DES MOINES, Iowa (AP) – The federal government announced Tuesday a program that will provide $1.3 billion in debt relief to about 36,000 farmers who have fallen behind on loan payments or are facing foreclosure.
The U.S. Department of Agriculture announced that the farm loan program was funded by $3.1 billion set aside in the Inflation Reduction Act to assist distressed borrowers of direct or guaranteed loans administered by the USDA. The law was passed by Congress and signed by President Joe Biden in August.
USDA provides loans to about 115,000 farmers and livestock producers who cannot obtain commercial credit. Those who have missed payments, are in foreclosure, or are headed for default will get help from the USDA. Financial difficulties for farmers can be caused by a number of problems, including drought and transport bottlenecks.
“Through no fault of their own, our nation’s farmers and ranchers have faced incredibly tough circumstances over the past few years,” said Agriculture Secretary Tom Vilsack. “The funding included in today’s announcement helps keep our farmers in agriculture and provides a fresh start for producers in challenging positions.”
About 11,000 farm borrowers who are past due on Direct or Guaranteed loan payments for 60 days or longer are receiving automatic electronic payments to bring them up to date on their loans. Each farmer with a direct loan received about $52,000, and those with guaranteed loans received about $172,000. The total cost of this group is almost 600 million dollars. Farmers who received this assistance will get a letter informing them that their payments have been made, and they will remain current until their next annual payment is due in 2023, Vilsack said.
An additional $200 million has been used to immediately help 2,100 farm borrowers after their loans were foreclosed but still owed money and had their tax refunds and other resources seized by the U.S. Treasury Department. The money will be used to pay the money these farmers owe to give them a fresh start, Vilsack said. The USDA said farmers in this category received an average of $101,000.
An additional $571 million will be used to help several additional groups, including:
—7,000 farmers who, during the COVID pandemic, delayed loan payments until the end of their loans. It will cost $66 million.
—1,600 farmers facing bankruptcy or foreclosure will receive case-by-case assistance with individual meetings to assess their problem and find solutions at a cost of $330 million.
—14,000 financially distressed farm borrowers facing cash flow problems who are asking for help to avoid missing a loan payment will receive additional assistance. Vilsack said those problems could be caused by drought or by low levels on the Mississippi River slowing barge traffic and causing problems with grain transportation. Up to $175 million will be available for this program.
The money announced Tuesday is the first round of payments designed to help ensure farmers stay in business or resume farming.
The rest of the $3.1 billion will be used to help ease unnecessary borrowing restrictions and provide additional assistance that will be announced later, the USDA said.
Farmers assisted by the program have been found by the USDA to be distressed borrowers hit hard by pandemic-induced market disruptions, exacerbated by more frequent, more intense, climate-driven natural disasters, the USDA said.
President Joe Biden and his administration continue to face criticism for enacting a program to forgive some college loans, but some of the Republican politicians who have criticized the program did not respond to questions about whether they support farm loan relief.
The USDA also provided $31 billion to help nearly a million farmers offset lower sales, prices and other losses due to the coronavirus pandemic in 2021 and 2022, the U.S. Government Accountability Office has said.