Microloans offer options to farmers

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Easier application would consider student experience


Capital Press

USDA Secretary Tom Vilsack has proposed a new microloan program to help small operations get rolling.

He seeks comments by July 24 on a plan that would be simpler than the Farm Service Agency's current operating loan program. The new program would be more accessible to small farmers, who often rely on credit cards or personal loans that carry high interest rates and have less-flexible payment schedules.

Under the microloan program, producers who need a loan for less than $35,000 could apply using simplified and streamlined procedures.

According to the proposed rule, posted in the May 25 Federal Register:

* Managerial experience eligibility could include an apprenticeship or past association with an organization such as FFA or 4-H in a field directly related to the proposed new operation.

* Farm assessment would require less information from the applicant.

* No itemization would be required for the cash-flow budget.

* Reporting of past yield would be simplified.

"We're recognizing that we're seeing a different scope of agriculture, not just traditional, larger farms," said Jeff Peterson, farm loan officer for the FSA in Chehalis, Wash.

He said he doesn't know how many more loans the new program could produce, but some young people might see it as an opportunity they haven't considered.

"This could be a stepping stone to a farm ownership loan later," he said.

Vilsack has called for hundreds of thousands of new farmers nationwide to regenerate the farming industry. Over the past century, the total number of American farmers has declined from more than 6 million in 1910 to about 2 million today. For each farmer under age 35 there are now six over 65, and the average age of farmers is 57. The USDA expects that a quarter of all farmers will retire in the next 20 years.

"Young farmers are ready, willing and able to build new farm businesses," Lindsey Lusher Shute, director of the National Young Farmers' Coalition, said. "Now they'll also have the investment they need make those businesses a success."

The 2007 Census of Agriculture shows that 71 percent of all farms gross less than $25,000 per year. These operations require smaller financial investments for initial start-up expenses.

The proposed microloan would also provide a financial bridge for Youth Loan Program borrowers who want to undertake more complex operations. FSA's Youth Loans -- with a maximum amount of $5,000 -- are made to borrowers age 10 to 20 to finance income-producing agriculture-related projects.

FSA would continue to provide credit counseling and supervision.

The agency has asked for comments on all aspects of the proposed microloans, especially comments regarding the loan amount.


Online: www.regulations.gov

Mail: Director; Loan Making Division, FSA, USDA; 1400 Independence Avenue SW, Stop 0522; Washington, DC 20250-0522

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