NSAC's Blog
Important Emergency USDA Changes for Farm Loans and Crop Insurance
April 2, 2020
With the ongoing pandemic sweeping throughout the country, farmers who are just ahead of spring planting are already feeling the impacts on their farms and in their communities of price volatility, labor shortages, lack of rural healthcare facilities, and dwindling or ever changing markets. And while NSAC has been pushing Congress to do more to provide immediate relief to farmers impacted by the crisis, we have also been urging the Administration to do whatever they can to keep farmers in business and on their farms.
Late last week, the U.S. Department of Agriculture (USDA) announced important changes to FSA loan programs and federal crop insurance policies. Hopefully, these changes will provide farmers impacted by the COVID-19 crisis greater flexibility in paying back their current farm loans, applying for emergency loans or advances, and completing required crop insurance reporting to USDA.
USDA FSA Service Center Changes
USDA’s Farm Service Agency (FSA) administers the bulk of USDA’s farm programs – including farm loans, safety net programs (i.e. Agriculture Risk Coverage, Price Loss Coverage, Margin Protection Program), disaster assistance programs (i.e. Non-Insured Crop Disaster Assistance) and other federal farm programs (i.e. Conservation Reserve program).
While FSA staff continue to work and administer these programs throughout the crisis, FSA county offices are open by phone appointment only and staff are using email and online tools whenever possible. The same is true for other USDA county offices including the Natural Resources Conservation Service (NRCS). Check USDA’s website for the current status of USDA Service Centers.
Farmers should contact their crop insurance agent to see how they are communicating and handling business during this time, either via telephone or electronically.
FSA Loan Changes
Last week, FSA announced important changes to direct and guaranteed farm loans to provide credit more quickly to producers in need. FSA provides both annual operating loans and ownership (i.e. farm real estate) loans, either directly or through commercial banks (guaranteed lenders).
Recent FSA loan changes include:
- Extending the deadline for applicants to complete farm loan applications;
- Continuing to prepare Direct Loans documents even if FSA is unable to complete lien and record searches because of closed government buildings; and
- Closing loans if the required lien position on the primary security is perfected, even for loans that require additional security and those lien searches, filings and recordings cannot be obtained because of closed government buildings.
Additionally, FSA is extending deadlines for farmers to respond to actions such as loan deferrals for financially distressed or delinquent borrowers. FSA will also suspend:
- Loan accelerations, which require loans to be fully due and payable
- Non-judicial foreclosures, which require FSA to sell whatever the farmer put down as collateral when opening the loan (house, equipment, land) because the borrower cannot pay back their loan
- Referring foreclosures to the Department of Justice, which will slow some, but not all farm loan foreclosures
FSA is also providing private lenders who administer USDA farm loans to self-certify, which will allow guaranteed lenders (like Farm Credit, Community Development Financial Institutions, and commercial ag banks) to provide operating loan advances and emergency advances on lines of credit more quickly to farmers with existing guaranteed loans. However, additional actions are needed to speed up the guaranteed loan approval process for new farm loans.
Guaranteed lenders can also request temporary payment deferrals for borrowers who do not have a feasible plan for repaying their loans due to loss in revenue.
For additional details on these additional flexibilities and policy changes, see USDA’s press release, or contact your local FSA county office or agricultural lender. For more information about FSA loans and policies, check out USDA’s Farm Loan Compass.
RMA Federal Crop Insurance Changes
Last week, USDA’s Risk Management Agency (RMA) also announced additional flexibilities to crop insurance policies to assist producers as the country is impacted by coronavirus. These flexibilities include:
- Allowing Electronic Notifications for Required Reports
- Extension of Production Reporting Date
- Additional Time Given and Interest Deferred on Premium Payments, Written Payment Agreements
To maintain the social distancing guidelines currently in place, producers may now send notifications and reports electronically for: written agreement issues, acreage and production reporting, and upcoming deadlines to buy crop insurance (which vary by crop, program, and county) to their crop insurance agents. To take advantage of this option, producers can provide notice over the phone with appropriate documentation of the call or by using electronic methods to send notifications or reports followed by their confirmation in writing (a signed, or e-signed, form) that they chose to send notifications or reports electronically no later than July 15, 2020.
Additionally, for the 2020 crop year, insurance agents may accept production reports through the earlier of either the acreage reporting date, or 30 days after the production reporting date for crops insured under the Common Crop Insurance Policy Basic Provisions and that have a production reporting date of March 15, 2020, or later.
Insurance agents can also now provide extra time for producers to pay premium and administrative fees and to make payments for Written Payment Agreements due between March 1, 2020, and April 30, 2020. Payments can be extended up to 60 days from the scheduled payment due date and still be considered a timely payment. Interest will not be accrued on premium payments and administrative fees from the earliest of an additional 60 days from the scheduled payment due date or the termination date on policies with premium billing dates between March 1, 2020, and April 30, 2020.
Producers should note that Approved Insurance Providers (the private insurance companies that partner with RMA to offer crop insurance options) are approved to provide these flexibilities but may not automatically offer them. Producers should communicate with their crop insurance agent and refer to the USDA’s News Release if the agent is not aware of the additional flexibilities.
For additional details on these additional flexibilities and RMA policy changes, see USDA’s press release and RMA’s COVID-19 Response. To find a crop insurance agent in your area, see the RMA Agent Locator.
For additional information on USDA’s response to the ongoing coronavirus pandemic and resources for farmers and impacted communities, check out the USDA website.
Categories: Commodity, Crop Insurance & Credit Programs
[…] Important Emergency USDA Changes for Farm Loans and Crop Insurance Last week, USDA announced important changes to FSA loan programs and federal crop insurance policies. Hopefully, these changes will provide farmers impacted by the COVID-19 crisis greater flexibility in paying back their current farm loans, applying for emergency loans or advances, and completing required crop insurance reporting to USDA. In this post, we cover changes to FSA service centers, modifications to direct and guaranteed farm loans, and flexibilities made to federal crop insurance. NSAC will continue to push Congress to provide immediate relief to farmers impacted by the crisis and urge the Administration to do whatever they can to keep farmers in business and on their farms. READ MORE… […]