The issuance of nearly $6 billion in new Farm Service Agency loans to American family farmers last year made 2017 among the program’s most active on record, according to the USDA.
Loans from the FSA scheme, which began in its current form in 1994, are given to qualified, small, beginning and under-served farmers unable to obtain commercial credit, USDA said. Assistance comes in the form of microloans of up to $50,000 and guarantees of up to $100,000. Among others, the USDA provided 4,200 loans to farmers making their first land purchase, 1,000 loans to female farmers and 400 loans to veterans in 2017.
Interest rates on credit facilities from the FSA program vary between 1.5 and 3.75 percent and USDA said that in total, more than 120,000 family farms participate in the program, receiving credit collectively valued at just under $25 billion.
The USDA did not return messages seeking further detail.
“FSA loan funds have been in high demand the last few years,” said acting deputy undersecretary for farm production and conservation Robert Johansson. “Family farmers across America also come to us when they face challenges to stay in business. We’re proud to support rural prosperity by providing credit to those who need it most. ”
Farmer Mac director of economic and financial research Jackson Takach told Agri Investor that while USDA said 2017 FSA loan volumes represented a “near-record”, the 2016 FSA loan total was higher than last year’s and the amount of credit flowing from the program is largely in line with the sector’s current capital needs.
Given the greater demand for credit across the farm economy that has persisted throughout recent years, Takach said, the USDA’s report of $6 billion in FSA credit last year shows lending has remained steady. It does not suggest broader financial stress in US ag has reached the point where investors could expect a rush of land sales, he added.
“I don’t think we’re quite there yet. These are the programs that people need when they are not quite pristine credits. So, if you see big changes in these numbers, that could tell you something.”
Given the FSA program’s broader social aims, Takach thought it important to note that the USDA’s reporting of FSA loan totals in dollar terms obscures the fact that the assistance is being provided through a decreasing number of loans.
“The needs are getting bigger out there, because land is decreasing in value. If you look at the number of loans that the USDA provides through this program, it continues to go down. They have a lot more dollars out the door, but the number of people that that helps has been going down,” Takach said.