Beginning Farmers and Ranchers

Beginning Farmers and Ranchers in Agriculture: Title II (Conservation), Title V (Credit), Title VI (Rural Development), Title VII (Research), Title XI (Crop Insurance), and Title XII (Miscellaneous)

Provides support to beginning farmers and ranchers in agriculture by increasing funding for beginning farmer development, facilitating farmland transition to the next generation of farmers, and improving outreach and communication to military veterans about farming and ranching opportunities.

Highlights

Reauthorizes and increases funding to $33 million (available until expended) during 2014-18 for the Conservation Reserve Program Transition Incentives Program to assist retired or retiring farmers when they transfer land to certain farmers, including beginning farmers or ranchers.
Reauthorizes and increases funding to $100 million (cumulative) during 2014-18 for the Beginning Farmer and Rancher Development Program.
Establishes a Military Veterans Agricultural Liaison to provide information to returning veterans about, and to connect returning veterans with, beginning farmer training programs.
Substantially changes the acreage limit in the definition of a “qualified beginning farmer or rancher”; under the new definition more producers will qualify as beginning farmers and ranchers for the USDA Farm Service Agency’s (FSA’s) Direct Farm Ownership loan program.

New Programs and Provisions

Beginning Farmer or Rancher Access to Crop Insurance (Title XI)—Adds the term “beginning farmer or rancher,” defined as a farmer or rancher who has no more than 5 years of experience, to the Federal Crop Insurance Act. Improves beginning farmers’ and ranchers’ access to crop insurance by providing a 10 percentage point reduction in their insurance premiums and exempting beginning farmers and ranchers from paying the $300 administrative fee for catastrophic level policies. Authorizes an increase, from 60 to 80 percent of transitional yield, as a substitute for low actual yields resulting from naturally occurring causes of loss.

Noninsured Crop Disaster Assistance Program(Title XII)—Enhances the provision of catastrophic-level risk protection for beginning farmers who are producers of commodities that do not have an insurance product available, including specialty crop producers and producers who grow a more diverse set of crops on smaller acreage. Specifically, the 2014 Farm Act reduces the premiums on buy-up level coverage by 50 percent for new farmers and waives the application fee.

Beginning Farmer and Rancher Development Program (Title VII)—Funds training, education, outreach, and technical assistance to beginning farmers and ranchers, with priority given to partnerships and collaborations led by or including non-governmental and community-based organizations. Total mandatory funding is continued for the program and increases from $75 million to $100 million (cumulative) for 2014-2018.

Facilitate Land Transfers through the Conservation Reserve Program Transition Incentives Program (Title II)—Total funding for the entire Farm Act period is increased from $25 million to $33 million to facilitate transfers of CRP land enrolled in an expiring contract from retired or retiring farmers to beginning or socially disadvantaged farmers and ranchers who plan to return the land to production.

Managed Haying and Grazing of Conservation Reserve Program Lands(Title II)—Waives, for beginning farmers, the 25-percent payment reduction under the 2014 Farm Act.

Conservation Loan and Loan Guarantee Program (Title V)—Increases the maximum conservation loan guarantee amount from 75 percent to 90 percent of the total loan amount for producers qualifying as beginning farmers or ranchers.

Microloans to Beginning Farmers and Ranchers (Title V)—Makes permanent the USDA’s Farm Service Agency microloan program. Microloans made to beginning and veteran farmers will be exempt from the term limits that otherwise apply on direct operating loans.

Beginning Farmer and Rancher Development Initiative (Title V)—The Development Account pilot program is extended through fiscal year 2018 for a Beginning Farmer Individual.

Definition of a Qualified Beginning Farmer or Rancher—For Direct Farm Ownership Loans (Title V)—In the definition of a qualified beginning farmer, the ownership limitation now reads “does not exceed 30% of the average county acreage.” This change from “median” to “average” could expand eligibility to more beginning farmers if the average exceeds the median, such as when small farms outnumber larger farms and a few large farms raise the average.

Down Payment Loan Assistance (Title V)—Expands assistance to beginning farmers and ranchers seeking to purchase real property by increasing the maximum loan made under the program to $300,000.

Expanded Opportunities for Value-Added Agricultural Producers (Title VI)—Increases funding for Value-Added Agricultural Product Market Development Grants from $15 million to $63 million (available until expended) during 2014-18. Beginning farmers and ranchers who produce value-added products will be given priority consideration for grants.

Outreach to Military Veterans (Title XII)—Establishes the position of Military Veterans Agricultural Liaison within USDA to provide information about, and to connect returning veterans with, beginning farmer training programs and agricultural vocational and rehabilitation programs appropriate for the needs and interests of returning veterans. Such needs include assistance with using Federal veterans’ educational benefits to prepare for a career in farming or ranching.

See other ERS Farm Bill pages for more information about programs that will provide funding and market access for beginning farmers and ranchers.

Economic Implications

The largest impact in terms of funding ($261 million over 10 years) for beginning farmers and ranchers is the new Federal crop insurance premium assistance. Historically, beginning farmers have been less likely than their established counterparts to participate in Federal crop insurance programs. While they accounted for nearly 11 percent of land in all U.S. farms in 2011, beginning farmers operated only 7 percent of the acres enrolled in crop insurance. The new premium assistance provision could encourage more beginning farmers and ranchers to enroll in the program or to enroll more acres if they already participate.

In FY2012, USDA’s Farm Service Agency made 13,384 direct loans to beginning farmers for a total of $1.1 billion in obligations. FSA guaranteed another 2,659 loans to beginning farmers for a total of $639 million. The two programs combined made 50 percent of their loans and 42 percent of their loan obligations in FY 2011 to beginning farmers. The 2014 Farm Act will make even more beginning farmers and ranchers eligible for loans by loosening the acreage limitation threshold. Eligible farmers will be able to own a farm that has 30 percent or less of the acreage of an average county farm, whereas the previous limit was based on median acreage. In 2013, the national average farm size was 418 acres, while the median acreage was only 80 acres.

The 2014 Farm Act authorizes $33 million for USDA’s Transition Incentives Program, up from $25 million authorized under the 2008 Farm Act. The program encourages enrolled CRP participants to transfer land enrolled under expiring CRP contracts to beginning (or socially disadvantaged) farmers and ranchers engaged in sustainable production practices. The increased authorization under the 2014 Farm Act could facilitate the transfer of land coming out of the CRP to beginning farmers as CRP acreage declines to satisfy its new CRP acreage cap.