USDA Announces New Conservation Loan Program

USDA Announces New Conservation Loan Program

USDA has launched a Conservation Loan program that will provide farm owners and operators credit to assist with the up-front cost of putting soil and water conservation measures on the land. The new conservation loans can be obtained through local Farm Service Agency offices.

FAQ: USDA has announced a new soil and water conservation loan program. What is it and how could it help our family farming operation meet our natural resource protection needs?

Answer: Provided by Brian Gossling, farm loan program director for USDA's Farm Service Agency in Iowa, located at the FSA state office in Des Moines.

On September 3 USDA announced a new Conservation Loan program that will provide farm owners and farm-related business operators access to credit to implement measures that will conserve natural resources. The CL program offers farmers who want to put soil and water conservation measures on their land a chance to do so by providing assistance with financing up-front costs. In return these farmers will help reduce soil erosion, improve water quality and promote sustainable and organic agricultural practices.

There are two types of Conservation Loans in this program—direct loans and guaranteed loans. Direct Conservation Loans can be obtained through local Farm Service Agency offices with loan limits up to $300,000. Guaranteed Conservation Loans up to $1,112,000 are available from commercial lenders working with FSA.

Q: What kinds of conservation practices can these loans be used for?

A: CL funds can be used for a wide array of conservation practices approved by USDA's Natural Resources Conservation Service (NRCS), including the installation of conservation structures; establishment of forest cover; installation of water conservation measures; establishment or improvement of permanent pastures; implementation of manure management; and adaptation of other emerging or existing conservation practices, techniques or technologies.

Q: What are the terms of the conservation loans? Interest rates? Length of loan? How are the loans structured?

A: The FSA Conservation Loans will be scheduled for repayment over a 7 to 10 year period, depending on the collateral used to secure the loan. Interest rates for guaranteed loans are negotiated with the lender. Interest rates for the direct loan program are equal to FSA's regular farm ownership loan rate. Right now, we are approving loans with an interest rate of 4.375%. Payments are typically scheduled to match the income stream for the farming operation and can vary from annual to monthly, with options in between.

Q: What is needed for a farmer or landowner to qualify for a conservation loan--either a direct loan or a guaranteed loan?

A: As it relates to loan eligibility, there are a couple differences between the Conservation Loan program and FSA's operating and farm ownership loan programs. Unlike these traditional loan programs, the Conservation Loan program does not require producers to try to obtain financing from conventional sources as the first financing option. Second, the program is not limited to family-sized operations. These differences will allow FSA to provide financing for some farming operations that have not been FSA loan customers in the past.

Q: USDA has for a long time had cost-sharing to help establish conservation practices such as terraces, grass waterways and other structures through the EQIP program. But has USDA ever had a loan program for conservation purposes before?

A: In the past FSA has financed conservation activities using the traditional FSA Operating and Farm Ownership Loan programs. It is fair to say USDA has not previously offered a loan program of this magnitude dedicated to conservation. The size of the loans available through this CL program should provide financing options for some projects that currently do not have a ready source of financing. There are some real opportunities for livestock operations, as well as operations looking at converting to organic or sustainable farming methods.

Q: What else do I need to know about the new CL program? Any other details about the program or things I should understand before I go in to my county FSA office to ask about a conservation loan?

A: The key for this program is the NRCS conservation plan. Conservation Loans can be made for any conservation activities included in the plan. The program can be used to provide "bridge financing" or construction financing to complete projects that will ultimately be funded through a cost-share or other program. There is a lot of flexibility with this new CL program.

For more information on the Conservation Loan program, contact a local FSA office or visit the FSA website at www.fsa.usda.gov.

If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.

Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.

And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com

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