Peters-Perdue Amendment to Help Small Farmers Passes Senate
Amendment Allows USDA Farm Service Agency to Offer Microloans to Help Family Farmers Start or Grow Operations
WASHINGTON, DC – U.S. Senator Gary Peters (MI) helped pass the bipartisan Farm Bill, which includes an amendment introduced by Peters and U.S. Senator David Perdue (R-GA) to provide more flexibility for the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) to issue microloans to small farmers. FSA microloans are a popular part of the agency’s larger direct loan program, which has been temporarily forced to suspend pending loans in recent years due to increased demand. The amendment allows FSA to issue microloans in the event that demand for FSA loans exceeds the available funding in a given year. There are currently more than 2,300 Michigan farms with FSA loans totaling over $630 million.
“Small farmers in Michigan and across the country rely on FSA loans to support their operations when traditional lenders aren’t available, but increased demand on the program can mean farmers ending up waiting months to get the financing they need,” said Senator Peters. “This commonsense, bipartisan amendment ensures that even during times of high demand, FSA can continue to provide Michigan farmers with the funding they need to continue raising the produce, crops and livestock that make agriculture our state’s second largest industry.”
“Agriculture is Georgia’s largest economic driver and our farmers are the backbone of the industry,” said Senator Perdue. “This Farm Bill strengthens an important FSA loan program for our country’s farmers. Whether our farmers are just starting out or are looking to expand and improve, it’s critical they have the financial flexibility they need to get their farms up and running.”
Farm Service Agency microloans are available to beginning farmers, women and minorities, and other disadvantaged borrowers who are unable to obtain assistance from private banks. FSA’s operating microloan can be used for expenses such as livestock, tools, equipment, and seed. The amendment raises the available federal funds used to make direct operating microloans by up to $5 million, which can leverage as much as $127 million in microloans. Given the maximum allowed microloan amount of $50,000, the amendment enables at least 2,500 additional loans for qualified small farmers across the nation.
In recent years, there has been increased demand for FSA’s loan programs, as net farm income has significantly declined since 2013. In June 2016, over 3,000 loans that had already been approved could not be funded for several months due to a shortfall in funding for FSA operating loans, leaving farmers without necessary financing. As a result, Congress was forced to pass an emergency appropriation in December of 2016 to address the shortfall.
The USDA’s microloan program was created in 2013 in order to meet the smaller credit needs of small, beginning farmers and diversified farms serving local markets. Of the approximately 6,500 microloans issued in fiscal year 2017, 4,900 were issued to beginning farmers, 1000 were issued to women, and 400 were issued to veterans.
Earlier this year, Peters and Perdue introduced bipartisan legislation to provide greater flexibility to the FSA loan program to provide support to periods of high demand.
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