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Without Increased Lending Authority for FSA, Access to Land and Capital May Get Worse for Smaller Farmers

In response to rising land values and input costs, both the Senate and House Farm Bill proposals will seek to increase the total amount that farmers may borrow from the Farm Service Agency (FSA). These increases will apply across the major lending products that FSA offers, including farm ownership loans that farmers use to buy new or additional land or built infrastructure, and farm operating loans that farmers use to buy equipment, inputs, and in other ways capitalize their ongoing operations. Currently, the lending limit increases in both proposals are as follows (with figures that are different between the House and Senate in bold):

Senate Framework

  • Direct Farm Ownership Loans: From $600,000 to $850,000
  • Direct Farm Operating Loans: From $400,000 to $750,000
  • Guaranteed Farm Ownership Loans: From $1,750,000 to $3,000,000
  • Guaranteed Farm Operating Loans: From $1,750,000 to $2,600,000
  • Microloans: From $50,000 to $100,000

House Mark

  • Direct Farm Ownership Loans: From $600,000 to $850,000
  • Direct Farm Operating Loans: From $400,000 to $750,000
  • Guaranteed Farm Ownership Loans: From $1,750,000 to $3,500,000
  • Guaranteed Farm Operating Loans: From $1,750,000 to $3,000,000
  • Microloans: From $50,000 to $100,000

It is critical to note that the overall effects of these changes depend greatly on whether the FSA’s overall lending authority is increased. Without expanding the lending “pie” at FSA, increased lending limits may result in more of FSA’s investments being concentrated in fewer, larger loans, while small to mid-sized farmers are forced to compete for a slimmer remaining pool of funds.

It is currently unclear whether the Senate framework increases FSA’s lending authority. However, in keeping with its overall pro-consolidation design, the House’s Farm Bill mark does not increase FSA’s lending authority, risking an even greater disparities in capital access between small and large farms if passed.

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