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Key changes
Eligibility time limits on Farm
Service Agency (FSA) direct and guaranteed farm operating
loans can be waived for a period of time, and more farmers can
qualify for FSA emergency loan financing. Interest-rate
assistance on guaranteed operating loans is made permanent,
and annual authorized loan amounts increase. Beginning farmer
and rancher programs are enhanced. Lending procedures are
streamlined, including raising the threshold for which lenders
can submit reduced documentation on loan guarantee
applications.
Summary of provisions
More FSA lending resources
are focused on beginning farmers and ranchers by modifying
program benefits, by targeting more loan funding to these
borrowers, and by increasing opportunities to purchase farm
property held by FSA. Authority is granted to guarantee
owner-financed farm purchase loans to beginning farmers on a
pilot basis and to guarantee State beginning farmer loans (a
change in the tax code is still required to make this change
operational).
Annual funding for FSA guaranteed and direct farm loan
programs is set at $3.8 billion. Interest rate assistance
program for guaranteed operating loans is made permanent and
annual authority for the program rises from $490 million to
$750 million. The Secretary of Agriculture is required to
study the effectiveness of FSA farm loan programs in meeting
the needs of producers in an efficient and fiscally
responsible manner.
FSA farm loan eligibility rules are relaxed to make more
borrowers eligible for Federal farm credit assistance.
Eligibility time limits on direct and guaranteed operating
loans are waived to allow for longer access to FSA farm loan
programs. The definition of an emergency is changed to include
plant or animal quarantines. USDA employees become eligible
for FSA farm loans.
Changes are made to FSA farm loan programs to streamline
their delivery. County committee involvement in loan decisions
is reduced, and a greater number of employees are given
authority to handle lending decisions. Low-document loan
processing on guaranteed loan requests was increased from
$50,000 to $125,000.
The Farm Credit System is provided greater authority to
finance the export and import of agricultural-related
equipment and goods.
Economic implications
Most changes to Federal
credit policies are relatively minor. Changes to FSA farm loan
programs focus more resources on beginning farmers and
ranchers, while eligibility rule changes will make more
borrowers eligible for Federal farm credit assistance. The
changes could boost demand for FSA farm loan programs
somewhat. The 2002 Farm Act sets annual lending levels close
to that experienced in recent years, so the level of
Government support to farm credit markets does not change
significantly. While farm bills authorize levels of lending
for FSA farm loan programs, actual expenditures are set
annually by appropriations bills.
Changes to the authorities of the Farm Credit System will
allow somewhat greater authority to provide financing of
agricultural products and agricultural-related machinery and
processing equipment abroad.
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