Up to 13,000 black farmers and other minority farmers could start seeing thousands of dollars in loan write-offs starting in June, as part of the federal stimulus package that aimed to help underprivileged farmers, but was delayed by several months.
About $ 4 billion from the American Rescue Plan Act has been allocated to provide debt relief for disadvantaged farmers of color to address centuries of government discrimination. Black farmers accused the US Department of Agriculture of dragging its feet on the program, because so far no money has been spent.
However, the U.S. Department of Agriculture’s Agricultural Services Agency announced on Friday that notices to underprivileged farmers are being sent, explaining that the debt relief money is now available and that the agency plans to begin. to pay the direct loans from the Farm Service Agency in early June.
Civil rights activists said the debt relief program was a big step towards righting a wrong after a century of mistreatment of farmers of color by the government and others. Meanwhile, white farmers and some lawmakers have criticized the program, calling it a form of reverse racism, and banks have warned it will hurt lending institutions financially.
Agriculture Secretary Tom Vilsack told the Washington Post that he estimated that between 11,000 and 13,000 Black, Native American, Hispanic, Alaskan, Asian American, or Pacific Islander farmers would benefit from the program, all of them. of their loans being repaid by the US Treasury. Eligible farmers and ranchers will also receive an additional 20 percent of this loan as a cash payment sent to them directly, to cover the tax burden that comes with such significant debt relief.
âThese people will receive a letter informing them that their debt is being paid,â Vilsack said by phone. “He will specify the amount of debt, principal and interest, regardless of the fees involved, and if the farmer or rancher agrees that this number is correct, he should sign a copy of the letter and return it to the Ministry of Agriculture, at that time, the ministry will send them, within a few weeks, a check for 20% of the loan that was canceled. “
In a statement, Vilsack reiterated his commitment to “end discrimination wherever it exists in the USDA and work like never before to earn the trust of American farmers and ranchers.”
Some supporters of black farmers are not so optimistic that this debt relief heals old wounds.
Corey Lea, a beef and pork farmer in Murfreesboro, Tennessee, and leader of the Cowtown Foundation advocacy group, has repeatedly sued the USDA for discrimination, most recently in 2019. He said farmers Whites had received billions of dollars in pandemic relief and direct payments aimed at mitigating the damage caused during the Trump administration’s trade war with China.
âSocially disadvantaged farmers have received 0.1 percent of pandemic relief,â Lea said, a figure Vilsack does not dispute. “If they do want to withdraw money in June, that’s great, relief is really needed. However, it is of great concern that the Civil Rights Bureau still does not allow farmers to resolve their complaints of discrimination. “
While debt relief is an attempt to correct historic harms to black farmers and help farmers of color who have been disproportionately affected by covid-19, critics say it is discriminatory in the other way.
In April, former Trump adviser Stephen Miller formed the America First Legal Foundation to file a lawsuit on behalf of Sid Miller, a white farmer (who separately serves as Texas agriculture commissioner) before the U.S. District Court for the Northern District of Texas. The USDA program “disrupts our common progress towards a more perfect union.”
Stephen Miller did not return a request for comment. But the lawsuit argues that codifying “socially disadvantaged groups” in law goes against the Constitution. He also argues that the definition of “socially disadvantaged group” should be broadened to include members of groups who have at one time been subjected to racial and ethnic prejudice, including Irish, Italians, Germans, Jews. and Eastern Europeans.
Also in April, a group of farmers in 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, have announced their intention to introduce the Agriculture Civil Rights and Equality Act, which would prohibit the USDA from discriminating or granting a preferential treatment to anyone on the basis of race, color, national origin or sex.
Vilsack asks those who perceive the USDA relief program to be reverse racism to read a book by Natalie Baszile called “We Are Each Other’s Harvest.”
“There is a very specific chapter on actions that have been taken by the USDA over the past 100 years, policies have been implemented that have been specifically distorted in a way that has disadvantaged socially disadvantaged producers.” , said Vilsack. “There is no better example of this than the Covid relief efforts. Billions of dollars have gone to white farmers, because the system is structured in a way that gives them significant benefits.”
Black farmers in America have lost over 12 million acres of farmland over the past century, 85% of their land according to census data, which Vilsack says is due to discriminatory government and trade policies. that made it more difficult to obtain loans or purchase equipment.
Today, about 98 percent of American farmers are white. Over the past 30 years, several major civil rights lawsuits have compensated farmers for specific acts of discrimination. According to Tracy Lloyd McCurty, executive director of the Black Belt Justice Center, which provides legal representation to black farmers, these have largely proven to be “disastrous” for black farmers.
âOur elderly farmers had five demands: monetary compensation for economic damage, land, debt cancellation, federal and state tax relief, and access to non-extractive capital,â she said. “Debt cancellation is a necessary step to eradicate pervasive racial discrimination within the USDA.”
In addition, the new debt relief program faced challenges from the banking sector. Three of the largest banking groups – the American Bankers Association, the Independent Community Bankers of America and the National Rural Lenders Association – have come forward to say the program could harm lenders and their shareholders.
Mark Scanlan, senior vice president of agriculture and rural policy for Independent Community Bankers America, said that while the banks “don’t oppose this program,” lenders are concerned about how it is implemented. As an example, Scanlan said he was aware of a small community bank offering $ 200 million in agricultural loans to those considered disadvantaged farmers, who could suffer losses of “tens of millions of dollars” if these loans are repaid early.
âWhen loans are taken off the books, they stop producing income,â Scanlan said. “Banks have revenue projections, so when they sit down to do their bank review with regulators, all of a sudden it changes dramatically overnight and can be a big loss.”
He said that many of these agricultural loans are sold in the secondary market, which gives the bank more liquidity to make new loans.
Danny Creel, executive director of the National Association of Rural Lenders, said that while his organization supports the repayment of USDA loans, the financial system is not designed to support such immediate repayment, funded by the government, existing loans.
“This $ 4 billion gain could have implications that may not have been factored into the development of the American Rescue Act,” Creel said. “Rural lenders provide millions of dollars in much needed loans to socially disadvantaged farmers in their communities.”
Vilsack said banks already have protection built in with prepayment penalties, which are fees ranging from 3-5% of the overall loan that are triggered when loans are paid off early.
“And we’re going to pay these prepayment penalties within the USDA. So they’re going to receive a prepayment penalty. The banks will get that money back. And so the banks can then lend the money again,” he said. Vilsack said.
The framework for this loan relief program, which was passed as part of the American Rescue Plan Act, is modeled on a bill called Emergency Relief for Farmers of Color Act, by Senator Raphael Warnock, D-Ga., And joined by Democratic Sense Cory Booker of New Jersey, Ben Ray LujÃ¡n of New Mexico and Debbie Stabenow of Michigan, in being part of the federal stimulus bill, despite opposition from Republicans in Congress.