Extension News

2008 U.S. Farm Bill Enhances Beginning Farmer Provisions

1/22/2009

AMES, Iowa -- People who want to get into farming have received support from the Beginning Farmer Center at Iowa State University Extension for the past 15 years. Now, they are getting a boost from the 2008 U.S. Farm Bill. With the leadership of Sen. Tom Harkin from Iowa and Rep. Collin Peterson from Minnesota, many of the beginning farmer provisions of the 2002 Farm Bill programs were expanded in the new farm bill and some new ones were added.

“Government programs play a major role in assisting young people who wish to pursue a farming career. In addition to the 2008 Farm Bill changes, the state of Iowa also has developed programs that have proven to be valuable tools,” said Dave Baker, Beginning Farmer Center farm transition specialist. “The Center monitors existing and new programs that can be a part of farm families succession plans. Several basic programs at the national level will give more opportunities to beginning farmers.”

Baker highlights some of the programs included in the 2008 U.S. Farm Bill that will affect beginning farmers, ranchers and socially disadvantaged farmers and ranchers. He notes that this is not a complete listing of the bill’s provisions.

Farm ownership and operating loan amounts change. Basic programs administered by the Farm Service Agency (FSA) of USDA provide direct and guaranteed farm ownership and operating loans for farmers and ranchers. In the new farm bill, larger percentages of the direct and guaranteed ownership and operation loans are reserved for beginning farmers and ranchers and for socially disadvantaged farmers and ranchers. The purpose of reserving funds for these borrowers is to target government credit programs to those most in need of credit assistance; to ensure that socially disadvantaged and beginning farmers and ranchers can obtain access to credit; and to help change the structure of agriculture by helping to reverse the aging of American agriculture and loss of minority land ownership.

The 2008 U.S. Farm Bill sets aside 75 percent of direct farm ownership loans (increased from 70 percent), 40 percent of guaranteed loans (increased from 25 percent) and 50 percent of the direct operating loans (increased from 35 percent) for beginning farmers.

The Beginning Farmer and Rancher Development Program will provide $15 million of competitive grants each year for education, extension and outreach initiatives to help young people prepare for a future in agriculture.

The Down-Payment Loan Program addresses the significant cash flow requirements of most new farm operations. It matches the resources of the FSA with a beginning or socially disadvantaged farmer and a commercial lender or private seller to enable beginning, minority and women farmers to make a down payment on a farm or ranch. These loans have attractive 20-year terms at 4 percent lower than regular FSA direct farm ownership loans, but no less than 1.5 percent.

The state of Iowa has first time farmer or aggie bond programs that provide tax benefits to contract sellers and lower interest loans to be used in combination with FSA loans. If beginning or disadvantaged farmers are unable to make the required 5 percent down payment they have two options: a participation loan and an FSA direct farm ownership loan for 100 percent of the loan with 40 year financing.

The Beginning and Socially Disadvantaged Farmer and Rancher Land Contract Program “pilot” guarantee program has become reauthorized and nationwide through the 2008 bill. It was designed to encourage retiring landowners to sell to beginning  or socially disadvantaged farmers and ranchers through private contracts. There are two guarantee options associated with this program: prompt payment guarantee of three amortized annual installments, or 90 percent principal loan value guarantee in effect for 10 years.

The Conservation Reserve Program Transition Option is designed to facilitate the transition of land to beginning and socially disadvantaged farmers and ranchers for the purpose of returning the land to production using sustainable grazing or crop production methods. To encourage this program, CRP contract holders can receive two extra years of rent payments for leasing or selling that land to a beginning or socially disadvantaged farmer. The National Organic Certification Cost Share Program can be used in conjunction with the CRP option to defray the costs, up to $750 per year, of organic certification for producers and handlers of organic produce.

The original 2002 Conservation Security Program has been restructured and renamed the Conservation Stewardship Program (CSP) incorporating many changes. One of the changes affecting new entries into organic production will be the requirement that the USDA provide appropriate outreach and technical assistance to organic farmers and ranchers so that they will participate in CSP.

For complete details on the 2008 Farm Bill, contact the local FSA office or visit the following website: www.fsa.usda.gov.

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Contacts :

David Baker, Extension Farm Transition Specialist, (515) 252-7829, baker@iastate.edu

Willy Klein, Extension Communications and External Relations, (515) 294-0662, wklein@iastate.edu