USDA Begins Loan Payments for Disadvantaged Farmers

The United States Department of Agriculture (USDA) announced in a press release on Friday that it is beginning loan payments, as was outlined in the American Rescue Plan.  The USDA Farm Service Agency published the first notice of funding availability (NOFA) announcing payments for eligible borrowers.

“The American Rescue Plan has made it possible for USDA to deliver historic debt relief to socially disadvantaged farmers and ranchers beginning in June,” said Agriculture Secretary Tom Vilsack in the press release. “USDA is recommitting itself to gaining the trust and confidence of America’s farmers and ranchers using a new set of tools provided in the American Rescue Plan to increase opportunity, advance equity and address systemic discrimination in USDA programs.”

The press release said that the official NOFA would be published early next week, and the payments are expected to begin distribution in June. The department also said that within 120 day notice addressing loan balances and other circumstances will be published.

Under section 1005 of the American Rescue Plan Act, the Farm Service Agency was directed to provide up to 120% for outstanding loan balances for socially disadvantaged farmers, which according to the USDA definition includes farmers who are part of minority groups who “have been subjected to racial or ethnic prejudice because of their identity.”

The press release explained, “for much of the history of the USDA, socially disadvantaged farmers and ranchers have faced discrimination — sometimes overt and sometimes through deeply embedded rules and policies — that have prevented them from achieving as much as their counterparts who do not face these documented acts of discrimination. Over the past 30 years, several major civil rights lawsuits have compensated farmers for specific acts of discrimination—including Pigford I and Pigford II, Keepseagle, and the Garcia cases. However, those settlements and other related actions did not address the systemic and cumulative impacts of discrimination over a number of decades that the American Rescue Plan now begins to address.”

This loan program received a lawsuit from a farmer who claimed that the loan program should be available to all races, and that the program is unconstitutional. He argued that the government should not exclude based on rights, but should promote equal rights instead. A group of banker associations also wrote a letter expressing concern that suddenly paying off loans would have adverse consequences, and suggested implementation steps to allow bankers to continue being incentivized to offer loans.