Sustainability 101 Pathway:
A Guide to USDA Sustainable Farming Programs
Today’s farmers are changing the way we farm and eat in this country. Folks starting out in farming today are:
USDA recognizes the needs of farmers of all kinds, and has worked hard to improve federal resources so they work for all farmers. However, navigating the programs and understanding what each program can do for you is confusing and time consuming. This guide is for anyone who is farming – or thinking about getting into farming – whether you’re a beginner or just looking to try something new.
View the full document: A Guide to USDA Sustainable Farming Programs
Providing low interest financing for annual farm operating expenses
Farming is a business, and just like other business owners, farmers need access to financial resources (i.e., capital) to grow and build their enterprises. FSA Direct Farm Operating Loans support established and beginning farmers of all kinds by providing short-term financing to cover annual operating expenses. These expenses include but are not limited to: livestock, farm equipment, feed, seed, fuel, rent, insurance, or minor improvements to existing buildings and farm infrastructure. FSA Guaranteed Farm Operating Loans help farmers obtain more affordable financing from a bank or other lending institution by providing the commercial lender a government guarantee.
Requirements: To apply, farmers must demonstrate sufficient education, training and experience; be unable to obtain credit from other sources; have an acceptable credit history; and be not larger than a family-sized farm (i.e., one in which the farm family provides all the management and a substantial amount of the total labor). A farmer must be able to demonstrate their ability to repay the loan and have enough collateral to secure the loan. Talk to your local FSA agent for more details on eligibility. Beginning, minority, and women farmers receive special priority from USDA in applying for farm loans, including FSA Direct Operating Loans.
Loan Terms: Repayment terms vary, but operating loans are normally repaid within seven years. Interest rates are calculated monthly, and can be found on the FSA website. Maximum direct loan amount is $300,000; maximum amount for a guaranteed loan is $1,399,000 (adjusted annually for inflation). Operating loans under $50,000 are considered microloans and have a streamlined application process and more flexible requirements and terms.
Affordable financing for farmland, buildings, and conservation improvements
Access to credit is critical for farmers and ranchers. Often, it can be the deciding factor in whether or not they are able to pursue a career in agriculture, or able to continue with an existing farming operation. FSA Direct Farm Ownership Loans support established and beginning farmers by providing affordable financing directly from FSA. FSA Guaranteed Farm Ownership Loans help farmers obtain more affordable financing from a bank or other lending institution by providing the commercial lender a government guarantee.
Requirements: To apply, farmers must demonstrate sufficient experience managing or operating a farm, be unable to obtain credit from other sources, have an acceptable credit history, and be not larger than a family-sized farm (i.e., one in which the farm family provides all the management and a substantial amount of the total labor). A farmer must be able to demonstrate their ability to repay the loan and have enough collateral to secure the loan. Talk to your local FSA agent for more details on eligibility. Beginning, minority, and women farmers receive special priority from USDA in applying for farm loans, including FSA Direct and Guaranteed Farm Ownership Loans.
Loan Terms: Repayment terms vary but cannot exceed 40 years for ownership loans. Interest rates are calculated monthly, and can be found on the FSA website. Maximum direct loan amount is $300,000; maximum amount for a guaranteed loan is $1,399,000 (adjusted annually for inflation).
Streamlined small loan options for operating costs, land, or equipment purchases
Access to capital is often cited as the number one barrier for those interested in pursuing a career in farming. FSA Microloans are tailored to the smaller-scale operations of beginning farmers and farmers serving local and regional food markets – including urban and small-scale diversified farmers. Examples of eligible purchases include but are not limited to: seeds, animals, small equipment, marketing-related costs, and small parcels of farmland.
Requirements: To apply, farmers must demonstrate sufficient education, training and experience; be unable to obtain credit from other sources; have an acceptable credit history; and be considered not larger than a family-sized farm (i.e., one in which the farm family provides all the management and a substantial amount of the total labor). A farmer must be able to demonstrate their ability to repay the loan and have enough collateral to secure the loan. Beginning, minority, women, and veteran farmers receive special priority from USDA in applying for farm loans, including Microloans.
Loan Terms: Microloan repayment schedules and loan terms are similar to those of FSA Direct Loans, however, the maximum loan amount for microloans is capped at $50,000. Unlike other FSA loans, microloans made to beginning and veteran farmers do not count toward the total number of years a farmer can receive FSA loan assistance. Microloans can also be used in the context of the Down Payment Loan Program.
A joint financing option to help beginning and underserved farmers purchase farmland
Access to affordable farmland is one of the most significant challenges that aspiring farmers face when looking to start a career in agriculture. To help beginning farmers, FSA offers a special joint-financing loan option, the Down Payment Loan Program, which creates a partnership between the farmer, FSA, and a private lender in order to help beginning and socially disadvantaged farmers buy farmland.
Requirements: To qualify, farmers must have been farming for ten years or less, or be a member of a socially disadvantaged group, including minorities and women. A five percent cash down payment is required, and the borrower must be able to secure a commercial loan for at least 50 percent of the purchase price. To apply, farmers must demonstrate sufficient experience managing or operating a farm, have an acceptable credit history, and not already own farmland bigger than 30 percent of the average acreage of the farms in the county. A farmer must be able to demonstrate their ability to repay the loan and have enough collateral to secure the loan. Talk to your local FSA agent for more details on eligibility.
Loan Terms: The repayment period for the FSA portion of the loan is scheduled in equal, annual installments for a term not to exceed 20 years. The repayment terms for the commercial portion of the loan can vary but cannot exceed 40 years. Interest rates on the FSA portion of the loan are calculated monthly, at a fixed rate that is four percent lower than the regular FSA farm ownership loan rate, but never lower than 1.5 percent. See the FSA website for current rates. The maximum purchase price for the loan cannot exceed $667,000. FSA can also provide the commercial lending partner with a 95 percent guarantee, which helps keep the commercial interest rate lower than it might otherwise be.
Providing federal loan guarantees for retiring farmers who self-finance the sale of their land to a beginning or minority farmer
Two of the biggest barriers for beginning farmers are access to land and capital. FSA’s Land Contract Guarantee Program helps farmers help one another, by connecting farmers looking to sell their farmland with beginning and minority farmers looking for property. This loan program reduces the financial risk for retiring farmers who self-finance the sale of their land and creates an additional, much-needed option for land access for new and minority farmers.
Requirements: To qualify to purchase land through this program, a farmer must have been farming for ten years or less, or be a member of a socially disadvantaged group (e.g. minorities or women). A farmer must also be unable to obtain credit from other sources, have an acceptable credit history, intend to be the owner or operator of the farm being purchased, and be able to provide a 5 percent cash down payment.
Loan Guarantee Options: The seller can choose between a Prompt Payment Loan Guarantee or a Standard Guarantee, both effective for ten years. The Prompt Payment Guarantee option would afford the seller up to three annual installments plus the cost of related real estate taxes and insurance. The Standard Guarantee option protects 90 percent of the outstanding principal balance under the land contract. The purchase price or appraised value of the farm or ranch that is the subject of the contract sale cannot be greater than $500,000.
Helping farmers build or upgrade on-farm storage and packing facilities
On-farm storage is essential for farmers who need to keep food fresh and safe prior to marketing. Farm Storage Facility Loans provide farmers with very low-interest financing to help pay for the equipment and facilities they need to safely wash, package, store, and transport their products, including:
Eligible Commodities: Fruits, vegetables, meat, poultry, dairy, eggs, grains, pulses (e.g. chickpeas or lentils), hay, renewable biomass, honey, maple syrup, flowers, hops, and aquaculture.
Eligible Costs: Purchase price and sales tax; cost of new materials; shipping and delivery; site prep costs; installation costs; off-farm paid labor; appraisals and legal fees.
Requirements: To apply, a farmer must have satisfactory credit, be able to repay the loan, have proof of crop insurance, and produce an eligible commodity. Talk to your local FSA agent for more details on eligibility.
Helping retiring farmers rent or sell expiring Conservation Reserve Program (CRP) land to beginning and underserved farmers
While retiring farmers are deciding what to do with their expiring CRP acres, beginning, veteran, and minority farmers may be struggling to access new land. The CRP Transition Incentives Program (CRP-TIP) helps connect the dots.
CRP-TIP offers two years of extra CRP rental payments to owners or operators of expiring CRP land who rent or sell their land to beginning, socially disadvantaged or veteran farmers or ranchers who will use sustainable grazing practices, resource-conserving cropping systems, or organic production methods. The incoming producer will have the option to enroll the former CRP acres in the Conservation Stewardship Program or Environmental Quality Incentives Program, and to re-enroll portions of the land in CRP through the “continuous sign-up,” which is for conservation practices such as buffer strips.
Eligibility: Retiring farmers and ranchers with expiring CRP contracts; beginning and socially disadvantaged farmers and ranchers; veteran farmers and ranchers who have been farming for no more than 10 years.
Requirements: Before the CRP contract is terminated, the retired or retiring owner or operator must sell or lease some or all of the land that was covered by the CRP contract to a beginning or underserved farmer, who must develop and implement a conservation plan for the land.
Providing insurance-style assistance for crops not covered by most federal crop insurance programs
Traditional crop insurance isn’t available for all crops or in every county. To help fill that void, FSA has the Noninsured Crop Disaster Assistance Program (NAP) to provide a crop insurance-like product to 300+ crops at low cost. If you can’t get traditional crop insurance for your crop, this program is for you. This policy allows you to obtain basic risk protection no matter where you are or what you grow or how you market it. NAP will cover the organic, direct market, fresh, and processing crop values when adequate pricing data is available.
In the event of a natural disaster that causes crop losses or prevents planting, NAP enrollees can receive payment on their lost crop to help recoup their expenses for the year. This program covers any crop not insurable by the federal crop insurance program. It includes a basic option for losses of 50 percent or greater at 55 percent of market price as well as buy-up option, with coverage of between 50-65 percent of production based on a crop’s full value. All coverage options cost $250 per crop with a cap of $750 (higher if you farm in more than one county). Buy-up coverage also has a 5.25 percent premium fee. Fees are waived and premiums cut in half for beginning farmers with less than 10 years experience, limited resource, and socially disadvantaged farmers and ranchers. Payments are capped at $125,000, and there is a gross income limit of $900,000.
Helping beginning farmers manage risk by reducing crop insurance premiums
Farming is full of uncertainty and risk, especially for those just beginning their careers in agriculture. The Federal Crop Insurance Corporation (FCIC), administered through RMA, can help eligible beginning farmers purchase crop insurance by providing a 10-percentage point increase in their premium subsidy. Hence, if the premium subsidy for a particular crop insurance policy were 65 percent for a non-beginning farmer, it would be 75 percent for a beginning farmer for those first five years.
For those choosing low-cost catastrophic coverage, the normal $300 administrative fee is waived for their first five years of farming.
Eligible farmers are also able to utilize the production history of a farm they are taking over to obtain a larger yield adjustment during this period, and, where applicable, receive a higher, 80 percent of county average yield plug instead of the usual 65 percent.
Combined, these provisions make securing and paying for federal crop insurance coverage easier and less costly for beginning farmers in the early start up years.
Helping farmers and ranchers manage natural resources and improve environmental benefits
The Environmental Quality Incentives Program (EQIP) provides payments and hands-on help for farmers and ranchers who implement practices and activities that conserve and improve natural resources on eligible land.
Resources that can be addressed include soil erosion and soil health, plant vigor and productivity, animal health, wildlife habitat restoration, water and air quality improvements, water conservation, and energy efficiency improvements. Many activities are eligible for support, such as pasture restoration, nutrient and pest management, and cover crop adoption. EQIP can also help defray the cost of equipment or infrastructure like high tunnels, irrigation equipment, fencing, and livestock watering facilities. A small portion of EQIP assistance is also targeted through several initiatives that use specific conservation practices to address priority natural resource concerns.
Five percent of all funds are set aside each year for beginning farmers and ranchers and five perfect for socially disadvantaged producers. Ask your NRCS office about other special initiatives for particular regions, resource concerns, or participants.
Payments: Payments are made based on installed practices being certified to NRCS standards and specifications, and at the approved payment rate. Beginning, socially disadvantaged, veteran, and limited resource farmers and ranchers may be eligible for higher payment rates (up to 90 percent instead of the normal limit of 75 percent) and advance payments to purchase materials and services (up to 50 percent of the cost).
Market Data, Certification, and Labeling
AMS facilitates the strategic marketing of agricultural products in domestic and international markets while ensuring fair trading practices and promoting a competitive marketplace. AMS publishes price data, conducts market research, provides audits and accreditation, and helps farmers pay for organic certification.
Farm Loans, Disaster Assistance, and Commodity Programs
FSA administers credit and loan programs and manages conservation, commodity, disaster and farm marketing programs through a national network of offices.
Find your local FSA field office at: http://offices.sc.egov.usda.gov/locator/app?agency=fsa
Conservation Payments and Technical Assistance
NRCS provides leadership in a partnership effort to help people conserve, maintain and improve our natural resources and environment through federal conservation programs.
Find your local NRCS field office at: http://offices.sc.egov.usda.gov/locator/app?agency=nrcs
Crop Insurance Policy Development and Data Collection
RMA helps to ensure that farmers have the financial tools necessary to manage agricultural risks. RMA works with private crop insurance companies and agents to administer the Federal Crop Insurance Program which protects farmers against losses on their farms.
Grants, Loans, and Rural Infrastructure
RD helps rural areas to develop and grow by offering federal assistance that improves quality of life. RD targets communities in need and then empowers them with financial and technical resources.
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