U.S. Sens. John Hoeven (R-ND) and Amy Klobuchar (D-MN) introduced legislation on Sept. 21 to modernize loan limitations for U.S. Department of Agriculture (USDA) loan programs.
Their bill, the Producer and Agricultural Credit Enhancement (PACE) Act, S. 2890, would improve farmers’ and ranchers’ access to credit by increasing loan limitations for the Farm Service Agency’s (FSA) Direct and Guaranteed Loan Programs for Farm Operating Loans and Farm Ownership Loans.
It would do so by the following amounts:
- Direct Operating: Increase from $400,000 to $750,000;
- Guaranteed Operating: Increase from $2.04 million to $2.6 million;
- Direct Ownership: Increase from $600,000 to $850,000; and
- Guaranteed Ownership: Increase from $2.04 million to $3 million.
It would also change the inflation benchmark for guaranteed ownership loans to the National Ag Statistics Service (NASS) Ag Land Values land survey. In addition, it would index the Direct Farm Ownership Down Payment Program to align with current loan limitations. Further, it would direct FSA to promulgate rules allowing distressed borrowers to refinance guaranteed loans into direct loans. Finally, it seeks to increase loan limitations for the FSA microloan program from $50,000 to $100,000.
“Production costs for our farmers and ranchers continue to rise due to record inflation and increasing costs for fuel, fertilizer and other inputs,” said Hoeven, the ranking member of the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. “Our legislation will help credit programs to keep pace with the current needs of producers, so they have access to the capital they need to support their operations and ensure Americans have access to the food and fuel we need.”
The senators are working to pass the legislation as part of the next farm bill.
“Too many American farmers and producers operate on razor-thin margins. Having access to credit can often mean the difference between economic viability and financial hardship. By expanding credit opportunities for producers and farmers, this legislation will strengthen the rural economy across Minnesota and the country,” Klobuchar said.
The PACE Act is supported by the National Farmers Union, American Farm Bureau Federation, American Soybean Association, American Sugarbeet Growers Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Pork Producers Council, National Sorghum Producers, National Sunflower Association, U.S. Canola Association, U.S. Beet Sugar Association, U.S. Dry Pea and Lentil Council, U.S. Peanut Federation, USA Rice, Farm Credit Council, American Bankers Association, and North Dakota Grain Growers Association.
“Access to capital is critical to everyone in production agriculture – especially beginning farmers and ranchers. Farm Credit thanks Senators Hoeven and Klobuchar for their leadership on the Producer and Agricultural Credit Enhancement Act. It would increase FSA’s direct and guaranteed loan limits to reflect the current costs of farming and ranching, benefitting producers across the country,” Farm Credit Council President and CEO Todd Van Hoose said.
U.S. Reps. Brad Finstad (R-MN) and Angie Craig (D-MN) have introduced a companion bill in the U.S. House of Representatives, H.R. 5631.