Beginning Farmer Financing and Loan Rules Update

This beginning farmer financing and loan rules update from USDA includes the announcement of SIGNIFICANT CHANGES in LOAN ELIGIBILITY RULES for beginning farmers and a new Program that encourages landowners to sell their land to beginning farmers using land contracts (seller-based financing). Beginning Farmers applauds these significant changes which will help to remove existing barriers that limit the ability of new farmers to participate in federal loan programs, and offer new opportunities for transferring land from private owners to beginning farmers!  USDA Announces Greater Flexibility and Additional Tools for Beginning Farmers and Ranchers WASHINGTON, Jan. 20, 2012 — U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Bruce Nelson today announced today a new rule that expands loan opportunities for beginning and socially disadvantaged farmers and ranchers, while also establishing a new Land Contract Guarantee Program. The rule provides additional flexibility allowing FSA loan officers to consider all prior farming experience, including on-the-job training and formal education, when determining eligibility for FSA for farm operating and ownership loans. It also expands a previous pilot program, the Land Contract Guarantee Program, from six states to all 50 states. This program is designed to encourage farmers and ranchers to sell their property to beginning and socially disadvantaged (SDA) farmers and ranchers through the use of seller financing. “USDA continues to find ways to improve our services for farmers and ranchers by streamlining processes, accelerating delivery, and using innovative solutions to 21st century agricultural challenges,” said Nelson. “These improvements demonstrate FSA’s commitment to helping the next generation of America’s farmers and ranchers participate in our nation’s agricultural economy. The new flexibility also enlarges the pool of potential farmland buyers, which is important to young, beginning and socially disadvantaged farmers who start out or operate without established credit.” The changes in eligibility announced today will increase access for farmers and ranchers to FSA loans and credit assistance. The new rule enables landowners to sell their farmland to the next generation on a contract for deed with a 90-percent guarantee against losses to the seller. Alternatively, the agency can provide a guarantee of three years’ amortized loan installments, plus payment of real estate taxes and hazard insurance premiums for the same three-year period.

U.S. agriculture is currently experiencing its most productive period in decades thanks to the productivity, resiliency, and resourcefulness of America’s producers. The improvements outlined today will help producers and businesses maintain this competitive edge. In late 2011, FSA announced a series of additional process improvements that included quicker disaster assistance and less reporting dates. Details follow:
USDA is reviewing comments on a proposed rule to streamline the process for its Secretarial Disaster Designation, allowing farmers and ranchers devastated by natural disasters to obtain emergency loans and other assistance faster than before. Streamlining the process from six steps to two will enable USDA to help those in need in an expedited manner. Additionally, the proposed rule can help to ensure all eligible disaster counties receive a designation.
USDA established 15 common Acreage Reporting Dates (ARDs) for farmers and ranchers participating in FSA and Risk Management Agency (RMA) programs. The common reporting dates will reduce the reporting burden on producers and also help to reduce USDA operating costs by sharing similar data across participating agencies. Before the streamlining, RMA had 54 ARDs for 122 crops, and FSA had 17 ARDs for 273 crops.
More information on the new Land Contract Guarantee Program and the other changes are available at local FSA offices nationwide. Information about Farm Loan Programs and FSA loan qualifications can be found at
The Obama Administration, with Agriculture Secretary Vilsack’s leadership, has worked tirelessly to strengthen rural America, implement the Farm Bill, maintain a strong farm safety net, and create opportunities for America’s farmers and ranchers. U.S. agriculture is currently experiencing one of its best years in decades thanks to the productivity, resiliency, and resourcefulness of our producers. Today, net farm income is at record levels while debt has been cut in half since the 1980s. Overall, American agriculture supports 1 in 12 jobs in the United States and provides American consumers with 86 percent of the food we consume, while maintaining affordability and choice. The Obama Administration has aggressively worked to expand export opportunities and reduce barriers to trade, helping to push agricultural exports to record levels in 2011 and beyond. Strong agricultural exports are a positive contribution to the U.S. trade balance, support nearly 1 million American jobs and boost economic growth.
USDA is an equal opportunity provider, employer and lender. To file a complaint of discrimination, write: USDA, Director, Office of Civil Rights, 1400 Independence Ave. SW, Washington, DC 20250-9410 or call (800) 795-3272 (voice), or (202) 720-6382 (TDD).

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