USDA announces $1 billion in debt relief for 36,000 farmers

By David Pitt | Associated Press

DES MOINES, Iowa — The federal government on Tuesday announced a program that will provide $1.3 billion in debt relief to about 36,000 farmers who have defaulted on loan payments or are facing foreclosures.

The US Department of Agriculture announced the Agricultural Loan Assistance Program, funded from $3.1 billion earmarked under the Inflation Reduction Act to help distressed borrowers of direct or guaranteed loans administered by the USDA. The law passed Congress and was signed into law by President Joe Biden in August.

The USDA makes loans to approximately 115,000 farmers and ranchers who cannot obtain trade credit. Those who have missed payments, are in foreclosure, or are at risk of default receive help from the USDA. Financial difficulties for farmers can be caused by a variety of issues, including drought and transport shortages.

“Through no fault of their own, our country’s farmers and ranchers have faced incredibly difficult circumstances in recent years,” said Agriculture Secretary Tom Vilsack. “The funding included in today’s announcement will help our farmers keep farming going and provide a fresh start for growers in challenging positions.”

About 11,000 agricultural borrowers who are 60 days or more in arrears on direct or guaranteed loan payments will receive automatic electronic payments to bring their loans up to date. Each farmer with a direct loan received about $52,000, and those with guaranteed loans received about $172,000. The total cost for this group is nearly $600 million. Farmers who have received this aid will receive a letter notifying them that their payments have been made and they will be kept informed until their next annual payment is due in 2023, Vilsack said.

Another $200 million was used to help 2,100 agricultural borrowers immediately after their loans were called but who still owed money and whose tax refunds and other funds were being confiscated by the US 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 delayed loan payments until their loans expired during the COVID pandemic. That costs $66 million.

—1,600 farmers facing bankruptcy or foreclosure will receive case-by-case help with one-on-one meetings to assess their problem and find solutions at a cost of $330 million.

—14,000 financially distressed farm borrowers who are facing liquidity problems and are asking for help to avoid missing out on a loan payment will receive additional support. Vilsack said those problems could be caused by drought or by low water levels on the Mississippi River slowing shipping and causing grain transportation problems. Up to $175 million is available for this program. The money announced on Tuesday is the first round of payments aimed at ensuring farmers stay in business or get back into farming.

The remainder of the $3.1 billion will be used to ease unnecessary lending restrictions and provide further support to be announced later, the USDA said.

The USDA has found that farmers supported by the program are distressed borrowers who have been hit hard by pandemic-related market disruptions, which are exacerbated by more frequent, more intense, climate-related 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 that program have not responded to questions about their support for farm loan assistance.

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 said. USDA announces $1 billion in debt relief for 36,000 farmers

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