As many as 13,000 minority farmers may receive thousands of dollars in loan forgiveness at the start of June, as part of the federal stimulus package that aims to help disadvantaged farmers but has been delayed for months.
The American Rescue Plan Act has devoted $4 billion for debt relief to disadvantaged farmers of color to remedy centuries of government discrimination. Black farmers have accused the USDA of delaying the program, because, so far, they have not received any money.
However, the USDA Farm Service Agency announced that notices to disadvantaged farmers are going out, explaining that debt relief money is now available, and that the agency is ready to start paying farmers in early June.
Civil rights activists have said the debt relief program is meant to right a wrong after centuries of discrimination of farmers of color by the government and others. Meanwhile, lawmakers and other farmers have criticized the program, calling it reverse racism, and banks warn that it will cripple lending institutions.
Agriculture secretary Tom Vilsack estimates that between 11,000 and 13,000 Black, American Indian, Hispanic, Alaskan Native, Asian American or Pacific islander farmers will benefit from this program.
Vilsack mentioned that his commitment is to “end discrimination wherever it exists at the USDA and working like never before to gain the trust and confidence of Americas farmers and ranchers.”
In April, former Trump adviser Stephen Miller formed the American First Legal Foundation to file a lawsuit on behalf of Sid Miller, a white farmer in the U.S. District Court for the Northern District of Texas claiming the USDA program “disrupts our common progress towards becoming a more perfect union.”
This lawsuit argues that the definition of “socially disadvantaged group” should be expanded to include those members of groups that have, at some point, been subject to racial and ethnic prejudice, including Irish, Italians, Germans, Jews and eastern Europeans.
Also in April, a group of farmers from Wisconsin, Minnesota, South Dakota and Ohio sued the federal government, seeking a court order prohibiting the USDA from applying racial classifications when determining eligibility for loan forgiveness. And Rep. Tom Tiffany (R-Wis) and Rep. Burgess Owens (R-Utah) announced plans to introduce the Agriculture Civil Rights and Equality Act, which would prohibit the USDA from discriminating or providing preferential treatment to any person on basis of race, color, national origin or sex.
Vilsack has stated that in the last 100 years the USDA had implemented policies that specifically put these groups in a disadvantage. He claims that billions of dollars have gone to white farmers because that’s how the system is structured.
Black farmers in America have lost more than 12 million acres of farmland over the century which Vilsack claims is due to discrimination by the government and business policies to make it nearly impossible to gets loans or buy equipment.
Tracy Lloyd McCurty, executive director of Black Belt Justice Center stated “our elder farmers had five demands: monetary compensation for economic harm, land, debt cancellation, federal and state tax relief, and access to non-extractive capital. Debt cancellation is a necessary step to eradicating pervasive racial discrimination within USDA.”
This new debt relief program has had difficulties with the banking industry. The American Bankers Association, the Independent Community Bankers of America and National Rural Lenders Association, the three major banking groups, have stated that this program is harmful to lenders and their shareholders.
Mark Scanlan, senior vice president of agriculture and rural policy for the Independent Community Bankers of America, said that while the banks don’t oppose the program, they are concerned on how it´s being implemented. If these loans are paid off early, small community banks could potentially lose millions of dollars.
“When the loans get taken off the books, they stop producing income. Banks have income projections, so when they sit down to do their bank exam with regulators, all of a sudden this changes dramatically overnight and can be a significant loss.” says Scanlan.
Danny Creel, executive director of the National Rural Lenders Association, said that, the financial system is not designed to sustain an immediate government-funded payoff of existing loans. “This $4 billion payoff could have repercussions that were perhaps not considered in the development of the American Rescue Act,” Creel said.
Vilsack assures that banks have protection for early payoff penalties that range from 3 to 5 percent. “We are going to pay for those prepayment penalties within the USDA. So theyre going to get prepayment penalty payment. Banks get their money back. And so, banks then can lend the money again.”
This loan relief program is part of the American Rescue Plan Act drawn from a bill called Emergency Relief for Farmers of Color Act by Sen. Raphael G.Warnock (D-GA.), Democratic Sens. Corey Booker (N.J.), Ben Ray Lujan (N.M.) and Debbie Stabenow (Mich.), making it onto the federal stimulus law, despite opposition from Congressional Republicans.
