Agriculture Secretary Tom Vilsack said Tuesday that thousands of farmers in debt have received $800 million in loan relief and that his department will use congressional funding to take a more proactive approach to reduce delinquencies and foreclosures.
Congress provided $3.1 billion for economically distressed farmers and ranchers in an August budget reconciliation package. The law was designed to aid those with direct loans from the Farm Service Agency or commercial loans guaranteed by the agency.
Lawmakers left it to the Agriculture Department to define economically distressed, and Vilsack said in a call with reporters that the definition will include a broad range of farmers and ranchers under financial pressure. The Farm Service Agency is the lender of last resort to an estimated 115,000 borrowers.
“There are literally thousands of producers out there who will be able to breathe a little easier. They are going to know that USDA is going to try to work with them and not against them. I think that is an important message,” Vilsack said.
He said the $3.1 billion will allow the department to “try and assist folks before they get to a point of no return.”
The August reconciliation bill repealed a 2021 $4 billion debt forgiveness law for minority farmers that addressed past discrimination and obstacles in Agriculture Department lending programs. But the aid from that law was held up when white farmers won court injunctions halting action.
Civil rights lawyer Ben Crump filed a class action lawsuit this month against the federal government on behalf of four minority farmers who say the repeal constitutes a breach of contract. Vilsack declined to comment on the lawsuit.
He said the most immediate need was to use $600 million to make approximately 11,000 borrowers with direct and guaranteed loans from the Farm Service Agency current with their accounts. The borrowers had to be at least 60 days behind on payments. The borrowers with direct loans also received payments to cover the next annual payment.
Deputy Secretary Jewel Bronaugh, a former Farm Service Agency executive director in Virginia, said the payments will provide a lifeline to at-risk farmers “to pull people back up and on the path. This is just the start.”
Bronaugh said when a farmer loses his or her operation to debt, it ripples through rural communities.
Borrowers with direct Farm Service Agency loans have been protected from foreclosures and other adverse actions under a moratorium in place for as long as the national public health emergency declared for the COVID-19 pandemic remains in effect. Vilsack has said the department is preparing for an end to the moratorium.
The department will use another $200 million to settle remaining debts of 2,100 farmers who have lost operations to foreclosure but still have outstanding debt, Vilsack said. Their debt has been or will be assigned to the Treasury Department, which garnishes tax refunds, Social Security checks and other federal payments they received to cover the loan debt.
Up to $500 million will be used for a case-by-case review of 1,600 complex delinquency cases, including those involving borrowers in bankruptcy or foreclosure, and of 14,000 borrowers at risk if they request aid to avoid falling behind on their loans.
The department will use $66 million in pandemic relief money to work with an estimated 7,000 farmers with direct loans who used a disaster set-aside option because of the COVID-19 pandemic to reschedule payments.
John Zippert, chairperson of Rural Coalition, an alliance of farmers, farm workers, indigenous, migrant and other working people, said the Agriculture Department’s action on debt was promising after the loss of the 2021 debt relief plan.
“We are hopeful that the economically distressed underserved producers we serve will now receive the prompt and long-awaited support they need to stabilize their operations in the face of the pandemic and growing increases in cost of inputs and land. We appreciate that USDA has demonstrated its understanding of the compelling need to provide this assistance in a timely and effective manner,” Zippert said in a statement.
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