It’s a New Day for Farm Financing

Around 40 years ago, a rancher and his family took in a fall day watching an admittedly motley herd of cows get on a truck, never to return to the ranch.  There are countless stories like this that exist as a result of the Farm Financial Crisis of the 80s. In that era, the federal government took a much different approach to distressed borrowers than we have in the last few years. The Inflation Reduction Act gave USDA’s Farm Service Agency (FSA) the tools we needed to help keep producers operating while folks all across the agency are working to improve our ability to better serve producers—producers just like that rancher from 40 years ago. 

One of that rancher’s kids was me. Today, that kid has the privilege to share the culmination of several years of work, and countless years of staff experience in helping producers. The Enhancing Program Access and Delivery for Farm Loans Rule is the centerpiece of many agriculture financing improvements we’re working on at FSA. 

This rule helps producers currently in our portfolio and improves opportunities for those seeking new loans by ensuring that our tools are deployed in a manner best suited to promote producer profitability and resilience. This rule establishes some of the most significant changes in the last 40 years. 

As a child of the Farm Financial Crisis and having spent my previous professional life in various roles of farm advocacy, I’d heard countless stories from FSA borrowers and former borrowers—heck, even folks that had never applied—recounting their perception of the shortcomings of FSA’s lending efforts.  With this rule, we are taking many of these shortcomings off the table, because we believe that the performance of our portfolio can be used as an example for the rest of the ag lending industry. We’ve heard the concerns loud and clear. In response, in recent years, we’ve announced several FSA lending improvements and flexibilities including:

• A new loan assistance tool
• A streamlined application
• Online loan payments option
• A “fast track” loan approval process

And there are more of these farm loan enhancements to come. We’ll visit more when appropriate, but for now I’d like to talk about the rule, and our broader credit reforms. The Biden-Harris administration has clearly demonstrated a dedication to listening to stakeholders and a willingness to promote change. The rule we publish today serves to codify many of the best practices we’ve seen across the country from our staff; while at the same time support our staff in a new approach tailored to the “actual needs” of a borrower. 

The rule is part of a holistic effort in support of the Biden-Harris administration’s commitment to our ag producers.  Twelve legislative proposals included in the President’s FY 25 Budget were offered as well, several of which are being contemplated by our friends on the Hill during their ongoing deliberations. 

You can read the rule changes for yourself in the Federal Register and here’s a one page fact sheet, but I will illustrate the meaningful impact the rule represents by sharing producer sentiments that will hopefully be a thing of the past for agency and the borrowers we serve – concerns expressed like:

“FSA takes every dang thing I have as security; they tie my hands so I can’t make decisions when I need to.” 

“I have to work off the place so I can afford to live.”

“Losing the family farm is bad enough, but did they have to take my house?”

The changes in this rule, signal a producer-centric approach to finance. Our tools can now be used to provide borrowers the financial freedom and flexibility to improve profitability and resilience. Allowing the borrower the opportunity and means to save for long-term needs and make strategic investments from their existing production income; can help demonstrate that when the terms of finance meet the “actual needs” of the producer, everybody wins; it’s akin to giving our producers a raise.

Please take a look at this video which further explains our philosophy. 

Over the next few weeks, we will work diligently to train our staff and inform our stakeholders across the country, to ensure we’re ready for the fall loan season. As always, your patience is appreciated, but please feel free to reach out if you think we can be of assistance here in the national office.

To say that it has been one of the great privileges of my life to contribute alongside our team to this effort, is a woeful understatement.

Many of you have seen the black vest that I wear for my “formal attire.” It belonged to that rancher mentioned at the beginning of this blog. I have worn it to keep me grounded and remind me of my “why.” Its work is done, now it’s time to get my own.

Zach Ducheneaux can be reached at zach.ducheneaux@usda.gov.