The U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) announced that it will offer an additional $185 million for farm operating loans available this fiscal year, which ends Sept. 30.
The announcement comes as farmers are facing financial challenges due to the struggling agricultural economy and the continued decline in commodity prices and farm income.
The additional funds will assist more than 1,900 approved applicants who are awaiting farm operating loans.
“Some of our farming and ranching customers are experiencing challenges due to market conditions and have been on a wait list for up to 60 days, so this will help those applicants whose paperwork has been pending the longest period of time to obtain credit or restructure loans as needed,” FSA Administrator Val Dolcini said in a news release.
Dolcini said that while the backlog on applications grows, borrowers should continue to apply because once the funding is replenished in fiscal year 2017, loans will be processed on a first-come, first-served basis based on the application date.
“It is the sign of the times, just as much as anything else,” American Farm Bureau Federation Chief Economist Bob Young told Agri-Pulse. “For the last several years…farmers that you talk to were basically self-financing…They had the cash in hand so they didn’t have to go to the bank for loans to be able to put the crop in the ground. Some farmers have obviously chewed through that money and are now saying I need to go to the bank and get a loan.”
But Young is also concerned that farmers may accrue too much farm debt.
“The concern is that if we get to the stage where they’re rolling these operating loans from one year to the next, and some of that may be what’s going on here, I suspect that the demand level for those loans is going to remain high,” Young said.
The FSA also reminds farmers they can get similar loan guarantees from the Small Business Administration and may be able to switch back into the FSA program after they get a loan.