The US Department of Agriculture has announced changes to its farm loan programmes aimed at cutting red tape and getting credit to producers faster, but farm groups say the bigger problem, borrowing limits that no longer match the cost of farming, can only be fixed by a new farm bill.

USDA is making permanent its fast-track application process for qualifying direct loan borrowers, which cut processing time by about eight days in a pilot. It is giving experienced agricultural lenders more authority to process guaranteed loans with less paperwork and fewer layers of review, and it plans to move from largely paper applications to electronic processing beginning in 2027.

Danny Munch, an economist with the American Farm Bureau Federation, said the steps help, but that farmland values, equipment costs and production expenses have risen sharply. "They can cut paperwork at USDA, modernize technology, but it can't independently raise those limits without a federal law change," he said.

According to Munch, the proposed farm bill would raise direct loan limits to $850,000 and $750,000, increase guaranteed loan limits and double the microloan limit to $100,000, and there is real demand for those programmes. "That's why the farm bill is so important," he said, adding that Farm Bureau hopes to see the bill passed soon.

For farmers facing tight cash flow, rising input costs and volatile markets ahead of the next season, the faster processing means quicker access to operating capital, while larger loans for expansion or land purchases wait on Congress.

Photo: JSquish / Wikimedia Commons (CC BY-SA 3.0)

Source: Michigan Ag Today