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JOHANNS DISCUSSES USDA FARM BILL PROPOSALS FOR BEGINNING FARMERS
AMES, Iowa, April 17, 2007 - Agriculture Secretary Mike Johanns today described in greater detail a broad package of proposed changes to several titles of the farm bill that will help future generations of farmers and ranchers become established in production agriculture.
"The future strength of American agriculture depends in part on the ability of young men and women to overcome the challenges associated with entering production agriculture," said Johanns, while addressing the state FFA convention in Iowa. "This sentiment was echoed across the nation during our Farm Bill Forums, and I believe very strongly that our proposals would help to address those challenges and support the success of the next generation of farmers and ranchers. Our proposals provide tangible benefits and help in leveraging assets to purchase or expand farm and ranch operations."
Key elements of the beginning farmer and rancher proposals include an increase in direct payments to major crop producers, targeting 10 percent of conservation payments to beginning farmers and ranchers, reducing the interest rate under the Beginning Farmer and Rancher Down Payment Loan Program and doubling the maximum loan amount among other enhancements, and creating a combined maximum for direct operating loans direct ownership loans of $500,000. Following are details of the major components of the proposals to assist beginning farmers and ranchers.
To help beginning farmers and ranchers face the financial burdens associated with entering production agriculture, the Administration proposes raising the direct payment by 20 percent, adding $250 million to producer income over 10 years. After the initial five years, these producers would no longer be eligible for the higher direct payment rate.
The table below shows direct payment rates for 2007 under current law compared to USDA's proposed direct payment rates for 2008-2017 crop years for beginning farmers:
To encourage conservation practices, the Administration proposes reserving 10 percent of farm bill conservation financial assistance for beginning farmers and ranchers. The majority of beginning farmers and ranchers often farm smaller acreages, which are not always competitive when seeking conservation support. In addition, beginning farmers and ranchers may be unfamiliar with conservation practices. Reserving these funds will result in greater overall environmental benefits and additional assistance to beginning farmers and ranchers.
To help beginning farmers and ranchers purchase land, the Administration proposes enhancing the existing Beginning Farmer and Rancher Down Payment Loan Program by cutting in half the interest rate, bringing it down to two percent. The initial payment would be deferred for one year.
The proposals would also double the potential buying power of beginning farmers by increasing the maximum down payment loan from $100,000 to $200,000. The minimum contribution required from a beginning farmer would drop from 10 percent of the property purchase price to 5 percent.
The $200,000 statutory limit on USDA direct operating loans and the $200,000 limit on direct ownership loans would increase to a maximum of $500,000 in indebtedness for any combination of the two loan types. Beginning farmers also would be given priority in obtaining direct farm operating and ownership loans. The Administration proposes overhauling federal repooling procedures to ensure that these targets are reserved for beginning farmers to the maximum extent possible.
The farm bill proposals released January 31 are based on comments and suggestions received from farmers, ranchers and other stakeholders during 52 USDA Farm Bill Forums across the nation and via mail and the Internet. These proposals represent the final phase of a nearly two year process. To access the full 183 page document or to access the proposals by title go to www.USDA.gov/farmbill.