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Are Federal Young and Beginning Farmer Loan Programs Hitting the Target?

Ernest Bazen

Summary

Understanding the financial challenges faced by Young and Beginning Farmers (YBF) has been of great interest to many state farm management extension programs. While the USDA Farm Service Agency (FSA) have been the primary source for providing credit to young and beginning farmers, provisions and terms for direct and guaranteed operating and farm ownership loans has not changed in over 20 years. YBF have different needs than established farmers and ranches, but can current FSA programs create successful small farming operations that will grow into tomorrow’s commercial farms depending less upon federal financial assistance and moving into more traditional financing (i.e., local banks) relationships?

In general, to obtain a FSA farm ownership loan, a beginning farmer must be unable to secure credit elsewhere; must have participated in the business operations of a farm for no less than three years but no more than ten years; must not currently own farmland in excess of 30% of the average farm size in the county; and must provide substantial day-to-day labor and management. Likewise, for an operating loan a beginning farmer must also be unable to secure credit elsewhere; cannot have operated a farm for more than 10 years; must agree to participate in borrower training; must provide substantial day-to-day labor and management; and must have sufficient education and/or experience in managing and operating a farm. This presentation will provide examples of how FSA direct and guaranteed operating and farm ownership provisions impact YBF and the ability to create a sustainable farm operation.

Details

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