February 5, 2014
With the 2014 Farm Bill recently signed into law, NSAC is doing a seven-part blog series that delves into the details of the bill for sustainable food and farming systems. This, the second post in the series, discusses the highlights and missed opportunities for beginning and socially disadvantaged farmers. The previous post dove into the overall farm bill by the numbers.
As a nation, we have made significant progress over the past twenty years in using federal farm policy to create new opportunities for the next generation of farmers and in ensuring farmers of all kind have access to federal programs and resources. The new farm bill that will soon be signed into law, while not perfect, represents a step in the right direction on these fronts.
Nearly two years ago, NSAC launched a campaign to expand farming opportunities for the next generation of producers through the farm bill. Our hope for what has now become the 2014 Farm Bill was to build on the gains made in previous farm bill debates in order to elevate the status of beginning and underserved farmers and to ultimately scale up the resources needed to adequately address the significant challenges facing the next generation. Our campaign began in 2011 when we developed dozens of Farm Bill proposals which aimed to address the distinctive challenges that those starting or hoping to start farming or ranching continue to face as agriculture changes and evolves.
These proposals formed the foundation of what later became the Beginning Farmer and Rancher Opportunity Act, which was introduced in both the Senate and the House in early 2012 by Senator Harkin (D-IA) and Representatives Walz (D-MN) and Fortenberry (R-NE). The bill included policy proposals that would increase access to credit, reduce barriers to acquiring land, and invest in successful new-farmer training programs and grants to help farmers capture more of the retail food dollar through value-added enterprises.
This bill was championed by key beginning farmer supporters in both chambers of Congress and attracted the support of dozens of legislators on both sides of the aisle who saw the need to make the next generation of farmers a cornerstone of the next farm bill. With the support of dozens of lawmakers and hundreds of farmer and community based organizations across the country, we were able to succeed in getting many of these proposals included in the 2014 Farm Bill.
In total, the new farm bill will invest $444 million directly into beginning, veteran, and socially disadvantaged farmer initiatives over the next ten years, representing an increase of 154 percent over the previous farm bill.
Summary of Additions to Mandatory Funding for
Beginning and Socially Disadvantaged Farm Bill Provisions
(5-year totals; $ millions)
Farm Bill Program
|Beginning Farmer and Rancher Development Program||
|Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers and Veteran Farmers and Ranchers||
|Conservation Reserve Program Transitions Incentive Program||
|Federal Crop Insurance Premium Reductions||
* The ten year cost of the federal crop insurance premium reduction for beginning farmers is $261 million.
Although the final farm bill is clearly far from perfect, and there is certainly more that should have been done for beginning and historically underserved farmers, the final farm bill continues the progress made in previous farm bills and hopefully will make it somewhat easier for a farmer to pursue a successful and rewarding career in agriculture.
Strengthening Financial Resources
Access to credit is a make or break issue for many aspiring, beginning and limited resource farmers. The new farm bill will continue the priority on lending to beginning and socially disadvantaged farmers through federal credit programs, including the Farm Service Agency’s Direct and Guaranteed Farm Ownership and Operating loan programs.
Additionally, USDA will now have increased flexibility in determining what types of experiences should count towards the “farm management experience” requirement for direct farm ownership loans. Another welcome change in the new bill will be the lower interest rate for Joint Financing (or Participation) loans that bring together farmers, USDA, and a private lender in order to leverage scarce federal credit appropriations with private lending resources.
The new farm bill will also make the FSA Microloan program permanent and will establish a new intermediary lending pilot program to allow USDA to work with non-profit community lenders to provide microloans and financial training to small, beginning, veteran and socially disadvantaged farmers. Additionally, microloans made to beginning and veteran farmers will be exempt from the term limits that otherwise apply on direct operating loans, to allow these farmers to continue to take advantage of federal credit resources as they continue to grow their farm operations in the future.
The bill will also make it easier for new farmers to access federal crop insurance by giving beginning farmers a 10 percentage point reduction on their crop insurance premiums. This is the single biggest provision for beginning farmers by cost, weighing in at $261 million over ten years. It remains to be seen how useful this policy will be, given that the discount only applies to farmers in their first five years of farming, and they may not be insuring as many crops in their early years as they would say in years five through ten.
Finally, the final bill will address longstanding issues within the Value-Added Producer Grant program by clarifying the beginning farmer priority status for proposals from multi-farmer applicants, such as farming cooperatives or other collective structures. This critical change will allow grant proposals to be judged based on how well they serve small and medium-sized farms, beginning farmers, and socially disadvantaged farmers.
Incentivizing Conservation Stewardship
An ideal opportunity for establishing sound conservation measures on a farm arises when a beginning farmer or rancher takes over an agricultural operation, and NSAC is pleased that the new farm bill will continue many of the specific conservation incentives for beginning and socially disadvantaged farmers that were established in the 2002 and 2008 Farm Bills.
The final bill reaffirms the existing cost-share differential for beginning, limited resource, and socially disadvantaged producers in the Environmental Quality Incentives Program (EQIP), and also increases the amount of an EQIP contract that a farmer can receive in advance from 30 to 50 percent. This advance payment can be used to cover the up front costs of a project for the purposes of purchasing materials or contracting services, which is crucial for many new farmers with limited cash flow.
The bill also retains, but does not increase as we proposed, the existing set-asides of dedicated funding for beginning and socially disadvantaged farmers both within EQIP and the Conservation Stewardship Program. These set-asides have ensured that that these farmers are able to successful compete for a limited pot of conservation funding. The bill also expands these conservation incentives to include veteran farmers as well.
The conservation loan program is one last farm bill program that aims to support conservation stewardship, and we are pleased that the final bill makes this program more attractive to both lenders and borrowers. The final bill increases the guarantee rate to 90 percent for beginning and underserved farmers (on par with other federal farm loan programs) and 80 percent for other borrowers.
Increasing Access to Farmland
The new farm bill includes several programs and policy improvements that will help new, aspiring, and socially disadvantaged farmers access land to start or expand their farming operations.
The new bill will continue and improve the highly successful Down Payment Loan Program, which provides much needed capital to new farmers seeking to purchase property, by increasing the total value of farmland to be purchased from $500,000 to $667,000.
The bill will also create a new Agricultural Conservation Easement Program, which will incorporate the existing Farm and Ranchland Protection Program, whose new purpose will not only include protecting the agricultural use of conserved farmland, but also consider the future viability for future generations in order to ensure preserved farmland is accessible and affordable to new farmers.
The final bill also increases funding for the Conservation Reserve Program – Transitions Incentives Program (CRP-TIP), which incentivizes retiring landowners to rent or sell their farmland to beginning and socially disadvantaged farmers. This popular program was established in 2008, and due to high demand, ran out of program funding in 2012. The $33 million provided in the new farm bill (up from $25 million) will provide a much need influx of funding into a stalled program, but will unfortunately not be sufficient to meet anticipated demand over the next five years as more CRP contracts expire and thousands of acres of conserved land come back into production. Military veteran farmers will also be newly eligible for this program.
Investing in Farmer Training and Outreach
Perhaps the best news on the beginning farmer front is the influx of $100 million into new farmer training programs through the Beginning Farmer and Rancher Development Program. This successful program is the only federal initiative that is exclusively dedicated to training the next generation of farmers and ranchers, and has been stalled since it ran out of funding in late 2012. Once the farm bill is signed into law, the program will take a few months to get up and running again, but once it does, it will include all of its historic emphases plus a new focus on agricultural rehabilitation and vocational training programs for veteran farmers. The program will maintain its priority on training programs geared for socially disadvantaged beginning farmers, although at a reduced level.
The new farm bill will also create a new position within USDA to assist returning military veterans pursue a career in agriculture. The Military Veteran Agricultural Liaison will help connect these aspiring farmers with USDA beginning farmer resources and assist them with program eligibility requirements for participation in farm bill programs.
There are several forward-thinking provisions that NSAC and our allies initially championed and which were unfortunately not included in the final bill.
One of these missed opportunities is the lack of funding for the Beginning Farmer and Rancher Individual Development Account program. This program was created in the last farm bill, but has never received any funding to date.
We remain hopeful that the new Deputy Secretary at USDA, who has made beginning farmers a top priority, will be able to help secure funding for this important program through the budget and appropriations process. Nonetheless, it is unfortunate that Congressional farm bill leaders did not take the opportunity to get this program up and running by providing even a mere $5 million per year through the farm bill. This program is modeled after innovative programs in place across the country that have been successful in helping beginning farmers with limited financial resources accumulate enough capital to put towards their farm business, including a down payment on a farm or purchasing livestock.
We are also deeply disappointed that the new farm bill significantly cuts funding for the longstanding Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers program (also known as the Section 2501 program). This program has been in place since the 1990s, and has helped countless historically underserved farmers, including farmers of color and tribal farmers, gain access to federal programs. Participation and usage of federal farm programs by these farmers have historically been lower than other groups, and the 2501 program has been invaluable in creating partnerships between USDA, community-based organizations and the socially disadvantaged farmers they work with to increase access to federal credit, conservation, and rural development programs.
The new farm bill will provide only $10 million per year to support this program (roughly half of previous farm bill levels) while at the same time expanding the program to also serve the needs of the influx of returning military veterans who wish to pursue a career in farming. This underinvestment is shortchanging our nation’s most vulnerable and chronically underserved farmers, and will slow the pace of progress and subsequent success of these farming operations, and thus, American agriculture as a whole.
Despite these unfortunate missed opportunities, the new farm bill represents an important renewal of funding to support our nation’s young, aspiring, beginning and underserved farmers who stand anxious and ready to confront the many challenges facing agriculture today.
The 2014 Farm Bill will not solve all of the issues we hear from the countless farmers in our network of sustainable agriculture leaders, nor will it invest what we believe is truly needed to transform our food and agriculture system to better support our nation’s young, aspiring and underserved farmers. But its modest steps in the right direction will ensure we don’t backstep on our commitments to the next generation of farmers who will feed our nation, preserve our natural resources, and rebuild our rural communities into the future.