NSAC's Blog

Millions Still Available to Help Farmers Purchase Land

May 21, 2015

Please note that this post analyzes loan funding availability for 2015. For a more updated analysis of FSA loan funding, please see our recent posts looking at Commodity, Crop Insurance, and Credit Programs. Are you a farmer? Want more information on Federal Farm and Food Programs? Check out our Grassroots Guide for more information.

With less than four months remaining in the 2015 fiscal year, USDA’s Farm Service Agency (FSA) still has nearly one billion dollars available for farm loans to help family farmers across the country buy land.

Last year, Congress significantly increased the appropriation for FSA farm loans, including a big bump up in FSA Direct Farm Ownership (DFO) loans, which can be used to purchase farmland.

For Fiscal Year (FY) 2015, the Department of Agriculture was provided $1.5 billion to help farmers buy farmland, and an additional nearly $1.3 billion to cover annual operating costs like seeds, feed, and other inputs.

As of June 17, 2015, FSA had made over 3,800 direct farm ownership loans and over 18,500 direct operating loans. The agency had also guaranteed an additional 3,000 real estate and 3,900 operating loans made through private agricultural lenders.

As the growing season kicks into full swing across the country, demand for operating loans is likely to level off since most farm inputs are purchased at the start of the year as farmers purchase inputs and prepare fields for planting. To date, FSA has used roughly 85 percent of funding available for operating loans, with just under $200 million still available to farmers through the end of September and the close of the current fiscal year.

However, unlike previous years, in which FSA continually faced a huge backlog of farmers who were approved for farm ownership loans which the agency didn’t have sufficient funding, this year the Department has a significant amount of funding still available for real estate loans for the remainder of this fiscal year.

Over the past nine months, FSA has obligated just under $700 million, or less than half of the funding available for direct farm ownership loans. The agency still has some $800 million it can lend before the end of September.

With the average for FSA real estate loan size being $182,000, this remaining funding could translate to nearly 4,400 more farmers who could use an FSA loan to purchase farmland.

Big opportunity for beginning farmers

Since most of the real estate loans that FSA makes are targeted to help beginning and socially disadvantaged farmers afford to purchase farmland, the significant amount of funding that FSA still has on the table is a huge opportunity for new and underserved farmers across the country! In fact, over $680 million of the $800 million in loan funds still available are targeted to either beginning or socially disadvantaged farmers.

Access to affordable farmland is one of the biggest barriers new farmers face when looking to farm, and for decades, FSA farm loans have served as a critical resource in helping beginning farmers get started in agriculture and afford to purchase farmland.

FSA Direct Farm Loans aim to help farmers who are unable to secure a loan from a commercial bank, and can finance the purchase of farm or ranchland up to $300,000 and up to $667,000 through FSA’s Down Payment Loan Program. Both loan programs offer very low interest rates – currently 3.5 percent for FSA Direct Farm Ownership Loans and 1.5 percent for FSA Down Payment Loans.

Farmers apply for FSA loans directly at their local Farm Service Agency office and farm loan application forms are available online.

NSAC and our members across the country have helped target the FSA lending programs and have helped secure increased funding for these important loan programs. We encourage farmers and organizations who work with farmers to help spread the word about this funding opportunity. For new farmers out there, if you’ve been looking for farmland in your area and have been searching for ways to help finance the purchase, check out FSA farm loans to see if they meet your needs.

Check out NSAC’s Grassroots Guide to Federal Farm and Food Programs for more information on FSA farm loans, including eligibility criteria and how to apply.

Categories: Beginning and Minority Farmers, Commodity, Crop Insurance & Credit Programs

3 responses to “Millions Still Available to Help Farmers Purchase Land”

  1. Chuck Hindman says:

    Grew up on the farm left the farm started a business that is Ag. related and want to go back to grass roots farming and turn things around and back to a organic base…

  2. Cavett Ishihara says:

    I appreciate this article. I am meeting with a SCORE mentor this week to start my business charter and review funding sources. I am trying to understand the steps required to make the transition to farming. As a minority and Veteran, site like this one help me understand that process.

  3. David says:

    I can tell you this, if you have good credit then the FSA isn’t going to loan you squat. They “Don’t want to compete with private enterprise”. Such bs, my alternative is to pay 6% on a variable loan on the open market.