Stabilizing farm income, helping farmers conserve land and water resources, providing credit to new or disadvantaged farmers and ranchers, and helping farm operations recover from the effects of disaster are the missions of the U.S. Department of Agriculture’s Farm Service Agency (FSA). The agency’s commodity operations office handles the acquisition procurement, storage and distribution of certain commodities.
County offices administer all programs. Those persons needing forms and program applications should visit the office in the county where their land is located. Some forms are available on FSA’s web site at: www.fsa.usda.gov
1996 FARM BILL
The most recent farm bill, which became law on April 4, 1996, significantly changed U.S. agricultural policy. The bill removed the link between income support payments, farm prices and production by providing for seven annual fixed, but declining “production flexibility contract payments.” Participating producers may receive Government payments that are independent of farm prices or production. This is in contrast to the past, when deficiency payments were inversely related to farm prices and producers were, in most cases, required to plan a crop in order to be eligible for program benefits.
To receive payments and loans on program commodities, producers must have entered into a production flexibility contract. That contract requires participating producers to comply with existing conservation plans for the farm, wetland provisions and planting flexibility provisions, as well as to keep the land in agriculture-related uses. Farmers and ranchers who entered into a contract also are eligible for marketing assistance loans at FSA county offices. The 1996 farm bill required USDA to hold a one-time signup in 1996. This was the only opportunity for producers to enroll and those who failed to do so are not eligible at a later date. There will be no additional signups except for land coming out of the Conservation Reserve Program.
FSA administers commodity loan programs for wheat, corn, barley, oats, oilseeds and sugar.
The Agency provides the operating personnel for the Commodity Credit Corporation (CCC), which provides short-term loans, with the actual commodity used as collateral. This provides producers with interim financing and the orderly distribution of the farm commodities throughout the year, as well as during times of surplus and scarcity.
CCC loan rates are designed to keep crops competitive in the marketplace. A producer must have entered into a production flexibility contract to be eligible for non-recourse marketing assistance loans for wheat and feed grains. Any production of a contract commodity from a farm entered into a production flexibility contract is eligible for loans.
Under certain circumstances, these loans may be repaid by a producer at less than principal plus accrued interest and other charges, with repayment of some portion of the relevant interest and principal being waived. In lieu of securing a loan from CCC, a producer may be eligible for a loan deficiency payment (LDP).
Market loan repayment and LDP provisions are intended to prevent delivery of loan collateral to CCC. In so doing, these provisions considerably reduce the Federal Government’s acquisition of stocks that might otherwise occur. Such stocks tend to make U.S.-produced commodities less competitive in world markets and may impose a significant taxpayer burden in the form of storage costs.
There are several eligibility requirements for marketing assistance loans and LDPs. Local FSA offices have more detailed information.
COMMODITY PURCHASE PROGRAMS
Forfeitures under non-recourse commodity loan programs are not the only means by which CCC acquires inventory. Under the dairy price support program, CCC buys surplus butter, cheese and nonfat dry milk from processors at announced prices to support the price of milk. These purchases help maintain market prices at the legislated support level.
CCC can store purchased food in over 10,000 commercial warehouses across the Nation approved for this purpose. However, commodity inventories are not simply kept in storage. FSA employees work to return stored commodities to private trade channels. At FSA’s Kansas City Commodity Office in Kansas City, Missouri, merchandisers regularly sell and swap CCC inventories, using commercial telecommunications trading networks.
Beyond the marketplace, CCC commodities fill the need for hunger relief both in the United States and in foreign countries. FSA employees work closely with USDA’s Food and Nutrition Service to purchase and deliver foods for the national school lunch and other domestic feeding programs. And, through donations to “Food for Peace” and programs administered by voluntary organizations, these U.S. farm products and foods help USDA fight hunger worldwide.
NONINSURED CROP DISASTER ASSISTANCE PROGRAM (NAP)
The NAP provides crop loss protection for growers of many crops for which Federal crop insurance is not available.
Eligible crops are commercial crops grown for food and fiber. Floriculture, ornamental nursery products, Christmas tree crops, turfgrass sod, seed crops, aquaculture (including ornamental fish, such as gold fish) and industrial crops are also included.
Also, losses resulting from natural disasters not covered by the crop insurance policy may be eligible for NAP assistance. NAP does not include trees grown for wood, paper or pulp products.
Unlike other disaster assistance programs, to be eligible for NAP, producers must file an acreage report and a production report with the local FSA office prior to the crop reporting date. Otherwise, producers may be ineligible for NAP assistance.
OTHER EMERGENCY ASSISTANCE
In the aftermath of a natural disaster, FSA makes available a variety of emergency assistance programs to farmers and ranchers in counties that have been designated (by the Secretary of Agriculture) or declared (by the U.S. President) as disaster areas.
Emergency loans are available to eligible producers who suffer qualifying losses as a result of a natural disaster. FSA can share the cost of some emergency conservation practices to help rehabilitate farmland damaged by a natural disaster.
FSA offers direct and guaranteed farm ownership and operating loan programs to farmers and ranchers who are temporarily unable to obtain private, commercial credit. Often, these are beginning producers who can’t qualify for conventional loans because they have insufficient net worth. The Agency also helps established farmers and ranchers who have suffered financial setbacks from natural disasters, or whose resources are too limited to maintain profitable farming or ranching operations.
Under the guaranteed loan program, the Agency guarantees loans made by conventional agricultural lenders for up to 90 or 95 percent of principal. The lender may sell the loan to a third party; however, the lender is always responsible for servicing the loan. All loans must meet certain qualifying criteria to be eligible for guarantees, and FSA has right to monitor the lender’s servicing activities. Producers interested in guaranteed loans must apply to a conventional lender, who then arranges for the guarantee.
For those unable to qualify for a guaranteed loan from a commercial lender, FSA also lends directly. Direct loans are made and serviced by FSA officials, who also provide borrowers with credit counseling and supervision by assessing and evaluating all aspects of the farming or ranching operation.
The Conservation Reserve Program (CRP) protects our most fragile farmland by encouraging producers to stop growing crops on highly erodible and other environmentally sensitive acreage. In return for planting a protective cover of grass or trees on vulnerable property, the owner receives a rental payment each year of a multi-year contract. Cost-share payments are also available to help establish permanent areas of grass, legumes, trees, windbreaks or plants that improve air and water quality, control soil erosion and give shelter and food to wildlife.
The Conservation Reserve Enhancement Program (CREP) is an initiative established as part of the CRP. Under this program, USDA partners with States to meet specific conservation objectives. Like CRP, CREP contracts require a 10 to 15 year commitment to keeping lands out of agricultural production, ensuring lasting benefits.
FSA works with USDA’s Natural Resources Conservation Service and other partner agencies to deliver other conservation programs, such as the Environmental Quality Incentives Program (EQIP), to farmers and ranchers. EQIP helps producers improve their property to protect the environment and conserve soil and water resources. Participants can take advantage of training in new conservation management practices, technical support, cost-share assistance and incentive payments.