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“These data confirm what our senior farmers have been saying about the US Department of Agriculture for decades,” said Tracy Lloyd McCurty, executive director of the Black Belt Justice Center, a nonprofit legal and advocacy group that represents black farmers. It exposes the “abysmal failure” of previous legal settlements in tackling ubiquitous racial discrimination, she said.
How the government approaches USDA lending will be an important test of whether President Joe Biden can deliver on his broader pledge to combat racial discrimination.
The plan to use $ 4 billion from the latest coronavirus relief package to provide loans to farmers of color is now tied to legal claims from white farmers. But even if the USDA prevails in court, Agriculture Secretary Tom Vilsack will still face the daunting task of revising old practices and convincing black farmers and their supporters that change is here.
“The American Rescue Plan seeks to address the cumulative effects of this discrimination on socially disadvantaged producers,” said Vilsack told reporters in May. “I think there is a very legitimate reason for what we do. I think it has to be supplemented by additional steps. “
The USDA said it is reviewing all of the department’s agencies and programs through an internal working group. It examines how better technical assistance can be provided to socially disadvantaged and local producers and how access to land and markets can be improved. An external review is due to start in the fall.
“The secretary is determined to build a new USDA at all levels, but this work has only just begun and requires steady focus and one more step,” a USDA spokesman told POLITICO.
The work requires a fundamental rethinking of the decades-long USDA programs.
USDA is a sprawling bureaucracy with nearly 100,000 employees working in more than 4,500 locations around the world. Founded during the Civil War, the division claims to have a long history of bias against small farms in general, and black farmers in particular, many of whom operate farms with annual sales of less than $ 250,000.
Black farmers filed a class action lawsuit in 1997, complaining that the USDA refused to grant them timely loans and reschedules, forcing many to foreclosure.
An agreement in this case, Pigford v. Glickman, resulted in disbursements of up to US $ 50,000 per farmer in 1997 and 2010, but many farmers did not submit applications due to restrictive deadlines and cumbersome documentation. Proponents argue that the deal did not address the problems that arose from discriminatory lending.
The problem, many say, is local. The district offices of the USDA’s lending arm, the Farm Service Agency, are often the first and only point of contact for farmers seeking access to government assistance programs. Black farmers say their interactions with FSA officials, who play a vital role in making credit decisions, are plagued by racial bias, inexperienced staff, and a lack of bandwidth to assist with applications.
“I don’t even know if the USDA understands how widespread the problems are in these small local county offices in 2021,” said Carolyn Jones, a black farmer and executive director of the Mississippi Minority Farmers Alliance.
“The process in place prevents you from applying,” said Jones, citing problems such as overly complex applications, lack of access to a competitive market and overt discrimination.
To counter the differential treatment, the USDA should consider outside oversight of its branches and programs and reshaping its approach to lending, said Jillian Hishaw, who founded Family Agriculture Resource Management Services to help farmers from historically disadvantaged backgrounds Helping groups.
“There should always be an objective, external review, especially when it comes to lending and FSA,” Hishaw said, adding that the agency “should consider other criteria when it comes to loan qualification.”
Other proponents are pushing for Sen. Cory Booker’s Justice for Black Farmers Act to be passed, p. 300 (117) – laws they say contain many of the changes they would like to see at the USDA, such as increased oversight and to enable impartial lending to an independent financial institution.
Some argue that the USDA should rethink the criteria it applies to lending, which benefits large, affluent farms. The average farm for a black farmer is 132 hectares according to the 2017 agricultural census, the lowest of all socially disadvantaged groups. That compares to 431 acres for white farmers.
Cesar Escalante, a professor of agricultural science and applied economics at the University of Georgia who has looked at credit patterns for socially disadvantaged farmers, is co-author of a study published last year in the Agricultural Finance Review that shows that minority borrowers often have smaller loan amounts with larger ones Interest for getting worse results on credit scoring models.
“We know race is not a factor in determining creditworthiness,” Escalante said. “It depends on profitability and size.”
The size of the farm was also a reason why so few black farmers received grants under the Coronavirus Food Assistance Program, which were subsidies to farmers to offset the loss of sales during the pandemic. Black farmers received the lowest percentage among socially disadvantaged groups.
“It’s pretty clear that white farmers have done pretty well on this program because of the way it’s structured. It’s structured by size, it’s structured by production, ”Vilsack said recently during a press conference at the White House.
The total number of direct loans to black farmers has declined sharply in recent years, from a high of 945 in 2015 to a 10-year low of 460 in 2020. Direct loans are available to farmers for a variety of purchases, repairs and investments .
Bad credit is the number one reason black farmers have turned down direct loan applications, although the program is intended for farmers who cannot obtain loans from other financial institutions. That irony has not gone unnoticed by farmers like Travis Cleaver of Hodgenville, Kentucky, who says he has extensive experience working with USDA loan programs.
“If you have a good credit rating, they say, ‘Go to a credit institution, you don’t need us’. So it’s a double-edged sword, ”Cleaver said in an interview. “To me, it’s just a trick because you have bad credit or too good credit. You have too many loopholes. “
For their part, farmers would like the Agency’s local offices to play a more helpful role than has been the case in the past.
Thelonious Cook, who started a small Virginia farm in 2015, said when he asked his local FSA office about potential loans or programs for socially disadvantaged farmers, he was told none existed, although the agency is targeting some of the aid for that took group.
Cook said he was frustrated with the complicated application process as well.
“It’s a waste of time going through all the applications. You need someone to help you sift it. You need people who are there, ”he said.
That sentiment was corroborated by Cleaver, the black Kentucky farmer, who said the process of finding money to buy land can be especially daunting because it requires a letter of approval from a real estate agent prior to application.
“You could be wasting all your time getting a letter of approval and still not getting a loan. I probably screwed up the credit four times on the application just because I didn’t understand it, ”he said. “The package is so thick and so intimidating it’s not something you’re used to.”
What helped Cleaver was a woman in the FSA office who took the time to explain the process.
“She was like an angel. I was through the loan officer and the HBCU. went [historically Black colleges and universities] that was here and there was nothing they could do, ”he said. “[She] held my hand and she told me everything step by step. She was patient, she was polite. “