WASHINGTON D.C. – U.S. Senators John Hoeven (R-N.D.) and Amy Klobuchar (D-Minn.) reintroduced 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. The senators are working to pass the legislation as part of the next farm bill and made the case for the bill to their Senate Agriculture Committee colleagues at a committee hearing on the issue today.
“It’s essential that the loan limits in these programs reflect the real-world costs faced by our ag producers. Our legislation makes needed updates to these loans so they can properly meet the needs of farmers, and we will continue our efforts to pass it as part of the next farm bill,”said Senator Hoeven, chairman of the Senate Agriculture Appropriations Committee and a senior member of the Senate Agriculture Committee.
“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 Senator Klobuchar, ranking member of the Senate Agriculture Committee.
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 $2.25 million to $2.6 million
- Direct Ownership: Increase from $600,000 to $850,000
- Guaranteed Ownership: Increase from $2.25 million to $3 million
- Changes the inflation benchmark for guaranteed ownership loans to the National Ag Statistics Service (NASS) Agriculture Land Values 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: American Bankers Association, American Farm Bureau Federation, American Soybean Association, American Sugarbeet Growers Association, Farm Credit Council, Midwest Council on Agriculture, Minnesota Association of Wheat Growers, Minnesota Corn Growers Association, Minnesota Farm Bureau, Minnesota Soybean Growers Association, National Association of Wheat Growers, National Barley Growers Association, National Coton Council, National Corn Growers Association, National Farmers Union, National Pecan Federation, National Pork Producers Council, National Sorghum Producers, National Sunflower Association, North Dakota Grain Growers Association, Southwest Council of Agribusiness, U.S. Beet Sugar Association, U.S. Canola Association, U.S. Peanut Federation, USA Dry Pea and Lentil Council, USA Rice and Western Peanut Growers Association.
A summary of the legislation and the full bill text can be found here and here, respectively. Representative Brad Finstad (R-Minn.) and House Agriculture Committee Ranking Member Angie Craig (D-Minn.) have introduced a companion to the legislation in the U.S. House of Representatives.
“Farmers across southern Minnesota, especially those who are just starting out, rely on dependable financing options to grow and maintain their operations,” said Rep. Finstad. “It is imperative that the limits on FSA loans align with the current challenges farmers and producers face today. I’m proud to reintroduce the PACE Act, which will provide farmers with certainty and make it easier to obtain the loans they need.”
“Farming is volatile work, and our family farmers are often tasked with navigating uncertain conditions, whether that’s periods of low commodity prices or extreme weather events,” said Rep. Craig.“That’s why I’m working across the aisle to help give Minnesota’s farmers and producers the certainty they need to continue operating through challenging times. This bipartisan bill will bolster generational operations, while ensuring that new and beginning farmers have access to the resources they need to get their businesses up and running.”
“Farm Credit extends its thanks to Senators Hoeven and Klobuchar for reintroducing the Producer and Agricultural Credit Enhancement (PACE) Act, which would expand the Farm Service Agency’s direct and guaranteed loan limits to match the rising costs of agricultural production. Agricultural producers depend on access to capital to grow and maintain their operations. For young and beginning farmers, in particular, accessible capital may be the difference between launching an operation or not. We look forward to collaborating with both senators to include this essential legislation in the Farm Bill for the benefit of farmers and ranchers across the nation,” said Farm Credit Council President and CEO Christy Seyfert.
“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 Hoeven and Klobuchar for putting forward this commonsense legislation to modernize FSA loan programs and strengthen the farm economy,” said National Farmers Union President Rob Larew.
