OMAHA (DTN) -- Financially distressed farmers who have gotten forbearance for delinquent debt on Farm Service Agency (FSA) loans may have to wait until at least October to find out if they will qualify for debt relief under new funds provided by the Inflation Reduction Act.
USDA isn't ready to share details on how it will use a pot of $3.1 billion to help distressed loan borrowers. The department also is not ready to spell out the rules of how $2.2 billion to pay for discrimination claims will be handled, Agriculture Secretary Tom Vilsack said Wednesday. Those program details will likely come this fall.
Still, Vilsack wants to make clear that the debt relief programs passed by Congress in the Inflation Reduction Act are completely different from the one passed last year in the American Rescue Plan.
Section 1005 of the American Rescue Plan was meant to provide aid payments to socially disadvantaged farmers before it got locked up by multiple federal lawsuits from white farmers. Congress has "rescinded" that provision, Vilsack said. "So, it's gone."
The $5.3 billion in debt relief and discrimination payments that replaced Section 1005 is not the same as that beleaguered effort, Vilsack said.
"This is a separate and completely different program," Vilsack told reporters on a call Wednesday. He added, "So, it's not a continuation, it's not an extension, it's not a modification."
The Inflation Reduction Act provides $3.1 billion for loan payments or modifications to farmers considered distressed borrowers of Farm Service Agency direct or guaranteed loans.
"The idea here behind what Congress is directing us to do is to keep people on the land, keep farmers farming, to assist them to get over this difficult time that they've experienced," Vilsack said. He repeated that comment a couple of times in a half-hour call with reporters.
Since January 2021, USDA has suspended debt collections, foreclosures and other legal action against more than 12,000 borrowers -- about 10% of FSA borrowers -- who had delinquent direct or guaranteed FSA loans, as well as Farm Storage Facility Loans. The secretary said USDA is now looking at how to help those producers once the moratorium is lifted -- possibly in October.
"So, we're looking at our loan portfolio," Vilsack said Wednesday. "It's going to take a little time to do that, but we understand and appreciate that we have to be in a position to provide some level of direction for those distressed borrowers when and if that moratorium is lifted."
Vilsack also indicated a higher percentage of loan borrowers -- 22% -- have been or are currently delinquent on loans or have had struggles paying down their debt.
"That is part of the universe of people who could be helped, but again, we haven't yet made any decisions," Vilsack said.
As of the end of fiscal year 2021, FSA had about $14.8 billion in direct loans to nearly 89,000 borrowers and loan guarantees of $17.6 billion to 39,000 borrowers.
USDA loan data that shows delinquency on FSA loans last year amounted to about $688 million direct loans (about 4.6%) and $190.3 million (1.1%) in guaranteed loans for FY 2021. USDA's report on those totals doesn't break down how many borrowers that includes.
Black farmer groups last year cited there were roughly 17,000 legacy Black farmers who were facing garnished Social Security checks or tax refunds because of delinquent farm loans, some going back as far as 30 years.
Another $2.2 billion was included in the bill to aid farmers, ranchers or forest owners who experienced discrimination in USDA's loan programs before Jan. 1, 2021. Vilsack again said it is too early to determine how that program will be structured. However, that funding will be turned over to third-party organizations that will decide who receives payments.
"As you know, the bill does provide and direct us -- not actually administer the programs," Vilsack said. "We sort of oversee the program, but the goal is for us to contract with one or more entities who will be in the process of actually administering the program."
Roughly 30,000 claims were paid out during the Obama administration for long-standing discrimination lawsuits involving Blacks, Native Americans, women and Hispanic who had been denied access to USDA programs in the past.
"There's obviously still work to be done, and resources again have been provided directly by Congress. So, the work continues."
At least a pair of organizations representing Black farmers have criticized the new aid plans, citing that USDA and the Obama administration walked away from the debt relief in the American Rescue Plan because of the court cases.
While questions Wednesday involved aid over loans and discrimination claims, Vilsack announced $550 million in funding for projects meant to help underserved farmers and boost minority employment in agricultural professions.
FUNDING FOR UNDERSERVED PRODUCERS
USDA issued a $300 million funding notice for organizations to help underserved farmers increase access to land, capital and markets. The funding can go to state and local governments, non-profits, colleges, or tribes. The deadline to apply for these projects is Oct. 28, 2022.
"We know that the access to capital, land and markets is not an easy process," Vilsack said. "It's something that I hear quite a bit."
NEXT GENERATION OF AG PROFESSIONALS
To recruit the next generation of food and agricultural professionals, USDA will provide $250 million to institutions focused on minority education and careers such as the 1890s land-grant institutions. Vilsack described it as the "next-gen ag leaders program," which will also include opportunities for internships and fellowships at USDA agencies. This year, USDA is assisting about 120 scholars under existing programs, which Vilsack said is a record number.
"The idea here obviously is to enlarge the number of people who are engaged in this very important occupation and calling," Vilsack said.
The funding deadline for those programs is Oct. 25, 2022.
More details can be found at https://www.usda.gov/….
Chris Clayton can be reached at Chris.Clayton@dtn.com
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