Today, American agriculture is thriving. Farm income is strong, and we are in the three best years for agricultural exports in history.
The prosperity of our agriculture sector is driving the economy forward, creating jobs, and ensuring that Americans have the most affordable food supply of any developed nation. At USDA, we’re committed to supporting the farmers and ranchers who are creating this success.
One issue that is always critical for farmers and ranchers is access to credit – in particular for those who are just starting out or who have smaller farming operations.
While producers have been able to increase their bottom line over recent years, startup costs are often high to enter the agriculture sector. Land costs, equipment and other expenses to purchase or operate a farm can quickly add up and many simply don’t have access to the commercial credit necessary to get started.
That’s where USDA’s Farm Service Agency steps in to help. The agency offers direct loans for farm ownership or operations, and also works with commercial lenders to provide guaranteed loans for farmers and ranchers. For beginning farmers and ranchers, USDA provides affordable credit, including loans under the Beginning Farmer and Rancher Development Program and Youth Loans.
Ultimately, we’re able to help many borrowers transition to commercial credit
Since 2009, USDA has made a record amount of farm loans through the Farm Service Agency – more than 128,000 loans totaling nearly 18 billion dollars. We’ve increased the number of loans to beginning farmers and ranchers from 11,000 loans in 2008 to 15,000 loans in 2011. In fact, more than 40 percent of USDA’s farm loans now go to beginning farmers.
In addition, we have increased lending to socially-disadvantaged producers by nearly 50 percent since 2008 as we work to ensure that all Americans have access to the programs and services offered by USDA.
Finally, we’re taking new steps to ensure flexibility in our programs. Just last month, USDA invited public comments on a proposed rule that will make “microloans” of up to 35,000 dollars available for new farmers, using simplified applications with half of the traditional paperwork burden.
Small farmers often rely on credit cards or personal loans, which carry high interest rates and have less flexible payment schedules, to finance their operations. The goal of this microloan program is to better meet the credit needs of small farm operations, beginning farmers, and returning veterans.
America’s farmers and ranchers are the best in the world. By further expanding access to credit, USDA will help a new generation of farmers out-produce the world and ensure the strength of an American agriculture sector that drives our economy, creates jobs, and ensures the most secure and affordable food supply in the world.
An audio version of this week’s column can be found here.