Beginning, Socially Disadvantaged, and Veteran Farmers and Ranchers

Beginning Farmers and Ranchers (BFR), Socially Disadvantaged (SDA) and Veteran Farmers and Ranchers (VFR): Title I (Commodities), Title II (Conservation), Title V (Credit), Title VII (Research), Title XI (Crop Insurance), Title XII (Miscellaneous)

Errata: On March 18, 2019, the "Beginning, Socially Disadvantaged, and Veteran Farmers and Ranchers" webpage from the "Agriculture Improvement Act of 2018: Highlights and Implications" series was revised to clarify language about farm loans and to correct a statement about USDA Farm Loan Guarantees. The previous statement that the 2018 Farm Act included provisions to waive fees for guaranteed loans for beginning and socially disadvantaged farmers was incorrect and has been removed.

Errata: On April 2, 2019, the "Beginning, Socially Disadvantaged, and Veteran Farmers and Ranchers" webpage from the "Agriculture Improvement Act of 2018: Highlights and Implications" series was revised to clarify language about the structure of the Farming Opportunities Training and Outreach Program and to correct statements about the allocation of funds to that program and about set-aside provisions for that funding.

Provides support to beginning farmers and ranchers, socially disadvantaged farmers and ranchers, and veteran farmers and ranchers by dedicating program funding and providing increased cost-share, loss compensation, and loan assistance; funding beginning farmer development; facilitating farmland transition between generations of farmers; improving outreach and communication to military veterans about farming and ranching opportunities; and providing incentives to researchers to develop new technologies to help beginning, socially disadvantaged, and veteran farmers and ranchers access marketplaces.

Highlights

Reauthorizes the Assistive Technology Program for farmers with disabilities and clarifies that the provisions also apply to veterans engaged in farming or pursuing new farming opportunities.
Authorizes new beginning farmer and rancher coordinators in each State to develop plans to coordinate outreach and technical assistance in county and area USDA offices. A new national coordinator is also created to advise the Secretary of Agriculture on beginning farmer/rancher issues.
Creates a new Soil Health and Income Protection Program available to farmers that includes provisions for a 50-percent cost share and annual rental rates of up to 75 percent of the county rental rate to beginning, socially disadvantaged, and veteran farmers and ranchers on less productive land taken out of production in the Prairie Pothole region and planted with perennial cover crops.
Creates Next Generation Agricultural Technology Challenge awards for the development of mobile technology that removes barriers to marketplace entry for beginning farmers and ranchers. Awards are limited to no more than $1 million in the aggregate to one or more winners of the competition.

New Programs and Provisions

Payment Acres (Title I)—To be eligible for Price Loss Coverage or Agriculture Risk Coverage payments, producers generally must have a minimum of 10 base acres either on their farm or in combination with the base acres of other farms in which they have an interest. Exceptions to the base acre test exist in the 2014 Farm Act for socially disadvantaged farmers and ranchers. The 2018 Farm Act amends the test to add beginning and veteran farmers/ranchers to the exception.

Advanced Payments (Title II)—Environmental Quality Incentives Program (EQIP) contracts are paid upon the completion of the approved conservation practice. For eligible limited-resource, socially disadvantaged, veteran, or beginning farmers and ranchers, the 2018 Farm Act adjusts the allowable advance payment from not more than 50 percent to at least 50 percent for all costs related to purchasing material or contracting. Advance payments must be expended by the participant within 90 days, beginning on the date of receipt of the funds, or the funds must be returned. The Secretary of Agriculture must notify eligible producers of the option of receiving advance payments.

Soil Health and Income Protection Program (Title II)—Provides annual rental payments of 50 percent of the county average rental rate for less productive farmland in the Prairie Pothole region to be taken out of production and planted to a low-cost perennial cover crop. The 2018 Farm Act specifies higher annual rental rates of 75 percent and a 50-percent cost-share for beginning, socially disadvantaged, or veteran farmers and ranchers.

Emergency Conservation Program (Title II)—In general, cost-share payments may be paid to producers to rehabilitate farmland damaged by natural disasters, up to 75 percent of the cost; limited-resource farmers and ranchers may receive up to 90 percent of the cost. The 2018 Farm Act extends the 90-percent provision to include beginning and socially disadvantaged farmers and ranchers.

Modification of the 3-Year Experience Requirement for Purposes of Eligibility for Farm Ownership Loans (Title V)—Generally, a farmer needs at least 3 years of experience to qualify for a Direct farm ownership loan; however, the 2018 Farm Act allows the 3-year requirement for qualified beginning farmers and ranchers to be reduced or waived under certain conditions:

The experience requirement is reduced to 1 or 2 years if the farmer has certain educational, management, or mentor-based experience, or was honorably discharged from the Armed Forces of the United States, or successfully repaid an FSA Youth Loan.
The 3-year experience requirement is waived altogether if the farmer has at least 1 year farm labor experience with management responsibilities and has a relationship with a counselor in a Service Corps of Retired Executives program.

Relending Program To Resolve Ownership and Succession on Farmland (Title V)—Authorizes a relending program for eligible farmers to resolve ownership and succession issues on farmland that has multiple owners and undivided ownership interests. USDA would make direct loans to institutions that are certified to operate as lenders and that have experience assisting socially disadvantaged, limited-resource, and beginning farmers and ranchers as well as rural businesses (including credit unions, cooperatives, and nonprofit organizations) to relend to such projects and heirs. Preference is given to relending entities with at least 10 years’ experience serving socially disadvantaged farmers and ranchers, and in States that have adopted the Uniform Partition of Heirs Property Act.

USDA Farm Loan Guarantees (Title V)—Generally, a 1.5-percent fee is charged for guaranteed loans, and guarantees are limited to up to 90 percent of the principal value (95 percent for refinancing or down payment loans). For beginning and socially disadvantaged farmers and ranchers, the 2018 Farm Act raises the guarantee percentage to 95 percent of the principal value.

Next Generation Agricultural Technology Challenge (Title VII)—Directs the Secretary of Agriculture to establish a next-generation agricultural technology challenge for the development of mobile technology that removes barriers to marketplace entry for beginning farmers and ranchers. Limits awards to no more than $1 million in the aggregate to one or more winners of the competition.

Competitive, Special, and Facilities Research Grant Act (Title VII)—The competitive grants program at USDA addresses priority areas of research important to the agricultural production, food, and nutrition sectors. The 2018 Farm Act adds the following priority research areas to the Agriculture and Food Research Initiative: (1) soil health; (2) tools that accelerate research in the use of automation or mechanization for labor-intensive tasks in crop production and distribution; and (3) removal of barriers to entry for young, beginning, socially disadvantaged, veteran, and immigrant farmers and ranchers.

Assistive Technology Program for Farmers with Disabilities (Title VII)—Demonstration grants provide agricultural education and assistance to individuals with disabilities engaged in farming and farm-related occupations; a new provision adds veterans engaged in farming or farm-related occupations, or who are pursuing new farming opportunities, to the program.

Value-Added Producer Grants (Title X)—Provides assistance to producers to develop value-added products and production activities. Priority is given to applications from beginning, socially disadvantaged, and veteran farmers/ranchers, as well as small and medium family farms. The 2018 Farm Act increases the authorized annual funding from $40 million to $50 million for FY2019 through FY2023.

Underserved Producers (Title XI)—Defines "underserved producer" to mean "a beginning farmer or rancher, a veteran farmer or rancher, or a socially disadvantaged farmer or rancher"; requires a report every 3 years to include recommendations to increase crop insurance participation in States and among underserved producers that are not adequately served by crop insurance.

Crop Insurance Research and Development Priorities and Authorities (Title XI)—Redefines “beginning farmer or rancher,” for purposes of research and development of whole-farm insurance plans, as having actively operated and managed a farm or ranch for less than 10 years, increasing it from the Federal Crop Insurance Act’s underlying definition of 5 years. Changing the definition to 10 years instead of 5 years allows a greater number of beginning producers to receive a 10-percentage-point premium discount for whole-farm revenue insurance.

Farming Opportunities Training and Outreach (Title XII)—Makes permanent the authorities of the Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers Program (also known as the 2501 Program) and the Beginning Farmer and Rancher Development Program (BFRDP) and combines both under the new umbrella program Farming Opportunities Training and Outreach (FOTO). FOTO combines complementary programs to assist socially disadvantaged and veteran farmers and ranchers through outreach and technical assistance, and beginning farmers and ranchers (including socially disadvantaged and veteran farmers and ranchers) through education and training programs.

Provides mandatory funds for the 2501 Program and BFRDP, which provide grants to organizations for education, mentoring, and technical assistance initiatives for socially disadvantaged and beginning farmers and ranchers, respectively. The mandatory funding is $30 million a year for FY2019-2020, $35 million for FY2021, $40 million for FY2022, and $50 million for FY2023. Provides $50 million of baseline funding for each fiscal year after FY2023. Authorizes appropriations of $50 million per year in discretionary spending for FY2019-2023. All funding is shared equally between the two programs.
Each fiscal year, at least 5 percent of the funds allocated through the BFRDP must go to programs that support limited-resource and socially disadvantaged farmers and ranchers and farmworkers desiring to become farmers or ranchers, and 5 percent must support programs and services that address the needs of veteran farmers and ranchers.
Requires the Secretary of Agriculture to prioritize grants to nongovernmental and community-based organizations that work with socially disadvantaged or veteran farmers and ranchers.

Agricultural Youth Organization Coordinator (Title XII)—Establishes the position of Agricultural Youth Organization Coordinator to promote the role of youth-serving organizations and school-based agricultural education to assist young farmers, with particular emphasis on beginning farmer and rancher programs.

Availability of USDA Programs for Veteran Farmers and Ranchers (Title XII)—Expands the definition of a veteran farmer or rancher to also include "a veteran who first obtained veteran status during the most recent 10-year period" and extends the benefits of multiple programs already provided to beginning farmers and ranchers to veterans, such as Farm Service Agency (FSA) downpayment loans. The 2018 Farm Act also increases coverage and reduces premium fees for the Noninsured Crop Disaster Assistance Program for veteran farmers and ranchers, and allows for higher reimbursement rates for beginning and veteran farmers than for other farmers under FSA’s Tree Assistance Program (TAP) and Emergency Assistance for Livestock, Honey Bees, and Farm-raised Fish (ELAP). For Federal crop insurance, a veteran is defined as an individual who has obtained veteran status during the previous 5 years, and benefits already provided to beginning farmer and ranchers—waiver of catastrophic insurance coverage fees and an additional 10 percentage points in crop insurance premium subsidy rates—are extended to veteran farmers and ranchers.

Beginning Farmer and Rancher Coordination (Title XII)—Requires the Secretary of Agriculture to designate, among existing employees, a State Beginning Farmer and Rancher Coordinator in each State, and a National Beginning Farmer and Rancher Coordinator. Each State coordinator is responsible for developing plans to coordinate outreach and technical assistance in county and area USDA offices. The national coordinator will advise the Secretary of Agriculture on beginning farmer and rancher issues, and approve the State coordinators’ plans to improve the coordination, delivery, and efficacy of beginning farmer and rancher programs.

Report on Farmland Access and Farmland Ownership Data Collection and Reporting (Title XII)—Requires the Secretary of Agriculture to report on barriers to acquisition or access to farmland by beginning and socially disadvantaged farmers/ranchers and on ways Federal programs are improving access. The 2018 Farm Act requires the collection and reporting—at least once every 3 years—of data and analysis on farmland ownership, tenure, transition, and entry of beginning and socially disadvantaged farmers and ranchers. It also requires the Secretary of Agriculture to develop surveys and distribute comprehensive reporting of trends in farmland ownership, tenure, transition, barriers to entry, profitability, and viability of beginning farmers and ranchers.

Military Veterans Agricultural Liaison (Title XII)—Amends the duties of the liaison to require the establishment and periodic update of a website that identifies available USDA apprenticeships for veterans, as well as job and skills training opportunities, with an emphasis on business assistance, nonprofits, educational institutes, and farmers that want to create apprenticeship programs for veterans. The liaison is required to consult with and give technical assistance to the U.S. Department of Defense, U.S. Department of Veterans Affairs, the U.S. Small Business Administration, and the U.S. Department of Labor.

Partnerships and Public Engagement (Title XII)—The Office of Advocacy and Outreach is renamed Office of Partnerships and Public Engagement, with a new emphasis on serving limited-resource and veteran farmers and ranchers, as well as outreach to youth.

Economic Implications

America's next generation of farmers and ranchers is supported by many Farm Act programs and provisions. One critical avenue of support is the USDA Farm Service Agency’s (FSA) "Beginning Farmer" direct and guaranteed loan programs, including microloans (FSA loans are available to other farmers as well). Farm ownership loans may provide access to land and capital. Operating loans may help beginning farmers increase competitiveness by helping pay normal operating or family living expenses, opening doors to new markets and marketing opportunities, or assisting with the diversification of operations. Through USDA farm loans, particularly microloans, beginning farmers and ranchers have another source of financial assistance during the startup years.

In FY2018, FSA made 16,420 direct loans to beginning farmers and ranchers for $1.6 billion in obligations. FSA guaranteed another 3,323 loans to beginning farmers for obligations of $1.0 billion. The two programs combined made 56.3 percent of their loans and 47.4 percent of their loan obligations in FY 2018 to beginning farmers.

In FY2018, FSA made 6,805 direct loans to socially disadvantaged farmers and ranchers for obligations of $415.9 million. FSA assisted socially disadvantaged farmers with another 849 loan guarantees, amounting to $349.5 million. Together, the programs made 22.2 percent of their loans and 12 percent of their loan obligations to socially disadvantaged farmers.

Finally, in FY2018, FSA made 1,026 direct loans amounting to $82.1 million to veteran farmers and ranchers. Veteran farmers were guaranteed 224 loans totaling $76 million. Altogether in FY2018, FSA made 3.6 percent of their loans and 2.9 percent of their loan obligations to veteran farmers.