There is some very good news in the new Farm Bill for new farmers and their advocates. For the first time in USDA history, there is a beginning farmer and rancher development program. There are other new provisions targeting new farmers and ranchers, in addition to reforms to existing beginning farmer loan programs. Following is a brief summary of these provisions, and what they mean in terms of opportunities and next steps, specifically implementation.
For some of you, certain provisions (particularly in the Credit Title) might seem arcane and technical; I suggest you scan for what interests you the most, then save and file this summary for future reference and action.
Section 1244. In carrying out any conservation programs, USDA may provide to beginning farmers and ranchers incentives to participate in the program. The goal is to foster new farming and ranching opportunities and enhance environmental stewardship in over the long term. This section authorizes (but does not require) NRCS to offer special incentives to beginning farmers to participate in any conservation program. New farmer advocates will want to encourage NRCS at the federal and state levels to consider and implement such incentives. GNF will be following up on this-and asking for your ideas and action.
Section 2001. In the new Conservation Security Program, a standard cost-share contract for conservation practices on working lands does not exceed 75 percent. In the case of a beginning farmer or rancher, the cost-share can be up to 90 percent. NRCS is responsible for administering this program. There may be opportunities for State Technical Committees and others to encourage, promote, and monitor NRCS efforts to attract beginning farmers to this new program.
Section 2301. In the Environmental Quality Incentives Program (EQIP), the cost-share for beginning farmers and ranchers can be up to 90 percent instead of 75 percent* (as Section 2001 above).
Two important beginning farmer program development opportunities were created in this Title.
Section 7205. In the Initiative for Future Agriculture and Food Systems (IFAFS), an existing competitive grants program with mandatory funding, the committee conferees encourage USDA to solicit and fund research and development of farm tenure, transfer, succession, finance, management, production and marketing models and strategies that foster new farming and ranching opportunities for beginning farmers and ranchers in the farm profitability priority mission area of the program. We will want to make sure that this language appears in the Request for Proposals language. This is a terrific opportunity for educational institutions, agencies and non-governmental organizations to receive support for beginning farmer programming. The GNF Project is supported by IFAFS funding.
Section 7405. This section is entitled “Beginning Farmer and Rancher Development Program.” The Farm Bill language states that “the [USDA] Secretary shall establish a beginning farmer and rancher development program to provide training, education, outreach and technical assistance initiatives for beginning farmers or ranchers.” It is a competitive grants program. Educational institutions, agencies and non-governmental organizations are eligible. There is more detail in this section as to what the program embraces. While authorized, it does not have mandatory funding, and requires annual appropriations; we will need to advocate for future funding for this program.
In general, there are some “fixes” to the existing FSA loan programs, and there are several new innovations.
Section 5001. This section amends criteria to qualify for beginning farmer direct loans. Loans can be made to farmers and ranchers who have “participated in the business operations of a farm or ranch for not less than three years (replaces “operated a farm or ranch”).
Section 5002. This is a new purpose authorizing the refinancing of short-term temporary bridge loans made by a commercial or cooperative lender to beginning farmers or ranchers who have a FSA direct ownership loan.
Section 5004. This provision authorizes USDA to guarantee “aggie bond” loans. There are still changes in the federal tax law necessary before this authority can be implemented. This statutory authorization helps pave the way for this next step. Pennsylvania is the only New England state with an aggie bond program; New York is developing one. GNF is encouraging other states to consider implementation.
Section 5005. This section amends the beginning farmer and rancher down payment loan program by increasing the loan repayment period to 15 years. It also increases the principal amount of the down payment loan to be equal to 40 percent of the purchase price of the land acquisition.
Section 5006. The Beginning Farmer and Rancher Contract Sales Program is an innovative new pilot program authorized in five (or more) states allowing USDA to guarantee financing of contract sales of farms or ranches to a qualified beginning farmer or rancher. This could be an important contribution to farm succession and transfer. Twenty-four percent of agricultural debt is held by private entities. There may be a New England state among the pilot states.
Section 5307. This amendment makes the simplified loan guarantee application available for loans of up to $125,000 (replacing the previous limit of $50,000).
Section 5308. This amendment extends the period of time inventory property must be offered to beginning farmers and ranchers. There is not a lot of inventory (foreclosed) property in New England.
Section 5310. In this definitions section, this amendment replaces the 25 percent limitation on ownership of the median ownership acreage within a county with a 30 percent limitation.
Section 5513. This extends the Interest Assist Program that provides an interest rate buydown for farmer program loan guarantees, and sets aside 15 percent for beginning farmers and ranchers.
Section 5316. This section mandates the establishment of standards for waivers granted for the borrower training program. The borrower training program is administered unevenly across the country, but is seen by many as a critical ingredient for successful borrowing.