NSAC's Blog
FSA Increases Flexibility for Loans to Beginning Farmers
March 9, 2012
Earlier this month, FSA announced several revisions to its program handbook to increase flexibility and broaden the scope of “farm management experience” a borrower is required to have before being eligible for a federal loan. This experience requirement is in place in order to assure that an applicant has sufficient managerial ability that will convey their ability to repay the loan.
Under the old language, a borrower needed to have three years of demonstrated “managerial ability” to qualify for a direct or guaranteed loan from USDA’s Farm Service Agency, which included education, on-farm training, and farm experience requirements. The new language specifies that:
The applicant may satisfy the managerial ability requirement with any combination of education, on-the-job training and farm experience, or by meeting just 1 of these criteria.
1. Education. Under the education requirement, FSA added language that would qualify the “successful completion of a community-based, nationally-based, non-profit, or similar farm workshop programs” or “other comprehensive agricultural program” as an acceptable educational experience to qualify a beginning farmer for a loan. Specific examples cited in the handbook include Annie’s Project (based out of Iowa) and Michigan State University’s Organic Farmer Program. Similarly, many of the programs funded by USDA’s Beginning Farmer and Rancher Development Program, such as the Land Stewardships Farm Beginnings training program, would also qualify.
2. On-the job training. Under the on-the-job training requirement, FSA added language that clarified that farm mentorships and internship programs with an emphasis on management requirements and day-to-day farm decisions would qualify as experience meeting this requirement. Examples cited in the handbook include Rogue Farm Corps, Midwest Organic and Sustainable Education Service Farmer-to-Farmer Mentoring Program, and Georgia Organics Mentoring Program. Additionally, having participated in urban or community-supported-agriculture programs which incorporate basic agricultural training would also qualify a borrower, including programs offered by Growing Power (Wisconsin), or the Columbia Center for Urban Agriculture (Missouri).
3. Farming experience. Finally, under the farming experience requirement, FSA added language that would qualify migrant farmworkers who have been promoted to a leadership position for at least one entire production and marketing cycle, and also applicants who have obtained and successfully repaid one FSA Youth Operating Loan.
NSAC applauds these recent revisions to the FSA Handbook, which guides the lending practices and decisions for local FSA offices all across the country. We believe these additional experience requirements will increase access to FSA loans for many beginning farmers who rely on diversified farm experiences, such as apprenticeships and mentorships. FSA and USDA leadership is to be congratulated for listening carefully to beginning farmers and responding with appropriate revisions to its rulebook.
Of course, this will largely depend on how effectively these changes are implemented in the field. If farmers experience problems at the local level, they should let national farm groups like NSAC know so we can work with national FSA staff to address any bottlenecks.
NSAC will continue to advocate for reducing the number of years of managerial experience from three to two, in order to extend the eligibility as a beginning farmer (those in operation for 10 or fewer years) from 7 to 8 years. That is a provision of the Beginning Farmer and Rancher Opportunity Act, a bill introduced in both the House and Senate with the intent of working for its inclusion in the 2012 Farm Bill. You can check to see if your Representative and Senators have signed onto the beginning farmer bill at this BFROA co-sponsor webpage.
To read more about the recent changes to the FSA Handbook, check out a blog post by the National Young Farmers’ Coalition.
To access the FSA Handbook on direct loan making, click here.
Categories: Beginning and Minority Farmers, Commodity, Crop Insurance & Credit Programs