Press Release: RAFI and Farm Aid Call for Reform Based on New Report RE: USDA Farm Loan Appeals

PITTSBORO, NC— Farmers who had been denied federal loans by the Farm Service Agency (FSA) won only 17% of cases in the USDA’s National Appeals Division (NAD), according to a new analysis by the Center for Agriculture and Food Systems at Vermont Law and Graduate School, published in partnership with the Rural Advancement Foundation International (RAFI) and Farm Aid. The results found that similarly situated farmers often had very different outcomes in the loan approval process.

The report, “Appealing for Relief: An Analysis of Appealed Direct Farm Loan Decisions 2009–2022 and Opportunities for Reform,”analyzes NAD cases concerning direct farm ownership and farm operating loans between January 2009 and July 2022. NAD is an independent division of the Department of Agriculture that conducts administrative appeals hearings to review agency program decisions. The cases analyzed span 14 years, three Farm Bills, and three U.S. presidents.

“This comprehensive review of hundreds of NAD cases over decades confirms what RAFI’s Farm Advocates know from our individual casework: that the current loan application and appeals process has not always resulted in fairness for the farmer applying,” said RAFI Policy Co-Director Margaret Krome-Lukens. “Issues include the broad discretion given to agency staff in several areas like evaluating credit history or managerial ability, and NAD’s deference to that agency discretion. For fair and equitable access to credit, farmers also need an appeals process where they have a fair shot.”     

Even farmers who are successful in their appeals can go through the appeals process and win, only to have their loan denied a second time for an entirely separate reason. This can lead to successive appeals, which can prevent a farmer from obtaining the credit needed to start the season and far too often can lead to the failure of their farm business.

Additionally, the report reveals that farmers with innovative and nontraditional operations and markets, including organic methods and direct and specialized markets, often face more barriers to a successful outcome. FSA may use inaccurate assessments of the feasibility of farm plans for these operations, with agents often failing to account for the income these unconventional methods and markets can generate, simply because they are unfamiliar with them.

“USDA and FSA have made strides to serve farmers more equitably, but it remains true that loan officers have significant discretion in approving or denying loans. An impartial and equitable appeals process should be part of USDA’s overall effort to serve all farmers equitably,” said Farm Aid Communications Director Jennifer Fahy. “We are hopeful that USDA will improve the NAD appeals process for farmers, leading to fewer upheld denials, less opportunity for discretion and more successful farmer outcomes.”

The report cites ways that these issues can be addressed, including by amending statutory, regulatory and FSA handbook provisions that control FSA’s direct lending programs, removing excessive FSA discretion and allowing for more flexibility in meeting lending requirements to make loans more accessible. This is particularly needed for beginning farmers, farmers of color and farmers whose operations are considered “nontraditional.” Also, training of FSA personnel should ensure that they understand FSA lending regulations and apply them correctly and equitably, and training should include regular anti-discrimination and implicit bias instruction. The report recommends that FSA employees who have made discriminatory or biased lending decisions should no longer be permitted to work for the agency and suggests state and national offices should conduct frequent reviews of county employees and hold local offices accountable.

“It is an uphill battle for a farmer to get a favorable result in the NAD process. In practice, the odds are against them because of the way the process works,” said Krome-Lukens. “The report makes a number of helpful recommendations for improvements. The process-related recommendations, in particular, mirror many of the changes we are advocating for in the Fair Credit for Farmers Act: changing the burden of proof from the farmer to the agency; ensuring that farmers do not needlessly get put through multiple rounds of the appeals process; ensuring that NAD decisions are implemented promptly according to the judge’s determination; and expanding equitable relief.”

The full report is available HERE.

About Rural Advancement Foundation International (RAFI)

RAFI challenges the root causes of unjust food systems, supporting and advocating for economically, racially and ecologically just farm communities. RAFI envisions a thriving and equitable food system where farming communities have dignity and agency; where they are supported by just policies; and where corporations and institutions are accountable to the communities they impact. Working across agricultural sectors and collaboratively through coalitions, RAFI combines on-the-ground practical services and policy advocacy to ensure farmers have access to the tools they need to make the right choices for their farms and families as well as for their communities and the environment.

About Farm Aid

Farm Aid’s mission is to build a vibrant, family farm-centered system of agriculture in America. Farm Aid artists and board members Willie Nelson, Neil Young, John Mellencamp, Dave Matthews and Margo Price host an annual festival to raise funds to support Farm Aid’s work with family farmers and to inspire people to choose family farm food. For more than 35 years, Farm Aid, with the support of the artists who contribute their performances each year, has raised more than $78 million to support programs that help farmers thrive, expand the reach of the Good Food Movement, take action to change the dominant system of industrial agriculture and promote food from family farms.

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