on USDA farm loans and to streamline rules to accommodate a diversity of farmers.
Five panelists spoke at the farm bill hearing, held to give the committee a chance to scrutinize current Agriculture Department credit programs for young, beginning and underserved farmers. Multiple witnesses at a farm bill hearing highlighted the need for higher credit limits for both types of loans to keep up with high land prices and inflation.
“You increased those loan limits in the last farm bill,” Adam Brown, an Illinois farmer and Farm Bureau board member told the committee. “They’re going to have to be increased to be beneficial in this farm bill as well. Land costs will continue to escalate and cash rents obviously are going to keep up with that as well.”
Direct USDA operating loans are capped at $400,000 while direct ownership loans are limited to $600,000. Guaranteed operating and ownership loans are capped at $1.825 million. Microloans are capped at $50,000.
Julia Asherman, who owns an organic vegetable and flower farm in central Georgia, wants lawmakers to create a pre-approval process for ownership loans to help farmers apply for them in the offseason and while they're looking for land to buy. Often, she said, land sellers do not want to wait for producers to go through the lengthy loan approval process. This makes it harder for farmers trying to purchase tracts in high-demand markets, particularly during the farming season.
“Being able to do some of that burdensome paperwork, do some of that preplanning, get pre-approval in your offseason and then be able to look for land in an ongoing fashion would be a major benefit to farmers,” she said.
Asherman also wants to streamline the approval process for microloans. The process is supposed to be quicker and simpler, but it takes the same amount of time and paperwork as an operating loan would, she said,
Dãnia Davy, a board representative of the socially disadvantaged farmer and rancher policy center at Alcorn State University, encouraged legislators to create a local civil rights ombudsman to conduct annual reviews of USDA offices.
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Black farmers have been disproportionately denied credit throughout American history and have been at least three times more likely to lose their land as a consequence of disparate credit access than white farmers, she said.
“I think that we do need and would benefit from a more robust civil rights process at the local levels,” Davy said. “That's where the majority of the, the complaints of perceived and actual discrimination are taking place.”
Davy called for the limit on farm ownership and farm operating loans at $600,000 and allow up to $100,000 to be borrowed under microloan rules, A financial institution owned and controlled by farmers of color also should be developed, she said.
Willard Tillman, a board member for the Rural Coalition, also called for the committee to take steps to make sure that USDA’s loan programs were treating black farmers fairly. He asked legislators to authorize an operating loan that would require no payment for three years. That would allow farmers some time to operate the farm and become sustainable.
“We urge that the farm bill authorize such a loan structure to afford producers a chance to build equity and ensure that they have enough cash flow to cover the payments of their loans,” he said.
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