By most accounts, Midsouth farmers are harvesting some of their better crops as the 2024 season draws to a close. But that may not be enough to keep some of them in business when they meet with their lenders this winter.

USDA announced on Oct. 7 an additional $250 million in Inflation Reduction Act funding for automatic payments for distressed direct and guaranteed Farm Service Agency-loan borrowers, along with other tools aimed at helping producers prepare for 2025.

While farmers are grateful USDA is doing what it can to keep those distressed borrowers from going further into arrears, most say the U.S. Congress needs to step up and pass not only a new farm bill to replace the now-expired 2018 legislation, but also a disaster-type bill offering immediate assistance.

“We began to realize this summer, we were entering a dangerous environment for farmers,” said Andrew Grobmyer, executive vice president of the Agricultural Council of Arkansas. “Alarm bells were going off, and there was no response in the market that was positive. It was just continuing to tumble downward.

“Knowing where we were with input costs, we were entering a difficult time. Even if we had a good crop year, we were going to be in a big hole. So, we started that conversation back in August, trying to seek additional help, because the farm bill won’t do much this year.”

Related:Changes coming to farm loan programs

Meeting with Agricouncil

The day before he was interviewed, Grobmyer and Ag Council leaders met with Sen. John Boozman, R-Ark., and Arkansas Gov. Sarah Huckabee Sanders during a visit to Isbell Farms in England, Ark. They’ve also met with Arkansas House members.

Boozman, ranking member of the Senate Committee on Agriculture, Nutrition and Forestry, released a farm bill framework in June. Republicans on the House Agriculture Committee passed their version of a farm bill in May, but the House has not voted on the bill. Instead, the House was in recess in late summer and now again until after the Nov. 5 elections.

During the meeting at Isbell Farms, Boozman said he hopes to pass a new farm bill in the “lame duck session” of Congress after the elections. But he also called for an immediate economic aid package and updated management tools to help farmers procure loans for 2025.

“We’re glad to have Sen. Boozman where he is, and I’m glad to have good support from our congressional delegation,” said Grobmyer. “We’re hopeful we can get something done before the end of this Congress. If we don’t, we will have to start from scratch in a new Congress and a new administration.”

Related:Disaster strikes farm: Are you covered?

Although the farm bill expired Sept. 30, most of its commodity programs continue through the end of the year. That will be of little comfort to many farmers, because Agriculture Risk Coverage and Price Loss Coverage payments are forecast at their lowest levels in years, due to the reference prices in the 2018 farm bill (which are based on 2020 input costs) and won’t arrive until 2025.

“As Sen. Boozman says, we need immediate assistance for farmers, and we need to get the farm bill structured to be more aligned with the economy that farmers deal with today,” said Grobmyer. “Our must dos are something for 2024 and something for 2025. Both of those are essential for bankers to be willing to let people continue to take that risk.”

Inflation Reduction Act

USDA’s $250 million in assistance for distressed FSA borrowers comes from Section 22006 of the Inflation Reduction Act President Biden signed in August of 2022. The Agriculture Department used $800 million of Section 22006 funding to bring distressed borrowers current on their loan payments in October of 2022 and more funding has been made available since then.

“These ongoing investments made possible by the Inflation Reduction Act come on the heels of critical Farm Service Agency loan reforms that became effective last week,” said Zach Ducheneaux, USDA Farm Service Agency administrator. “The payments announced today (Oct. 7) help to ensure that more than 4,500 producers across the country will see another production season.”

Ducheneaux said that, besides trying to address the current crises, USDA is also creating a more resilient and supportive loan system for the future.

The $250 million additional assistance includes $235 million for an estimated 4,485 delinquent direct and guaranteed FSA borrowers who have not received prior Inflation Reduction Act 22006 assistance and about $15 million for an estimated 165 direct and guaranteed borrowers with Shared Appreciation Agreements.

Delinquency assistance

For direct borrower delinquency assistance, FSA will make an automatic payment in the amount of any outstanding delinquencies as of Sept. 30, on qualifying loans that are one or more days delinquent.

For guaranteed borrower delinquency payments, FSA will mail a check for an amount of any outstanding delinquencies as of Sept. 30 on qualifying guaranteed loans that are 30 or more days delinquent provided those borrowers have not received prior Section 22006 loan assistance.

For borrowers receiving assistance on Shared Appreciation Agreements, a payment will be made to resolve outstanding amortized repayment agreements and recapture amounts owed to FSA, which have matured as of Sept. 30. Borrowers whose agreements have not matured as of Sept. 30 will be contacted by FSA and provided an opportunity to request that FSA calculate a partial recapture and Shared Appreciation Agreement offer.

FSA has also announced significant changes to its farm loan programs through the Enhancing Program Access and Delivery for Farm Loans rule.

“These policy changes are designed to expand opportunities for borrowers to increase profitability and be better prepared to make strategic investments in the enhancement or expansion of their agricultural operations,” FSA said in a press release.