HR1991-119

What This Bill Does

The Producer and Agricultural Credit Enhancement Act expands federal farm-credit tools under the Consolidated Farm and Rural Development Act. It raises farm ownership loan limits from $600,000 to $850,000 for direct loans and from $1.75 million to $3.5 million for guaranteed loans, and raises operating loan limits from $400,000 to $750,000 for direct loans and from $1.75 million to $3 million for guaranteed loans. It changes the inflation adjustment from the Prices Paid By Farmers Index to an equally weighted measure based on average U.S. farm real estate, cropland, and pasture values published by USDA's National Agricultural Statistics Service. It revises down-payment loan calculations so the 45 percent limit applies to the lesser eligible amount subject to section 305(a), doubles microloan limits from $50,000 to $100,000, and requires the Farm Service Agency to issue regulations within one year allowing distressed guaranteed loans to be refinanced into direct FSA loans if the borrower has tried unsuccessfully to work with the lender, the operation has a reasonable chance of success, and taxpayer-protection criteria are met.

Who Benefits and How

Farmers and ranchers benefit because higher direct and guaranteed loan caps can finance land, operating costs, and equipment at modern price levels. Beginning farmers benefit from more flexible down-payment loan calculations and larger microloans. Distressed farm borrowers benefit from a potential refinancing path out of guaranteed loans into direct FSA loans. Family farms benefit because the bill's credit changes are aimed at producer demand and farm viability rather than large corporate finance. Farm Service Agency lenders benefit from clearer statutory authority to refinance certain troubled guaranteed loans.

Who Bears the Burden and How

The Farm Service Agency must update loan limits, indexing calculations, down-payment rules, microloan rules, and refinancing regulations. Private guaranteed-loan lenders may lose some distressed guaranteed loans if borrowers refinance into direct FSA loans. Federal taxpayers bear larger credit exposure from higher loan caps and distressed-loan refinancing. USDA loan officers must evaluate borrower workout efforts, distress, reasonable chance of success, and taxpayer-protection criteria.

Key Provisions

• Expands farm ownership loan limits to $850,000 for direct loans and $3.5 million for guaranteed loans.
• Expands farm operating loan limits to $750,000 for direct loans and $3 million for guaranteed loans.
• Amends inflation indexing to use USDA land-value measures for farm real estate, cropland, and pasture.
• Expands microloan limits from $50,000 to $100,000 and modifies down-payment loan calculations.
• Requires FSA regulations for refinancing certain distressed guaranteed loans into direct loans within one year.