USDA plans loans for small-scale farmers

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January 22, 2013

As more young, small-scale farmers launch into agriculture, many are stumbling on a major obstacle: a lack of cash.

So the U.S. Department of Agriculture is stepping in to help. Last week, Agriculture Secretary Tom Vilsack announced a "microloan" program that will distribute loans of $35,000 or less in an effort to smooth the path for first-time farmers. The program is expected to distribute $100 million a year.

January 22, 2013

As more young, small-scale farmers launch into agriculture, many are stumbling on a major obstacle: a lack of cash.

So the U.S. Department of Agriculture is stepping in to help. Last week, Agriculture Secretary Tom Vilsack announced a "microloan" program that will distribute loans of $35,000 or less in an effort to smooth the path for first-time farmers. The program is expected to distribute $100 million a year.

"This administration has really tried to create opportunity and to prioritize different types of farms," said Juli Obudzinksi, of the National Sustainable Agriculture Coalition, which pushed for the program and is supporting similar provisions in the 2012 Farm Bill, which was recently extended for a year by Congress. "I think this was a positive step. They're really making sure, as a federal department, they're reaching all types of farmers."

The department estimates that 25 percent of the nation's 2 million farmers will retire in the next 20 years, prompting Vilsack to call for hundreds of thousands of new farmers to fill agriculture's ranks.

But these young or beginning farmers, many of whom neither come from a farming background nor stand to inherit land, often have trouble accessing cash or credit. A survey by the National Young Farmers Coalition, a New York-based advocacy group, found that 78 percent of its members said a lack of cash was their biggest challenge, while 40 percent said a lack of credit was a major problem.

"I have met several small and beginning farmers, returning veterans and disadvantaged producers interested in careers in farming who too often must rely on credit cards or personal loans with high interest rates to finance their startup operations," Vilsack said in a statement last week. "'By further expanding access to credit to those just starting to put roots in farming, USDA continues to help a new generation of farmers."

The program, first announced last year and finalized last week, will use funds from an existing loan program administered by the Farm Service Agency. Since 2009, the agency had distributed $18 billion in loans and has increased the number of loans to beginning farmers from 11,000 in 2008 to 15,000 in 2011.

Under the new loan program, however, applications will be streamlined, with approval and distribution times considerably shortened.

The idea, the department has said, is to encourage small-scale growers, particularly those who sell at farmers markets or through subscription, direct-to-consumer arrangements.

"It's intended to fill the credit needs of smaller operations," Obudzinksi said. "And it just so happens that young farmers, small farmers, are selling into regional food systems and urban systems. Diversity growers tend to be on a smaller scale."

The most recent figures available, from the 2007 Census of Agriculture, show that the number of farms making $50,000 or less grew 6 percent in the preceding decade. Since then, however, with a boom in farmers markets and the surging appetite for locally and regionally produced food, more farmers have stepped in to fill the niche.

The latest census, being conducted now, will likely reflect a much bigger spike in small-scale farmers.

"It'll be interesting to see the shift," Obudzinksi said. "There are more small farms, but large farms are getting larger. We're concerned about those farms in the middle. We hope these loans are a stepping stone for small farmers to get bigger."


Courtesy: NYDN