Forum Shares ISU Research on Farmer Use of Conservation Loans

Forum Shares ISU Research on Farmer Use of Conservation Loans

Study finds out how farmers are using low-interest loans to address soil erosion and water quality concerns.

When a state of Iowa program introduced low-interest loans for soil and water conservation for farmers and livestock producers in 2005, no one knew whether they would be willing to borrow for conservation improvements. The conventional wisdom was that crop and livestock farmers needed grants or cost share. On July 8, 2009 a public forum was held in Des Moines to discuss the results of a study that found out how farmers in Iowa are using those loans to address water quality concerns. Since the program began, farmers have borrowed more than $34 million to prevent sediment, chemicals and nutrients from polluting Iowa's streams and rivers. However, use of the loans has varied around the state and program managers wanted to know why.

What's impact of program on Iowa land, water?

"We asked Iowa State University to study producers who took loans, versus those that didn't," says Bill Ehm, Iowa Department of Natural Resources coordinator for water quality. "We wanted to know the potential impacts of the loan program on Iowa's land and waters." ISU Extension Sociologist J. Gordon Arbuckle Jr. presented highlights of the study at the July 8 program in the auditorium of the Iowa Historical Building at 600 East Locust Street in Des Moines.  Ehm asked ISU researchers to identify why some Iowa producers were not taking advantage of the program, which caps interest rates at 3%. Initial findings indicate that not all parts of the state were equally aware of the program. However, in areas where staff understood and actively promoted the program, usage tended to be higher.

Farmers are willing to use low interest loans

"The study has shown that farmers are willing to finance conservation when low-interest loans are available," says Ehm. "We gained information that indicates borrowing can be a useful tool for producers who want to improve their management practices." Other findings show that people who used the loan program were very satisfied. In general, they tended to spend more on conservation than the farmers who funded their conservation practices through cost-share programs.  "The results are striking," says Arbuckle. "On average, loan recipients spent 25% more on conservation practices and implemented a greater variety of practices than folks who relied primarily on cost share. The loans appear to help them make significantly larger investments in conservation over shorter periods of time."  The loans are available through the State Revolving Fund, an Iowa program aimed at improving water quality. Loans are offered to farmers and livestock producers through a partnership between the DNR, the Iowa Finance Authority, the Iowa Department of Agriculture and Land Stewardship, and local Soil and Water Conservation Districts. For more information about the loans, see www.iowasrf.com.  For a copy of the report, see www.soc.iastate.edu/staff/arbuckle.html.

TAGS: Livestock
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