American Rescue Plan Provides Assistance for Socially Disadvantaged Farmers

April 19, 2021 | Kitt Tovar Jensen

UPDATE: On June 23, a judge from the Middle District of Florida also granted a preliminary injunction halting the debt relief program. Wynn v. Vilsack, 2021 WL 2580678 (M.D. Fla. June 23, 2021).

UPDATE: On June 10, a judge from the Eastern District of Wisconsin granted a motion for a temporary restraining order halting the nationwide implementation of the loan forgiveness program for socially disadvantaged farmers. The plaintiffs, twelve white farmers and ranchers from nine different states, claim the program violates the Equal Protection Clause of the U.S. Constitution. Faust v. Vilsack, Case No. 21-C-548 (E.D. Wis. June 10, 2021).

On March 11, 2021, President Biden signed the $1.9 trillion American Rescue Plan Act (ARPA) into law. The ARPA set aside approximately $10.4 billion for agriculture and nutrition programs to address food supply chain disruptions, provide funding for rural areas, and increase nutrition assistance. Among its relief provisions, the new law provides specific loan payment assistance to “socially disadvantaged farmer or ranchers.”

ARPA Section 1005: Farm Loan Assistance

Under the ARPA, Congress directed the USDA to pay up to 120 percent of all eligible FSA loans balances as of January 1, 2021, made to socially disadvantaged producers. Because the debt payment will qualify as income, the additional 20 percent is intended to generally offset the associated tax liability. USDA estimates it will spend around $4 billion on this new debt relief program.

A "socially disadvantaged farmer or rancher" is defined as a producer who is a member of socially disadvantaged group. 7 U.S.C. § 2279(a)(6). This includes producers who are Black, Native American/Alaskan Native, Asian American or Pacific Islander, or who are of Hispanic/Latino ethnicity. This definition of "socially disadvantaged," in contrast to that of some other USDA programs, does not include women.

Both current and delinquent FSA Direct Loans, Guaranteed Farm Loans, and Farm Storage Facility Loans (FSFL) are eligible. Rural Development Loans, FSA Marketing Loans and loans from commercial lenders are NOT eligible.

At this point, FSA is still developing the payment process. Eligible borrowers do not need to take any action to apply, but should either continue to make payments or, if applicable, apply for COVID-related Disaster Set-Aside of payments. Eligible borrowers can contact their local USDA Service Center to ensure that their demographic designation is up-to-date. A producer can update a demographic designation by filling out the USDA Form AD-2047 or by contacting the local service center.

ARPA Section 1006: USDA Assistance and Support for Socially Disadvantaged Farmers and Ranchers

Section 1006 of the ARPA specifically appropriates $1.01 billion to support socially disadvantaged farmers through various programs. This funding will create a racial equity commission to address previous discrimination by the USDA. The law provides that this funding will also be used to provide outreach, loans and grants, education, and financial assistance to improve land access for socially disadvantaged producers. 

 We will keep you posted as the USDA release more details on these programs.