USDA Farm Service Agency
Greg Foulke, Farm Loan Chief
November 8, 2011
What Comprises FSA?
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Farm Programs
Farm Loan Programs
In October 1995, the Farm Loan Division
of the Farmers Home Administration
merged with the Agricultural Stabilization
and Conservation Service (ASCS) to
create the Farm Service Agency (FSA)
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Allocation of Funds in the Farm Bill
FSA Program
Allocation
Crop
Insurance
10%
Other
4%
Commodities
9%
Conservation
8%
FSA/NRCS
Nutrition
73%
CBO Score - $307 Billion for 5-year
period 2008-2012
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Over 40 Programs & Services Available:
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Farm Programs
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Price Support – principally commodity
loans and loan deficiency payments (LDP’s)
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Commodity loans are 9 month loans. Can repay P & I
or at posted county price, whichever is lower, or
producer can forfeit grain. Lenders with crop liens
must execute lien waivers but can require the loan
funds be paid jointly
LDP’s are only in effect when the market price is
lower than the county loan rate
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Farm Programs
Conservation Programs
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Conservation Reserve Program (CRP)
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Emergency Conservation Program (ECP)
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General and continuous signup (waterways, filter
strips, etc.), 10 – 15 year contracts with annual
payments
Cleanup from natural disasters such as tornadoes,
flooding, & drought on crop land (some cost share)
Emergency Forest Restoration Program (EFRP)
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Similar to ECP except for woods and forests
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Farm Programs
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Average Crop Revenue Election Program (ACRE)
Direct & Countercyclical Payments (DCP)
Disaster Programs – NAP and Ad Hoc
Supplemental Revenue Assistance Payment
Program (SURE) – expired 9/30/11 – sort of…
Compliance – acreage and bin measuring, HEL &
wetland, etc.
Payment Limitations
Reconstitutions
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Farm Storage Loans
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Farm Storage Facility Loans
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available to all producers of eligible commodities
$500,000 loan limit per structure
mortgage required if loan exceeds $50,000
15% down payment required
eligibility is based on need for additional storage
7, 10 or 12 year terms and low fixed interest rates
no test for credit requirement – most farmers are
eligible
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FY 2010 FSA Farm Support – Indiana
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DCP and ACRE Payments ~ $261 Million
MILC & DELAP Payments ~ $7.5 Million
Conservation Reserve Program Payments
~ $44.7 Million
SURE Disaster Payments ~ $50 Million
Farm Storage Facility Loans ~ $18.9 Million
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Farm Loan Programs (FLP)
The Farm Service Agency makes and
guarantees loans and provides credit
counseling and supervision to farmers
and ranchers who are temporarily
unable to obtain private, commercial
credit.
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11 FLP Offices Statewide
Greensburg
Marion
New Castle
Hanover
Warsaw
Monticello
Auburn
Corydon
Rensselaer
Vincennes
Rockville
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Farm Loan Programs
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Direct Loans
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Farm Ownership, Operating and Emergency
(Conservation was not funded in FY 2012)
Youth Loans
Guaranteed Loans
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Farm Ownership and Term Operating
(Conservation was not funded in FY 2012)
Lines of Credit
Interest Assistance (not funded in FY 2012)
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Loan Program Delivery
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Direct loan requests are processed and
serviced in local offices
Guaranteed requests are completed by
the lender and producer and submitted
to FSA for processing
Upon request, FSA staff assists
applicants in completing paperwork
Most adverse decisions are appealable
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Direct & Guaranteed Dollars Loaned
FISCAL
# LOANS
DOLLARS
% OF FUNDS
AVERAGE
YEAR
MADE
OBLIGATED
GUARANTEED
LOAN
2011
677
171 MILLION
82%
$253,300
2010
594
116 MILLION
77%
$194,900
2009
509
105 MILLION
81%
$206,200
2008
536
107 MILLION
83%
$199,500
2007
501
94 MILLION
81%
$188,000
2006
489
83 MILLION
81%
$170,000
2005
473
74 MILLION
85%
$156,000
2004
540
80 MILLION
88%
$148,000
2003
607
96 MILLION
86%
$158,000
2002
577
84 MILLION
84%
$146,000
2001
603
86 MILLION
82%
$142,000
2000
753
92 MILLION
78%
$122,000
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Basic FLP Eligibility Criteria
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unable to get credit elsewhere *
must be actively engaged in farming
family sized farmer *
sufficient training and experience
no prior agency loss
not delinquent on any non-tax Federal
debt
* Not applicable to Conservation Loans
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Direct Loans
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Farm Ownership Loans
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$300,000 maximum per person/entity
up to 40 year repayment period
regular & “limited resource” interest rates
funds used to acquire or enlarge a farm
cannot refinance debts with FO funds
bridge loans authorized (with conditions)
limited funds available
joint financing/participation loans are popular
cannot finance non-farm enterprises
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Beginning Farmer Definition
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Meet regular eligibility requirements
Must not have operated farm/ranch for more
than 10 years – applies to all entity members
Materially participate in operation of farm
Agree to borrower training as required
Cannot already own more than 30% of median
farm size in the county where farm will be
purchased (applies only if using FO program to
purchase real estate)
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Socially Disadvantaged Applicants
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What is a Socially Disadvantaged Applicant
(SDA)?
An SDA applicant is one who is a member of a
socially disadvantaged group whose members
have been subjected to racial, ethnic, or
gender prejudice because of their identity as a
member of a group, without regard to their
individual qualities.
SDA groups include African Americans,
American Indians, Alaskan Natives, Hispanics,
Asians, Pacific Islanders, and Women.
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SDA Applicants
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FSA does not have a specific SDA loan
program, but rather targets funds in
existing programs to applicants that
meet the definition
The targets are set by law
SDA loan applicants must meet regular
loan program requirements
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Direct Loans
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Down Payment Program
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Must meet definition of a beginning farmer or Socially
Disadvantaged Applicant (SDA)
Applicant provides 5% down payment (cash)
FSA can loan up to 45% of purchase price or appraised
value (whichever is less) over 20 years
No limit on purchase price but FSA loan cannot exceed
$225,000
Other lender loans at least 50% – must use a 30 year
amortization and cannot balloon before 20 years
FSA interest rate is fixed at 1.5%
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Direct Loans
 Joint Financing Program
• Also called FSA’s 50-50 participation loan program
• Do not have to be a beginning farmer but must meet
other FSA eligibility requirements
• Another lender must provide at least 50% of the
financing for the R/E purchase
• Other lender can have first mortgage – FSA will even
guarantee their loan (if necessary)
• FSA interest rate is fixed at 5% or can use FSA’s regular
rate, whichever is lower
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Direct Loans
 Conservation Loans (CL) (not funded in FY 2012)
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Must meet FSA’s regular elig requirements – except no ‘test
for credit’ and do not have to be a family sized farmer
CL funds may be used for any conservation purpose in a
conservation plan, including, but not limited to:
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Installation of structures to address soil, water, and related
resource conservation
Establishment of forest cover for sustainable yield timber
management, erosion control, or shelter belt purposes
Installation of water conservation measures
Establishment or improvement of permanent pasture
Installation of waste management systems
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Direct Loans
 Operating Loans
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$300,000 maximum per person/entity
up to 7 year repayment period
regular & “limited resource” interest rates
used for annual operating, equipment or
livestock purchases, refinancing, etc.
limited funds available
cannot fund non-farm enterprises
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Direct Loans
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Emergency Loans
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$500,000 maximum per person/entity
various repayment periods - normally not to
exceed 20 years
3.75% fixed interest rate
must have a qualifying loss ( 30% for
production) – different for physical losses
county must be designated as a disaster area
or contiguous to a designated county
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Direct Loans
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Youth Loans
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$5,000 maximum per person
various repayment periods
regular operating loan interest rate
age 10 – 20 and live in town of 50,000 or less
must have a sponsor/advisor (4-H Leader, VoAg. Teacher, County Extension Agent)
finance most agriculturally related projects
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Direct Loan Applications
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applications for direct loan assistance may be
submitted to the FSA local office serving the
area where the operation is located
local FSA offices are listed in the telephone
directory under U.S. Government,
Department of Agriculture, Farm Service
Agency
applications, other forms, and office locations
are available online at: www.fsa.usda.gov
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Application Tips
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A good farm business plan is critical
Applicants should:
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Set short and long term goals
Plan conservatively
Have records to support production
projections
Have good financial records
Get help from experts (Extension, State
Programs, etc.)
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Farm Storage Loans
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Farm Storage Facility Loans
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available to all producers of eligible commodities
eligible structures now include hay, renewable
biomass and cold storage
$500,000 loan limit per structure
mortgage required if loan exceeds $50,000
15% down payment required
eligibility is based on need for additional storage
7, 10 and 12 year terms and low fixed interest rates
(published monthly – rates vary by loan term)
no test for credit requirement – most farmers are
eligible
consider a Rural Development REAP grant to help pay
for new energy efficient grain dryers
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Confinement Operations
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Hogs, Chickens, Ducks & Turkeys
Usually ≤ 12 year amortization on new hog
buildings
15 – 20 years on poultry buildings
FSA is very wary of older hog and poultry
buildings – obsolete
Most under contracts – payment assignments
IDEM permit process
Underlying acreages vary – more is better
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Guaranteed Loans
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Operating and Farm Ownership Loans
(Conservation loans were not funded in FY 2012)
• Lender applies for the guarantee
• $1,214,000 maximum per person/entity –
adjusted annually (this is the FY 2012 limit)
• Rates and terms negotiated by lender
• Can use funds to refinance debt or purchase
assets
• Mostly 90% guarantees but up to 95%
• Local FSA offices have lists of participating
lenders
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Guaranteed Loans
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Guarantee Fees
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One time fee of 1.5% of the guaranteed
portion of loan except:
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No fee if loan has interest assistance
No fee if majority of loan ( 50%) will
refinance FSA’s direct loan indebtedness
No fee if Down Payment Loan
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Guaranteed Loans
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Interest Assistance (IA) (not funded in FY 2012)
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only available on operating type loans
need based program
eligible applicants qualify for a 4% interest
rate subsidy that is paid to the lender
loan limit is $400,000
funds are limited
no guarantee fee
other restrictions
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Guaranteed Loans
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Basic Guarantee Process
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Lender submits application
Lender submits narrative, balance sheet, cash flow,
appraisal, historical info, verifications, etc, as needed
Assuming all in order, FSA issues a conditional
commitment (CC)
Lender closes loan after receiving CC
Lender submits closing information to FSA
FSA issues loan note guarantee
Lender may or may not sell guaranteed portion
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Real Estate Appraisals
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FSA appraisals must meet USPAP
requirements for real estate
Self contained or summary – not
restricted
Must use State Certified General
appraisers if loan is  $250,000
May use qualified if < $250,000
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Questions or More Info?
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Contact any FSA Office – we’re located
in 78 counties
FSA State Office: 317-290-3030
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