Stimulus Relief for Farmers & Ranchers

On March 11, 2021, President Biden signed into law another round of stimulus funding. This article highlights the agricultural provisions of the American Rescue Plan Act of 2021 (ARPA). For ease of reference, section numbers are included to help navigate the almost 600-page law. 

The ARPA also includes a variety of items, including aid for vaccinations and testing, state and local governments, schools, rental assistance, agriculture, and the airline industry. In addition, ARPA includes several tax-related provisions and additional business relief. For an overview of other ARPA provisions, see “Senate Passes Latest COVID-19 Stimulus Bill.”

Agriculture (Title I (A)) 

Food Supply Chain & Agriculture Pandemic Response (Section 1001)

The ARPA allocates $4 billion (available until expended) to the Secretary of Agriculture (Secretary) to be used to:

• Purchase food and agricultural commodities
• Purchase and distribute agricultural commodities (including fresh produce, dairy, seafood, eggs, and meat) to individuals in need, including through delivery to nonprofit organizations and through restaurants and other food-related entities, as determined by the Secretary, that may receive, store, process, and distribute food items
• Make grants and loans for small or midsize food processors or distributors, seafood processing facilities and processing vessels, farmers markets, producers, or other organizations to respond to COVID-19, including measures to protect workers against COVID-19
• Make loans and grants and provide other assistance to maintain and improve food and agricultural supply chain resiliency

Farm Loan Assistance for Socially Disadvantaged Farmers & Ranchers (§1005)

The ARPA provides a payment up to 120 percent of the outstanding indebtedness of each socially disadvantaged farmer or rancher as of January 1, 2021, for debt relief from a direct or guaranteed Farm Service Agency (FSA) loan or a Commodity Credit Corporation Farm Storage Facility loan. The extra 20 percent is intended to address taxes following the debt relief. Unlike other ARPA provisions, there is no cap on this expenditure, “such funds as may be necessary, to remain available until expended, for the cost of the loan modifications and payments.” 

For this relief, socially disadvantaged is defined by the Food, Agriculture, Conservation, and Trade Act of 1990 (FACTA), §2501(a), as a group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities. Other USDA regulations further define socially disadvantaged farmers and ranchers as belonging to the following groups: American Indians or Alaskan Natives, Asians, Blacks or African Americans, Native Hawaiians or other Pacific Islanders, and Hispanics. 

The FACTA definition does not include women. For the purposes of loan eligibility, the 1992 Consolidated Farm and Rural Development Act §355(e) added gender to the definition of a socially disadvantaged group. 

As of December 31, 2020, socially disadvantaged farmers had $3.1 billion in outstanding loans (both current and delinquent balances). USDA data indicates the biggest state with socially disadvantaged loans is Oklahoma, which has farmers from 38 federally recognized Native American tribes. 

USDA Assistance & Support for Socially Disadvantaged Farmers, Ranchers, Forest Landowners & Operators, & Groups (§1006) 

The ARPA allocates $1 billion (available until expended) to the Secretary of Agriculture for fiscal year 2021 to be used for:

• Using not less than $50 million to provide outreach, mediation, financial training, capacity building training, cooperative development training and support, and other technical assistance on issues concerning food, agriculture, agricultural credit, agricultural extension, rural development, or nutrition to socially disadvantaged farmers, ranchers, forest landowners, or other members of socially disadvantaged groups
• Using not less than $50 million to provide grants and loans to improve land access for socially disadvantaged farmers, ranchers, or forest landowners, including issues related to heirs’ property in a manner as determined by the Secretary
• Using not less than $5 million to fund an equity commission to address racial equity issues within the Department of Agriculture and its programs
• Using not less than $50 million to support and supplement agricultural research, education, and extension, as well as scholarships and programs that provide internships and pathways to federal employment

Conclusion 

BKD will continue to follow this developing situation. As with most topics related to COVID-19, changes are being made rapidly. Please note that this information is current as of the date of publication. Visit BKD’s COVID-19 Resource Center to learn more. If you have questions about these changes, contact your BKD Trusted Advisor™ today.

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