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USDA announces $1 billion in debt relief for 36,000 farmers

Bills in grain

The federal government has announced a program that will provide $1.3 billion in debt relief for about 36,000 farmers who have fallen behind on loan payments or face foreclosure.

The U.S. Department of Agriculture on Oct. 18 unveiled the farm loan relief program funded from $3.1 billion set aside in the Inflation Reduction Act allocated toward assisting distressed borrowers of direct or guaranteed loans the department administers. Congress passed the law, and it was signed by President Joe Biden, in August.

The USDA provides loans to about 115,000 farmers and livestock producers who cannot obtain commercial credit. Those who have missed payments, are in foreclosure or are heading toward default will get help from the program.

The federal government has announced a program that will provide $1.3 billion in debt relief for about 36,000 farmers who have fallen behind on loan payments or face foreclosure.

Farmers may be experiencing financial difficulties for a variety of reasons, including drought and transportation bottlenecks.

“Through no fault of their own, our nation’s farmers and ranchers have faced incredibly tough circumstances over the last few years,” said Agriculture Secretary Tom Vilsack. “The funding included in today’s announcement helps keep our farmers farming and provides a fresh start for producers in challenging positions.”

About 11,000 farm borrowers delinquent on direct or guaranteed loan payments for 60 days or longer are receiving automatic electronic payments to get them current on their loans. The total cost is nearly $600 million. Farmers who received this help will get a letter informing them that their payments have been made and they will remain current until their next annual payment is due in 2023, Vilsack said.

Another $200 million in immediate aid will go to 2,100 farm borrowers whose loans have been foreclosed but who still owe money and had their tax refunds and other resources taken by the U.S. Treasury. The money will give them a fresh start, Vilsack said. The USDA said farmers in this category received an average of $101,000 apiece.

Another $571 million will go to several additional groups. Alllocations include:

=$66 million for 7,000 farmers who during the COVID pandemic delayed loan payments to the end of their loans.

=$330 million for 1,600 farmers who face bankruptcy or foreclosure. The aid will be handed out to farmers on a case-by-case basis following individual meetings to assess their problems.

=Up to $175 million for 14,000 financially distressed farm borrowers who are facing cash flow problems and are seeking help to avoid missing loan payments. Vilsack said farmers in this group may be experiencing difficulties due to drought or grain shipping issues because of low water levels on the Mississippi River.

The money announced Oct. 18 is the first round of payments designed to help insure farmers stay in business or re-enter farming.

The remainder of the $3.1 billion will help relax unnecessary loan restrictions and provide further assistance to be announced later, the USDA said.

The USDA also provided $31 billion to help nearly a million farmers offset lower sales, prices and other losses due to the coronavirus pandemic in 2021 and 2022, the U.S. Government Accountability Office has said.

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