Earlier this week, some struggling farmers made an incredible, albeit confusing, discovery. Their farm loan balance for 2022 went to $0 with no explanation. Even better, next year’s payment had also been marked as paid. An answer came yesterday at 11 am when the U.S. Department of Agriculture (USDA) announced that they had quickly implemented Section 22006 of the Inflation Reduction Act (IRA).
Specifically, USDA shared that distressed borrowers with qualifying USDA farm loans had already received nearly $800 million in assistance, as part of the $3.1 billion in assistance allocated for distressed farm loan borrowers in the IRA.
“Through no fault of their own, our nation’s farmers and ranchers have faced incredibly tough circumstances over the last few years,” said Agriculture Secretary Tom Vilsack. “The funding included in today’s announcement helps keep our farmers farming and provides a fresh start for producers in challenging positions.”
Farm families who literally were at risk of losing their farms and homes this week were suddenly able to breathe easy again.
Reading the press release on Tuesday morning was amazing, but it wasn’t until the afternoon when I joined a call with several Farm Aid partners that the implication of this action became real. On the call were a few folks who spend their days assisting farmers with their business plans. All too often, that assistance involves financial crisis. These farm advocates shared the stories of farmers who have already been helped by USDA’s action. Farm families who literally were at risk of losing their farms and homes this week were suddenly able to breathe easy again, knowing their farms and homes were safe.
Yesterday’s announcement is the first step in a process to provide assistance to distressed farm loan borrowers, with the goal of keeping them farming, removing obstacles that currently prevent many of these borrowers from returning to farming, and improving the way that USDA approaches borrowing and servicing. Through this assistance, USDA says they are focused on generating long-term stability and success for distressed borrowers. This is crucial. As long-term Farm Aid supporters know, family farming has always been a difficult occupation, but in recent years, it has been much more so. This first step goes a long way in helping to stabilize farmers who want to stay on their land and feed their communities.
To be clear, many farmers likely have a lot of questions about this program and how it works. We’ve got our eyes and ears peeled to hear what those questions are. Additionally, it is important to note that these debt payments are not related to Section 22007 of the Inflation Reduction Act, which was passed to provide assistance to farmers, ranchers, and forest landowners who have experienced discrimination in USDA’s farm lending programs. That program received funding of $2.2 billion and those funds have not been disbursed yet, nor has a clear process been established. USDA begins a series of listening sessions tomorrow to hear from producers about that matter. If you’re interested, you can tune in Thursday, October 20, at 12 pm EDT by registering at this link.
Impact of the Inflation Reduction Act
Here’s a breakdown of the numbers of farmers who have been helped so far as part of the Inflation Reduction Act:
- Approximately 11,000 delinquent direct and guaranteed borrowers had their accounts brought current. USDA also paid the next scheduled annual installment for these direct loan borrowers giving them peace of mind in the near term.
- Approximately 2,100 borrowers who had their farms foreclosed on and still had remaining debt have had this debt resolved in order to cease debt collections and garnishment relieving that burden that has made getting a fresh start more difficult.
In addition to the automatic assistance already provided, USDA has also outlined steps to administer up to an additional $500 million in payments to benefit the following distressed borrowers:
- USDA will administer $66 million in separate automatic payments, using COVID-19 pandemic relief funds, to support up to 7,000 direct loan borrowers who used FSA’s disaster-set-aside option during the pandemic to move their scheduled payments to the end of their loans.
- USDA is also initiating two case-by-case processes to provide additional assistance to farm loan borrowers. Under the first new process, FSA will review and assist with delinquencies from 1,600 complex cases, including cases in which borrowers are facing bankruptcy or foreclosure. The second new process will add a new option using existing direct loan servicing criteria to intervene more quickly and help an estimated 14,000 financially distressed borrowers who request assistance to avoid even becoming delinquent.
More details on each of the categories of assistance, including a downloadable fact sheet, are available on the Inflation Reduction Act webpage on farmers.gov.