U.S. Agriculture Secretary Tom Vilsack today announced that USDA is undertaking an unprecedented effort to use the department's administrative flexibility to provide relief to individuals and businesses in struggling agriculture industries. Vilsack has ordered USDA Rural Development and the Farm Service Agency to use all available means to help producers, processors and other small businesses who have been hit by worsening economic conditions.
"The Obama Administration is committed to doing everything it can to help families and businesses in agriculture to get through these tough economic times," said Vilsack. "Not only is this effort critical to restoring economic prosperity in America's rural communities, it is essential to ensure that Americans continue to have access to a safe, secure, and healthy food supply."
The assistance includes Farm Service Agency's increased effort to provide loan assistance to livestock producers and the Rural Development Business and Industry Loan program which has been structured to provide relief to processors and other small businesses in agriculture industries.
Additionally, the Farm Service Agency (FSA) is carrying out a number of actions to ease some of the stress being experienced by America's livestock producers, including:
Educating producers in all agricultural sectors about the loan and servicing options available to them and utilizing all existing authorities to maximize relief available to both new and existing borrowers.
FSA sent a letter to direct borrowers outlining the options and tools that are available to help ease any financial stress they may be experiencing. The letter encourages borrowers to contact their local county offices where loan officers can offer individualized financial and farm planning expertise. Options available include rescheduling, reamortization, deferral, and in extreme cases, reduction of debt.
Encouraging guaranteed lenders to use all options available to assist FSA guaranteed borrowers. FSA regulations allow lenders to undertake a variety actions to help struggling producers, including:
Lowering payments on chattel loans through debt rescheduling;
Lowering payments on real estate loans through reamortization;
Deferring part of scheduled payments; and
Writing down part of a delinquent loan.
Producers can apply for direct operating loans of up to $300,000 at 2.5 percent and direct-farm-ownership loans up to $300,000 at 4.625 percent. Direct operating loans can be used for most farm-related expenses including refinancing debt, while farm ownership loans can only be used to purchase or improve real estate;
County loan officers can also work to help secure guaranteed operating and farm ownership loans up to $1,094,000 at a rate negotiated with the lender. The first scheduled installment of these loans can be deferred for up to 18 months or can be interest only if needed. The terms of each loan are determined on a case-by-case basis.
And, the Rural Development's Business and Industry Guaranteed Loan program, which supports the development of private businesses, has been put to work helping processors and other businesses connected with the agricultural sector of the economy. Business and Industry loans are available to help cooperative organizations, corporations, partnerships, nonprofit groups; federally recognized Indian tribes, public bodies and individuals.
USDA recently made available $1.7 billion from the American Reinvestment and Recovery Act for Business and Industry loans. These funds will be focused to create and retain quality jobs, and serve difficult-to-reach populations and areas hardest hit by the current economic downturn. USDA is implementing a series of immediate steps to expand access to capital among rural small businesses.