Ag Policy Blog

Analyzing Loan Totals for Socially Disadvantaged Farmers

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
Connect with Chris:
USDA has provided updated totals for loans to socially disadvantaged farmers. Total outstanding loans amount to $2.67 billion, as of the end of Fiscal Year 2020. These loans for minority farmers will be paid off under a provision in the American Rescue Plan that passed Congress this week. (DTN chart from USDA data)

Debt relief in the American Rescue Plan for minority farmers appears to reach about $3.7 billion when the numbers are compiled by USDA, though there are some caveats to those figures.

After a week or so of pestering USDA's press office for numbers, the department on Thursday provided DTN with updated statistics for Farm Service Agency direct and guaranteed loans for all borrowers and socially disadvantaged farmers.

The American Rescue Plan received final approval on Wednesday and was signed by President Biden on Thursday. More details can be found at https://www.dtnpf.com/…

The provision in bill on debt relief was promoted as aid that would remove historic debt for Black farmers that was not paid off during the multiple Pigford settlements. Advocates for these farmers say there are as many as 17,000 Black farmers with legacy debt at USDA that these farmers were unable to pay off, and the Pigford settlements did not address.

USDA shows 14,432 borrowers under the category of socially disadvantaged farmers with 25,328 loans.

USDA numbers also show delinquent debt for socially disadvantaged farmers breaks down to $414.9 million. Overall, USDA shows among all borrowers, there is about $2.42 billion in delinquent debt for FSA direct and guaranteed loans.

The bill language, though, does not specify delinquent debt. After repeatedly asking congressional staff about how the specifics of the language works, staff for the Senate Agriculture Committee said, “The language states that the USDA will pay up to 120% of socially disadvantaged farmers' outstanding debt as of January 1st. That means all USDA direct and guaranteed loans – not just delinquent loans.”

The language also states the Agriculture secretary would use “such sums as necessary” to pay the provision, which the Congressional Budget Office had pegged at $4 billion.

All debt for socially disadvantaged farmers as of Dec. 31, 2020, shows socially disadvantaged farmers with current loans had $2.67 billion on the books, along with the $414.9 million in delinquent debt, reaching $3.1 billion in outstanding loans for socially disadvantaged farmers. With the extra 20% added in for tax liability, that comes to about $3.7 billion.

Including the $2.42 billion in delinquent debt, USDA has about $31.7 billion in outstanding FSA loans and loan guarantees to 144,802 borrowers as of the end of 2020. A concern raised by Republican members of the House Agriculture Committee is that if the provision offering aid only to minority farmers ends up being challenged in court that USDA could be required to pay off all of those loans.

The dollar figures involved include another caveat. USDA doesn't break out how many of the loans for socially disadvantaged farmers went to white women farmers. The American Rescue Plan uses the 1990 definition for socially disadvantaged farmers, which is defined as Black, or African American, American Indians or Native Alaskans, Hispanics, Asians and Native Hawaiians or Pacific Islanders. In 1992, specifically for credit issues, the definition of socially disadvantaged was changed to include women farmers as well. Under the American Rescue Plan, they do not qualify for that loan relief.

As DTN also has highlighted over the past week, a few states have used loans for socially disadvantaged farmers far more than others. Oklahoma is the biggest state for FSA loans for socially disadvantaged farmers, by far. Fiscal Year 2020 data -- just published this week by FSA (after pestering from DTN) -- shows Oklahoma had 1,189 farmers receiving loans for socially disadvantaged farmers totaling $176.8 million. Arkansas was the second-highest state at $94.9 million in loans, followed by Texas with $88.9 million and Louisiana at $65.9 million.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Comments

To comment, please Log In or Join our Community .