Farm Bill expands help for beginning farmers and ranchers

Cattle Market & Farm Reports, Editorials
Nov 12, 2007

Beginning and young farmers and ranchers are going to have better options for tapping into USDA programs stemming from the 2007 Farm Bill.

The House and Senate farm bills reflect that Congress is working to help younger producers get better access to capital and land. It’s a contrast to the past when lawmakers would talk about the needs, but never follow through with better benefits for younger, beginning producers.

“Both bills represent the most attention beginning farmers have gotten in the farm bill,” said Ferd Hoefner, policy director for the Sustainable Agriculture Coalition. “As far as the farm bill, this is definitely a high-water point and if we can get some of the funding worked out, it could be a big breakthrough.”

There are provisions in the commodity, conservation and credit programs that provide extra incentives for producers through tweaks such as lower loan rates or higher cost-share percentages, for example. Most of the beginning farmer provisions in the Senate and House are similar and in some cases, the language in the two bills is identical. Others, however, look comparable, but one chamber may have funding for a program while the other does not.

The House passed its full farm bill in July. The Senate takes up the farm bill in a floor debate next week. The differences in the final Senate version and the House bill would also have to be hashed out before a final vote.

Both bills right now increase loan limits for the Farm Service Agency on direct farm ownership and operating loans from $200,000 to $300,000. But the Senate also increased the funding authorization by a similar percentage to potentially allow for more loans at larger amounts. The House bill does not make that adjustment, which is a “fairly glaring oversight,” Hoefner said.

“It sounds like a small point, but it could be a really big point down the road,” he said.
There is comparable language in the two bills for the Beginning Farmer and Rancher Down Payment Loan Program, though there are differences in the allowable loan rate that would have to be adjusted. Both bills lower the down payment required to 5 percent and increase the allowable sale price to $500,000. Loan terms are also extended to up to 20 years.

The Beginning Farm and Rancher Development Program was created in the 2002 Farm Bill, but never received any funding. The program is expected to create competitive grants of up to $250,000 for university extension offices or private non-profits to provide training, outreach and technical assistance for beginning farmers and ranchers. The House funds it with $15 million mandatory spending each year while the Senate has no mandatory money authorized.

Then there is the individual accounts pilot program for beginning farmers and ranchers that would create matching savings accounts. The money could be used on capital expenses for a farm or ranch, including buying land. While authorized in both versions, neither the House nor Senate has actual money set aside.

“But we’re not giving up that it may incorporated into a floor amendment,” Hoefner said.
The Farm and Ranchland Protection Program, which funds conservation easements to protect agricultural property from being sold for development, also has $398 million in increased spending in the House bill while no new money in the Senate. The program has made it easier for older farmers to avoid selling out to developers and instead protect land for their children or other, younger farmers.

Both bills offer beginning and socially disadvantaged farmers up to 90 percent cost-share for the Environmental Quality Incentives Program, or EQIP. That’s 15 percent better than the prevailing rates for other farmers. At least 5 percent of total EQIP funds in the House bill would go for beginning or disadvantaged farmers, while that is as high as 10 percent in the Senate bill.

Each bill also has a provision offering incentives for landowners in Conservation Reserve Program (CRP) contracts to modify their contract if land is being sold to a beginning or socially disadvantaged farmer or rancher. This would allow the new buyer to return some of the land to production before the CRP contract expires while still paying the retiring landowner on the CRP contract.

“This is sort of to level the playing field so the landowner might be more willing to sell to the beginning farmer rather than highest bidder, which is most normally the case,” Hoefner said.

There’s another provision that also allows the young or beginning farmer to begin the transition to organic production though there may be a year left on a CRP contract. The bill also includes up to $20,000 per-year payments over three years for farmers attempting to shift traditional farmland into organic acres. The Senate treats this as part of the EQIP program.