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New proposal in Congress on debt relief for ‘limited-resource’ farmers

Stymied by lawsuits that contend USDA debt relief for farmers of color is actually reverse discrimination, House Democrats proposed an alternative: full or partial forgiveness of USDA loans to limited-resource farmers. The multi-billion-dollar proposal, which does not mention race, is directed toward economically distressed farmers and ranchers in high-poverty areas.

It also allows payments of up to $500,000 apiece to farmers, ranchers, and forest owners who were victims of bias in USDA lending programs, as well as allotting funds to resolve heirs’ property issues and for equity commissions to explore racial equity at USDA and in its programs. The proposal was part of a $1.75 trillion social welfare and climate change package unveiled by House Democrats in concert with President Biden last week.

“Family farmers like me are facing serious economic challenges,” said John Boyd, president of the National Black Farmers Association. “The debt relief plan in the Build Back Better Act finally makes sure financial support flows to farmers in economic distress. It’s long overdue and it’s a historic turning point in farm policy.”

An estimated $6 billion would be devoted to support financially distressed or underserved farmers, ranchers, and forest owners in high-poverty areas, to address credit and land access barriers and to aid historically Black land grant colleges, according to a tally by Senate Agriculture chair Debbie Stabenow.

“I believe we will pass my Build Back Better plan and I believe we will pass the infrastructure bill,” said President Biden on Sunday at the G20 meeting in Rome. “I believe we’ll see by the end of next week at home that it’s passed.” Some portions of the package were still under debate on Sunday.

The provisions on economically distressed producers included $1.02 billion for payments or modifications of loans made directly to farmers by USDA or by lenders with USDA loan guarantees. In running the program, the USDA would take into account whether a limited-resource borrower received trade-war or pandemic relief payments from the government. The USDA could issue payments of up to 100% of the amount owed. Alternately, the USDA could provide payments of up to $150,000 apiece.

Assistance would be directed to borrowers who were at least 90 days delinquent on payments; live in an area with a poverty rate of more than 20%; owed more in interest than in principal on the loan; were undergoing bankruptcy or foreclosure; or who had restructured the loan in the past.

In March, Biden signed a $1.7 trillion coronavirus relief bill that included an estimated $4 billion in USDA loan forgiveness for Black, Hispanic, and other farmers of color. The bill obligated the USDA to pay 120% of the amount due on the loans to minority farmers. The extra 20% was to cover taxes associated with the debt relief, which would be counted as income when farmers paid taxes.

House Republicans said the loan forgiveness plan was divisive, poorly designed, and illegally excluded white farmers who also were in financial straits. A swarm of lawsuits, at least one filed by a Trump-linked think tank, have stopped USDA action on debt relief to minority farmers. Advocates said the loan forgiveness would rectify years of USDA discrimination against Black farmers. The USDA acknowledged racial bias in its loan programs in the so-called Pigford settlements.

In 1920, roughly one in every six farmers was Black. Today, less than 2% of U.S. farms have Black operators. Black farms are one-fourth the size of the average U.S. farm, with smaller sales, and they are located mostly in the South.

The text of the social welfare and climate change bill, including language about aid to economically distressed farmers, is available here.

For a section-by-section summary of the bill, including $90 billion earmarked for agriculture, forestry, and rural communities, click here.

For a FERN story on the decades-long campaign by Black farmers for debt forgiveness, click here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.

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