$123 Million in Additional Funds for Distressed Borrowers

The USDA announced that starting in April, it will provide $123 million in additional, automatic financial assistance to qualifying farm loan program borrowers. The Federation of Southern Cooperatives is lauding this move as responsive to advocacy efforts on behalf of Black farmers.

The recently announced funds are an addition to the Inflation Reduction Act’s (IRA) compromise to issue payments in a race-neutral manner to ‘economically distressed borrowers.’ Previously, funds had been earmarked specifically for black, indigenous, and other farmers of color in a separate statute. These race-specific payments, however, were consistently stalled by discrimination lawsuits.

In response to these lawsuits, the Biden administration repealed the race-specific statute and instituted the IRA. This move allowed money to start flowing, albeit to any farmers regardless of race if they could demonstrate economic distress. The USDA reports that nearly $800 million of the $3.1 billion allocated had been distributed as of last October.

NPR recently reported that in 2022, black farmers still suffered from disparate outcomes for direct loan applications from the Farm Service Agency (FSA). According to their analysis, only 36% of farmers who identified as Black were granted direct loans, whereas 72% of white farmers were approved. These disparate outcomes are the reason aid to black farmers is needed, and until the USDA can create programs that fairly and properly serve black farmers, aid will continue to be needed as a stopgap measure.

However, it is unclear how much of the IRA money recently announced that will go to “economically distressed borrowers” will end up in the hands of Black, Indigenous, or other Farmers of Color. Those interested in taking advantage of the recent round of IRA funds should start with this USDA factsheet.