Think small with USDA’s ‘microloans’
In a world where big is now often small, the U.S. Department of Agriculture’s (USDA) new microloan program could have a great impact on little farmers’ lives. The program was announced in Memphis, Tenn., Jan. 15, by Secretary of Agriculture, Tom Vilsack. It is designed to aid “small and family operations, beginning and socially disadvantaged farmers.” They can secure loans of up to $35,000 with the program.
The idea, Vilsack said, is to bolster the progress of younger producers as they move through their difficult start-up years. The program does that by providing resources to increase the farmer’s equity, making it possible a bit later on for them to eventually qualify for commercial credit — and expand their operations. The program, in expanding producer access to credit, can provide simple and flexible loans for small operators.
The secretary said he’s met several small and beginning farmers, some returning veterans, and “disadvantaged producers,” who are interested in farming as a career but, “too often must rely on credit cards or personal loans with high interest rates to finance their start-up operations.” The USDA seeks to help these producers put down roots in agriculture by expanding their credit opportunities.
Vilsack said he’s concerned about this new generation of farmers. He wants to help them “while ensuring the strength of an American agriculture sector that drives our economy, creates jobs and provides the most secure and affordable food supply in the world.”
The program allows producers to apply for a maximum of $35,000 to pay for what the USDA terms “start-up expenses.” They include such things as hoop houses to extend the growing season, essential tools, irrigation, delivery vehicles, and annual expenses, such as seed, fertilizer, utilities, land rent, marketing (essential these days) and distribution expenses. The loans can also pay for purchase of land, livestock, equipment, feed, seed and supplies, or can be put toward construction of buildings, and help make farm improvements.
The program is administered through the Farm Service Agency (FSA), so farmers have local access to information and guidance in the loan process. The FSA looks at any unintended barriers these start-up producers might encounter in obtaining needed financing.
The microloan program offers a simplified loan application process, and the program also offers help for farmers interested in niche farming, raising products to sell directly to ethnic markets and through farmers markets throughout the nation. And, Vilsack noted, the program provides a bridge for past FSA Rural Youth Loan recipients to successfully transition to larger-scale operations.
It should be noted that more than 40 percent of the USDA’s farm loans now go to beginning farmers, and the agency has increased its lending to socially-disadvantaged producers by nearly 50 percent since 2008. Interested producers can get more information or make applications through their local county FSA office.
Vilsack, a former Iowa governor, has announced that he will stay on as Ag Secretary in President Obama’s second term, which began officially Jan. 19.
I’ll see ya.
An Iowa native, Peter Graham has been a rural newspaper editor for 40 years. He currently edits a twice-weekly paper in Western Iowa. You can contact him at (712) 642-2791 or news@missourivalley times.com.