Biden’s USDA loan relief program will save farmers $3.1 billion.
About 36,000 farmers who have fallen behind on loan payments or are facing foreclosure will receive billions of dollars in debt relief thanks to a scheme that the federal government unveiled on Tuesday.
The Inflation Reduction Act set aside $3.1 billion for the purpose of helping troubled borrowers of direct or guaranteed loans managed by the U.S. Department of Agriculture. This money will be used to pay the farm loan relief program, according to the USDA. Congress passed the measure earlier this year, and President Biden signed it in August.
“Our country’s farmers and ranchers have suffered very terrible circumstances over the last few years, through no fault of their own,” said Agriculture Secretary Tom Vilsack. “The financing included in today’s announcement helps keep our farmers farming and offers a new beginning for producers in difficult situations,” the statement reads.
Automatic electronic payments are being made to around 11,000 farm borrowers who have fallen behind on direct or guaranteed loan installments for 60 days or more. Each farmer who received a direct loan received approximately $52,000, while those who received guaranteed loans received approximately $172,000 each. This group’s expenses come to around $600 million in total.
According to Vilsack, farmers who got this assistance will receive a letter confirming that their payments have been made and that they will continue to be current until their next yearly payment is due in 2023.
2,100 farm loan debtors who had their loans foreclosed but still owed money and had their tax returns and other resources confiscated were given urgent assistance of $200 million. According to the USDA, farmers in this category got an average of $101,000.
Additional funding of $571 million will be utilized to:
- 7,000 farmers missed loan payments all the way up to the maturity date because of the coronavirus pandemic.
- With individual meetings to examine their issues and develop solutions, 1,600 farmers who are facing bankruptcy or foreclosure will receive case-by-case assistance at a cost of $330 million.
- Additional aid will be provided to 14,000 financially struggling farm borrowers who ask for assistance to prevent missing a loan payment due to cash flow issues.
The money presented on Tuesday is the first round of compensation meant to ensure that the farmers continue operating or return to farming.
Farmers of color have expressed great anxiety about Mr. Biden’s agricultural funding plan because many of them were promised tailored loan relief but will now be included in payments with all farmers.
Farmers of color would receive $4 billion in loan forgiveness under the Emergency Relief for Farmers of Color Act, which was passed last year along with the American Rescue Plan of 2021. The emergency financing would have been the first step in redressing decades of discrimination, according to some farmers, that they claim they have endured at the hands of the USDA, in addition to offering assistance to Black growers who have struggled during the pandemic.
However, before any money could reach farmers, the loan-forgiveness program was dropped from the Inflation Reduction Act. The measure also eliminated language that provided money expressly for Black farmers to cancel their USDA loans.
Black farmers’ worries
The National Black Farmers Association’s John Boyd Jr. said that because White farmers outnumber Black farmers countrywide, the USDA loan relief is likely to result in fewer Black farmers receiving forgiveness.
The USDA stated that the remaining $3.1 billion will be utilized to help ease needless lending limitations and give further assistance that will be disclosed later.
According to the USDA, farmers helped by the program include distressed borrowers who have been hit particularly hard by market disruptions brought on by pandemics and compounded by more frequent, more intense, climate-driven natural disasters.
According to the U.S. Government Accountability Office, the USDA also contributed $31 billion to help nearly a million farmers offset lower sales, prices, and other losses brought on by the coronavirus pandemic in 2021 and 2022.