Individual Development Accounts


Program Basics

The Beginning Farmer and Rancher Individual Development Accounts (BFRIDA) Pilot Program is designed to help beginning farmers and ranchers of limited means finance their agricultural endeavors through business and financial education and matched savings accounts. The program is modeled after the more urban-based Individual Development Account program, administered by the Department of Health and Human Services, that focuses primarily on home purchase or business development. The new Beginning Farmer and Rancher IDAs, administered by USDA, will promote a new generation of farmers and ranchers by assisting those of modest means to establish a pattern of savings.Ultimately, the savings can be used as part of a down payment on farmland or to purchase breeding stock, farm equipment, or other productive assets.

The 2008 Farm Bill directs USDA to establish pilot projects in at least 15 states.The states have still not been selected as of March 2010, but future editions of this Guide will provide that information when it becomes available.Selection of the IDA organization or agency within a state will be chosen on a competitive basis.

Eligible beginning farmers or ranchers are those who do not have significant financial resources or assets and have an income less than 80 percent of the median income of the state in which they live, or 200 percent of the most recent annual Federal Poverty Income guidelines published by the Department of Health and Human Services. An eligible beginning farmer or rancher must also agree to complete a financial training program and create a savings account.

Any non-profit organizations or tribe or local or state government can submit an application to USDA to receive a grant. Non-profits could also team with agencies to run a pilot program. The selected groups will both establish and administer the IDAs and are also responsible for providing access to business and financial education.

The organization or collaboration will establish a reserve fund made up of the total amount of the IDA grant awarded to them (up to $250,000) and a non-federal match of 50 percent of that total amount awarded. The grantees can use up to 10 percent of the federal grant amount (up to $25,000) to support business assistance, financial education, account management, and general program operation costs. The local, non-federal match may be used for program expenses without limit. Interest accrued on the federal grant award can be used for matched savings or for program costs.

Once a participating organization establishes a Beginning Farmer or Rancher IDA project, an eligible beginning farmer or rancher can set up an account with the participating organization and deposit a certain amount that is “matched” by that organization at a rate of at least 100 percent and up to 200 percent. For instance, if a farmer participant deposits $100 a month into the individual development account, the organization’s IDA program will match them at 1:1 or 2:1 or up to $200 a month. After the two-year program period, up to $7,200 would be available for the farmer to put towards the assets he or she has been saving for. Up to $3,000 of an individual’s savings can be matched per year, so at the 2:1 rate that means there can be a total of $9,000 in annual leveraged savings.

2008 Farm Bill Changes

The Beginning Farmer and Rancher Individual Development Accounts initiative is a brand new pilot program. Section 5301 of the Food, Conservation, and Energy Act (FCEA) of 2008 amends Subtitle D of the Consolidated Farm and Rural Development Act of 1972 by adding a new Section 333b, to be codified at 7 U.S.C. Section 1983b.

Funding
The 2008 Farm Bill authorizes appropriations of up to $5 million a year for the Beginning Farmer and Rancher Individual Development Accounts Program. The program will commence only after Congress designates funding for it in the annual agriculture appropriations bill.

Implementation Basics

The BFRIDA pilot program will be administered by USDA’s Farm Services Agency. A proposed or an interim final rule for the program’s implementation has not yet been posted, in part because the program did not receive a funding appropriation in FY 2009 or 2010.

If an appropriation is secured in the fiscal year 2011 bill, a Request for Proposals would be posted sometime after the start of fiscal year 2011 (i.e., after October 1, 2010).

For up-to-date application deadlines and links to RFAs when they’re available, please go to: http://sustainableagriculture.net/publications/grassrootsguide/farm-bill-programs-and-grants.

Additional Resources
Information about the program will be posted on the FSA website: www.fsa.usda.gov