WASHINGTON – U.S. Senators Amy Klobuchar (D-MN) and John Hoeven (R-ND) introduced the Producer and Agricultural Credit Enhancement (PACE) Act, legislation to improve farmers and ranchers’ access to credit by modernizing loan limitations for U.S. Department of Agriculture (USDA) loan programs.
“Too many American farmers and producers operate on razor-thin margins. Having access to credit can often mean the difference between economic viability and financial hardship. By expanding credit opportunities for producers and farmers, this legislation will strengthen the rural economy across Minnesota and the country,” said Klobuchar.
“Production costs for our farmers and ranchers continue to rise due to record inflation and increasing costs for fuel, fertilizer and other inputs,” said Hoeven, the ranking member of the Senate Agriculture Appropriations Committee. “Our legislation will help credit programs to keep pace with the current needs of producers so they have access to the capital they need to support their operations and ensure Americans have access to the food and fuel we need.”
Specifically, the PACE Act:
- Increases loan limitations for the Farm Service Agency’s (FSA) Direct and Guaranteed Loan Programs for Farm Operating Loans and Farm Ownership Loans by the following amounts:
- Direct Operating: Increase from $400,000 to $750,000
- Guaranteed Operating: Increase from $2.04 million to $2.6 million
- Direct Ownership: Increase from $600,000 to $850,000
- Guaranteed Ownership: Increase from $2.04 million to $3 million
- Changes the inflation benchmark for guaranteed ownership loans to the National Ag Statistics Service (NASS) Ag Land Values land survey.
- Indexes the Direct Farm Ownership Down Payment Program to align with current loan limitations, helping support beginning farmers and ranchers to finance the purchase of a family farm.
- Increases loan limitations for the FSA microloan program from $50,000 to $100,000.
- Directs FSA to promulgate rules allowing distressed borrowers to refinance guaranteed loans into direct loans.
The PACE Act is supported by: National Farmers Union, American Farm Bureau Federation, American Soybean Association, American Sugarbeet Growers Association, National Association of Wheat Growers, National Barley Growers Association, National Corn Growers Association, National Cotton Council, National Pork Producers Council, National Sorghum Producers, National Sunflower Association, U.S. Canola Association, U.S. Beet Sugar Association, U.S. Dry Pea and Lentil Council, U.S. Peanut Federation, USA Rice, Farm Credit Council, and American Bankers Association.
“Farmers Union members welcome the introduction of the Producer and Agricultural Credit Enhancement Act. Access to credit is essential for farmers, and USDA’s Farm Service Agency (FSA) loan programs are a unique and important source of capital for farm operations. Given sky-high land values and elevated input costs, this bill takes the important step of updating FSA loan limits, while expanding credit opportunities for all types of producers, and creating a new pathway for FSA to assist distressed borrowers. Thank you, Senators Klobuchar and Hoeven for putting forward this commonsense legislation to modernize FSA loan programs and strengthen the farm economy,” said National Farmers Union President Rob Larew.
“Access to capital is critical to everyone in production agriculture -- especially beginning farmers and ranchers. Farm Credit thanks Senators Hoeven and Klobuchar for their leadership on the Producer and Agricultural Credit Enhancement Act. It would increase FSA’s direct and guaranteed loan limits to reflect the current costs of farming and ranching, benefitting producers across the country. Farm Credit looks forward to working with Senators Hoeven and Klobuchar to include this important legislation in the Farm Bill,” said Farm Credit Council President and CEO Todd Van Hoose.
Representatives Brad Finstad and Angie Craig have introduced a companion bill in the U.S. House of Representatives.