Title V: Credit
The Credit title authorizes USDA agricultural credit and rural development programs. It also “provides support to farmers with limited access to traditional lending markets by increasing direct loan and loan guarantee limits made by the Farm Service Agency” (USDA ERS).
The Consolidated Farm and Rural Development Act (ConAct) first authorized credit and rural development programs through three types of loans. The first type of loan, farm ownership loans, are for real estate purchases. Second, the ConAct offers farm operating loans for purchasing livestock, feed, seed, equipment, supplies, land or water development, and other purposes. Finally, emergency loans are for recovery from natural disasters and quarantines (“Credit Programs”).
The 2018 Farm Bill changed Title V by increasing loan amounts. Guaranteed loans were increased to $1.75 million per borrower, and in direct loans the farm ownership limit was increased to $600,000 and farm operating limits were increased to $400,000. Fifty percent of direct operating loans were reserved for qualifying beginning farmers and ranchers over the next five years in the Loan Fund Set-Asides. The percentage of loans that may be guaranteed was also increased to 95% specifically for beginning and socially disadvantaged farmers in order to provide them with more support. These changes help account for inflation and increased real estate value to provide farmers and ranchers with more fair prices. However, there are concerns that increasing these loan limits will result in larger, fewer loans being provided to established farmers, rather than providing loans to the beginning and socially disadvantaged farmers that may need them the most.
The Federal Agricultural Mortgage Corporation (FarmerMac)’s acreage exception was increased from 1,000 acres to 2,000 acres, which will “enable larger loans to be sold to Farmer Mac by commercial banks and members of the Farm Credit System” (USDA ERS). The 2018 Farm Bill also reauthorizes $150 million in annual appropriations for Conservation Loan and Loan Guarantee Program for conservation projects and Cooperative Lending Pilot Projects for loaning to community development financial institutions.
The Farm Credit System (FCS) and Farm Credit System Insurance Corporation (FCSIC) had some relatively small policy changes in the new farm bill.
New programs authorized gave the Secretary of Agriculture the authority to “provide equitable relief to farm loan program borrowers who were mistakenly qualified for farm loan program loans and who acted in good faith” and to “make additional direct operating microloans in any fiscal year in which it is determined that the need for direct operating loans is greater than the aggregate authorized amount” (USDA ERS). State Agricultural Loan Mediation Programs, which match grants for states providing third party mediation for agricultural credit disputes, were also reauthorized, and their scope is extended to cover additional issues.