Debt Relief for Black and Minority Farmers
The American Rescue Plan (ARP) contains historic provisions for farm loan assistance and USDA support for farmers of color during the COVID-19 crisis. This bill was signed into law on March 11th, and we are awaiting details from USDA on how they will implement the provisions. In the meantime, it is important to know what the law says, so I have compiled a list of answers to frequently asked questions to help in that regard.
*Please note that this is not intended to be the sole resource for farmers of color impacted by the COVID-19 outbreak.
FAQs on Section 1005 of the American Rescue Plan (ARP)
Q: What are the provisions related to black farmers in the COVID-19 package?
There is a section on debt relief for certain USDA farm loans as well as $1 billion to allow the Secretary of Agriculture to provide training, technical assistance and other assistance to black farmers and other farmers of color. Also eligible under that billion-dollar pot of funding are community-based organizations that work with farmers of color and the 1890 and 1994 Land Grants and other minority serving institutions.
Q: Who is eligible for debt relief under section 1005 of the ARP?
Socially disadvantaged farmers and ranchers, as defined in the Food, Agriculture, Conservation, and Trade Act of 1990, with existing Farm Service Agency (FSA) farm loan debt. These are farmers or ranchers who have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.
Q: What loans are covered under section 1005 of the ARP?
Debt relief in the ARP agriculture section is only for USDA direct and guaranteed farm loan debts as of January 1, 2021. It does not address “non-Federal” debt unless it is an FSA guaranteed loan with a commercial bank or Farm Credit System institution.
The loans covered are: 1) Commodity Credit Corporation Farm Storage Facility Loan Program and 2) direct and guaranteed loans administered by the FSA under subtitle A, B, or C of the Consolidated Farm and Rural Development Act, which include:
• Emergency loans;
• Farm ownership loans;
• Farm operating loans;
• Soil and Water loans; and
• Conservation loans.
Q: I have a loan through a Farm Credit System institution. Is my loan covered under Section 1005 of ARP?
No. The loans issued through Farm Credit System institutions are not eligible for debt relief under Section 1005 of ARP unless the loan is a FSA guaranteed loan.
Q: How many producers in my state will receive debt relief under section 1005 of the ARP?
You can contact USDA Congressional Relations to learn the estimated number of impacted borrowers in your state.
Q: Why is the debt relief only going to farmers of color?
Decades-long discrimination against farmers and ranchers of color by the USDA in its administration of farm loan programs and other safety net programs is well-documented, and we still see the effects of that discrimination today.
The inability to access resources from USDA was only made worse by the COVID-19 pandemic. Section 1005 is tailored to provide relief for farmers and ranchers with outstanding USDA FSA indebtedness.
Below are two documents from Jonathan Coppess with the Department of Agricultural and Consumer Economics at the University of Illinois which provide additional information:
Q: How is the debt relief for Socially Disadvantaged farmers related to COVID?
This pandemic did not affect all farmers and ranchers the same way. Due to longstanding discriminatory practices by the USDA, farmers of color have not had equal access to credit and other USDA safety net programs and are at risk of losing their farm due to the pandemic.
Data from USDA shows a disproportionate percentage of the $50 billion in Federal payments to agricultural producers to offset the effects of COVID-19 and the trade war went to white farmers.
Q: How much money will be spent on debt relief for socially disadvantaged farmers under section 1005 of the ARP?
The CBO estimates that providing farm loan assistance under section 1005 would cost $4 billion.
Q: How soon will my farm receive debt relief under section 1005 of the ARP?
The American Rescue Plan was signed into law on March 11th, and we are awaiting details from USDA on how they will implement the provisions. Secretary Vilsack has assured us that details are coming soon, and he has said that USDA is working to set up the outreach and financial training necessary to help farmers understand the tax implication of the debt relief.
Q: How much will my farm receive in debt relief payments under section 1005 of the ARP?
The debt relief in ARP section 1005 provides relief up to 120 percent of outstanding indebtedness, as of January 1, 2021, on certain direct or guaranteed farm loans. After debt obligations to the USDA or guaranteed lender are paid off, amounts remaining are provided to the farmer or rancher to account for the tax implication of the debt relief.
Q: Are farmers disqualified from taking advantage of USDA farm loans in the future if they receive debt relief under section 1005 of the ARP?
Debt relief would not affect the eligibility of farmers or ranchers for farm loans.
Q: I heard there’s a billion-dollar pot of funding for black farmers?
Below is a summary of Section 1006:
Provides $1.01 billion to the Secretary for assistance to socially disadvantaged farmers, ranchers, and forest landowners who have historically faced discrimination by USDA, with such assistance provided directly to producers and through community-based organizations, land-grant universities, other minority serving institutions of higher learning. These funds will support:
- Outreach, financial training, cooperative development and capacity building, and other technical assistance to socially disadvantaged groups;
- Grants and loans to improve land access, including heirs’ property issues, and aid former farm loan borrowers that suffered adverse actions or past discrimination or bias;
- The creation and activities of equity commissions; and,
- Research, education, and extension activities at minority serving institutions, including scholarships, internships, and pathways to Federal employment for students; eligible institutions include 1890 Land-Grant Institutions, 1994 Tribal Land-Grant Colleges and Universities, Alaska Native/Native Hawaiian Serving Institutions, Hispanic-Serving Institutions, and Insular Area Institutions
Q: How can constituents have input into how the Section 1006 funding is spent?
We do not have direction from USDA on how Secretary Vilsack intends to proceed with funding the priorities spelled out under Section 1006 at this point, but this could be a topic for a town hall or listening session with constituents or a request for ideas from individuals and groups in your district.