USDA Farm Service AgencyGreg Foulke, Farm Loan Chief

November 7, 2012

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What Comprises FSA? Farm Programs Farm Loan ProgramsIn October 1995, the Farm Loan Division of

the Farmers Home Administration merged with the Agricultural Stabilization and Conservation Service (ASCS) to create the Farm Service Agency (FSA)

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Over 40 Programs & Services Available:

Ag

Mediation

Dairy Programs

NAP Coverage

CRP

GRP

Commodity Loans

Farm Loans

SURE

BCAP

ACRE

Disaster Programs

Farm Storage

Facility Loans

County Committees

Beginner

Farmer

Loans

CREP

Direct and Counter-

cyclical Program

Direct Operating Loans

Emergency Conservation

Programs

ELAPGuaranteed

Operating

Loans

Livestock Indemnity

Program

MILC Program

Commodity Loans Tobacco Transition

TAP

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Farm Programs Price Support – principally commodity

loans and loan deficiency payments (LDP’s) • Commodity loans are 9 month loans. Can repay P & I

or at posted county price, whichever is lower, or producer can forfeit grain. Lenders with crop liens must execute lien waivers but can require the loan funds be paid jointly

• LDP’s are only in effect when the market price is lower than the county loan rate

Farm Programs

What will the new Farm Bill bring? Past programs have included:• Direct & Countercyclical payments• Disaster Programs – NAP, LIP and Ad Hoc• Supplemental Revenue Assistance Payments (SURE) –

expired 9/30/11 – sort of… payments are paid 2 years after the fact

• Average Crop Revenue Election (ACRE) Program Most likely will still have:

• Compliance – acreage and bin measuring, HEL & wetland, etc.

• AGI – Payment Limitations• Reconstitutions

Farm Programs Conservation Programs• Conservation Reserve Program (CRP) General and continuous signup (waterways, filter strips,

etc.), 10 – 15 year contracts with annual payments• Emergency Conservation Program (ECP)

Cleanup from natural disasters such as tornadoes, flooding, & drought on crop land (some cost share)

• Emergency Forest Restoration Program (EFRP) Similar to ECP except for woods and forests

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FY 2011 FSA Farm Support – Indiana

DCP and ACRE Payments ~ $220 Million Conservation Reserve Program Payments

~ $44.8 Million SURE Disaster Payments ~ $32.5 Million Farm Storage Facility Loans ~ $14 Million Other Disaster Programs ~ $2.36 Million

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Farm Loan Programs (FLP)The Farm Service Agency makes and guarantees loans and provides credit counseling and supervision to farmers and ranchers who are temporarily unable to obtain private, commercial credit.

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10 FLP Offices Statewide

Greensburg Columbia City Marion Corydon New Castle RensselaerHanover Vincennes Warsaw Rockville

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Farm Loan Programs Direct Loans• Farm Ownership, Operating and Emergency

(Conservation loans will not be funded in FY 13)• Youth Loans Guaranteed Loans• Farm Ownership and Term Operating (Conservation

loans not yet funded for FY 13)• Lines of Credit• Interest Assistance (will not be funded in FY 13)

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Loan Program Delivery

Direct loan requests are processed and serviced in local FSA offices

Guaranteed requests are completed by the lender and applicant and submitted to FSA for processing

Upon request, FSA staff assists applicants in completing paperwork

Most adverse decisions are appealable

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Direct and Guaranteed Dollars Loaned – IN

FISCAL # LOANS DOLLARS % OF FUNDS AVERAGE

YEAR MADE OBLIGATED GUARANTEED LOAN

2012 625 151 MILLION 81% $242,160

2011 677 171 MILLION 82% $253,300

2010 594 116 MILLION 77% $194,900

2009 509 105 MILLION 81% $206,200

2008 536 107 MILLION 83% $199,500

2007 501 94 MILLION 81% $188,000

2006 489 83 MILLION 81% $170,000

2005 473 74 MILLION 85% $156,000

2004 540 80 MILLION 88% $148,000

2003 607 96 MILLION 86% $158,000

2002 577 84 MILLION 84% $146,000

2001 603 86 MILLION 82% $142,000

Basic FLP Eligibility Criteria unable to get credit elsewhere * must be actively engaged in farming family sized farmer * sufficient training and experience no prior agency loss not delinquent on any non-tax Federal

debt* Not applicable to Conservation Loans

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Direct Loans Farm Ownership Loans • $300,000 maximum per person/entity• up to 40 year repayment period• regular & “limited resource” interest rates• funds used to acquire or enlarge a farm• cannot refinance debts with FO funds• bridge loans authorized (with conditions)• limited funds available• joint financing/participation loans are popular• cannot finance non-farm enterprises

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Beginning Farmer Definition Meet regular eligibility requirements Must not have operated farm/ranch for more

than 10 years – applies to all entity members Materially participate in operation of farm Agree to borrower training as required Cannot already own more than 30% of median

farm size in the county where farm will be purchased (applies only if using FO program to purchase real estate)

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Socially Disadvantaged Applicants What is a Socially Disadvantaged Applicant

(SDA)?

An SDA applicant is one who is a member of a socially disadvantaged group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as a member of a group, without regard to their individual qualities.

SDA groups include African Americans, American Indians, Alaskan Natives, Hispanics, Asians, Pacific Islanders, and Women.

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FSA does not have a specific SDA loan program, but rather targets funds in existing programs to applicants that meet the definition

The targets are set by law SDA loan applicants must meet regular

loan program requirements

SDA Applicants

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Direct Loans Down Payment Program• Must meet definition of a beginning farmer or Socially

Disadvantaged Applicant (SDA)• Applicant provides 5% down payment (cash)• FSA can loan up to 45% of purchase price or appraised

value (whichever is less) over 20 years• No limit on purchase price but FSA loan cannot exceed

$225,000• Other lender loans at least 50% – must use a 30 year

amortization and cannot balloon before 20 years• FSA interest rate is fixed at 1.5%

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Direct Loans Joint Financing Program• Also called FSA’s 50-50 participation loan program• Do not have to be a beginning farmer but must meet

other FSA eligibility requirements• Another lender provide at least 50% of the financing

for the R/E purchase• Other lender can have first mortgage – FSA will even

guarantee their loan (if necessary)• FSA interest rate is fixed at 5% or can use FSA’s

regular rate, whichever is lower

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Direct Loans Conservation Loans (CL) – not funded in FY 2013

• Must meet FSA’s regular elig requirements – except no ‘test for credit’ and don’t have to be a family sized farmer

• CL funds may be used for any conservation purpose in a conservation plan, including, but not limited to: Installation of structures to address soil, water, and related

resource conservation Establishment of forest cover for sustainable yield timber

management, erosion control, or shelter belt purposes Installation of water conservation measures Establishment or improvement of permanent pasture Installation of waste management systems

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Direct Loans Operating Loans • $300,000 maximum per person/entity• Up to 7 year repayment period• Regular & “limited resource” interest rates• Used for annual operating, equipment or

livestock purchases, refinancing, etc.• Limited funds available• Cannot fund non-farm enterprises

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Direct Loans Emergency Loans • $500,000 maximum per person/entity• Various repayment periods – normally not to

exceed 20 years• Fixed interest rate (OL rate + 1% – changes

monthly) • Must have a qualifying loss ( 30% for

production) – different for physical losses• County must be designated as a disaster area or

contiguous to a designated county

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Direct Loans Youth Loans • $5,000 maximum per person• Various repayment periods• Regular operating loan interest rate• age 10 – 20 and live in town of 50,000 or less• Must have a sponsor/advisor (4-H Leader, Vo-Ag.

Teacher, County Extension Agent)• Finance most agriculturally related projects

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Direct Loan Applications Applications for direct loan assistance are

submitted to the FSA local office serving the area where the operation is located

Local FSA offices are listed in the telephone directory under U.S. Government, Department of Agriculture, Farm Service Agency

Applications, other forms, and office locations are available online at: www.fsa.usda.gov

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Good farm business plan is critical Applicants should:

• Set short and long term goals• Plan conservatively• Have records to support production

projections• Have good financial records• Get help from experts (Extension,

State Programs, etc.)

Application Tips

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Farm Storage Loans Farm Storage Facility Loans • Available to all producers of eligible commodities • Eligible structures now include hay, renewable biomass

and cold storage• $500,000 loan limit per structure• Mortgage required if loan exceeds $100,000• 15% down payment required • Eligibility is based on need for additional storage• 7, 10 and 12 year terms and low fixed interest rates

(published monthly – rates vary by loan term)• No test for credit requirement – most are eligible• Consider a Rural Development REAP grant to help pay

for new energy efficient grain dryers

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Confinement Operations Hogs, Chickens, Ducks & Turkeys Usually ≤ 12 year amortization on new hog

buildings 15 – 20 years on poultry buildings FSA is very wary of older hog and poultry

buildings – obsolete Most under contracts – payment assignments IDEM permit process Underlying acreages vary – more is better

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Guaranteed Loans Operating and Farm Ownership Loans

(Conservation loans were not funded in FY 2012)• Lender applies for the guarantee• $1,302,000 maximum per person/entity –

adjusted annually (this is the FY 2013 limit)• Rates and terms negotiated by lender• Can use funds to refinance debt or purchase

assets• Mostly 90% guarantees but up to 95%• Local FSA offices have lists of participating

lenders

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Guaranteed Loans

Land Contract Guarantee Program – purpose is to facilitate land transfers to Beginning Farmer or SDA applicants• 2 types of guarantees under this program – Seller

may request either of the following: Prompt Payment Guarantee: Guarantee of up to the

amount of 3 amortized annual installments plus the cost of any related real estate taxes and insurance; or

Standard Guarantee: Guarantee of 90 percent of the outstanding principal balance under the land contract

Guaranteed Loans Guarantee Fees• One time fee of 1.5% of the guaranteed

portion of loan except: No fee if loan has interest assistance No fee if majority of loan ( 50%) will refinance

FSA’s direct loan indebtedness No fee if Down Payment Loan

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Guaranteed Loans Basic Guarantee Process• Lender submits application• Lender submits narrative, balance sheet, cash flow,

appraisal, historical info, verifications, etc, as needed• Assuming all in order, FSA issues a conditional

commitment (CC)• Lender closes loan after receiving CC• Lender submits closing information to FSA• FSA issues loan note guarantee• Lender may or may not sell guaranteed portion

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Real Estate Appraisals FSA appraisals must meet USPAP

requirements for real estate Self contained or summary – not

restricted Must use State Certified General

appraisers if loan is $250,000 May use qualified if < $250,000

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Questions or More Info?

Contact any FSA Office – we’re located in 75 counties

FSA State Office: 317-290-3030

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