By ANN HINCH
Assistant Editor INDIANAPOLIS, Ind. — Several federal programs through the USDA will help qualifying farmers with a match of 50-90 percent to replace or repair critical geographical features of their land destroyed by recent floods – but what about farmers who can’t come up with the necessary 10-50 percent?
Last week, Indiana State Treasurer Richard Mourdock and Agriculture Director Andy Miller unveiled Mourdock’s $50 million Treasurer’s Conservation Assistance Program (T-CAP) for Hoosier farmers applying for one or more help programs through the Farm Service Agency and the Natural Resource Conservation Service.
The assistance – which is actually up to $50 million – is available to farmers who qualify for federal conservation assistance as well as a local bank loan between now and Dec. 31, 2008. Eligible programs include the Emergency Conservation Program (ECP), Conservation Reserve Program (CRP), Conservation Reserve Enhancement Program (CREP), Emergency Watershed Program (EWP) and Environmental Quality Incentives Program (EQIP).
“I don’t believe the waters had even crested on many parts of Indiana when the governor called and asked us to work on a way to help Indiana farmers,” Mourdock said on July 2.
That way was to look over the state budget – particularly, the General Fund – to see what uncommitted monies are available. Mourdock explained the $50 million represents maturities and other investments coming due this fiscal year, or money the state would be investing elsewhere again, anyway.
As to whether the state might make more than $50 million available, he and Miller said that number “is in a state of flux” until the actual extent of agricultural land damage can be determined.
Right now, the state knows about 9 percent of soybean and corn acres were washed out, but how much of this can be recouped for replanting in 2008 remains to be seen. Miller pointed out some lands may be so damaged that it takes two years to get them back to planting form; others may have to be put in a longer-term conservation program, unable to be planted again.
Once the treasurer’s office decided on the source, the next step was to figure out how to disseminate it. “We wanted to do leveraging in the areas that it would have the most impact,” Mourdock said.
What will happen is an Indiana farmer applies for federal assistance – this is for land cleanup and conservation structures such as erosion control, not for crop or livestock losses. Once approved and informed of the amount of his or her match, if they need a loan to meet their obligation, the farmer may apply at their local bank. If approved, the bank then goes to the state for funds.
The state will purchase certificates of deposit (CDs) from that bank, providing the funds to loan to the farmer. Mourdock said the state will accept reduced interest from the bank, at 1.5 percent below the federal rate, as low as 0.5 percent; in turn, the bank must promise not to add more than 2.25 percent to that when making the loan to the farmer.
(Example: If the federal rate is 2.0 percent, the state will accept a 0.5 percent rate of return on the CD instead. The bank may loan that money to the farmer for up to 2.75 percent, or 2.25 percent over the 0.5 percent.)
Mourdock said banks will use their usual criteria to determine whether to give a local loan, including assessing a farmer’s land value, collateral, income and insurance – the state will not dictate an institution’s approval.
“We’re simply going to back up the bank loan when they decide to make it,” he said.
He added under this scenario, the farmer gets a lower-rate loan than he or she might otherwise, the bank pays out less in interest on CDs and the state only loses a relatively small amount of money on its investment.
He estimated if the entire $50 million is used, it will cost the state approximately $1.1 million in potential lost interest income. In addition, the reduced rate is good for one year from when the recovery project actually begins. If a farmer applies and qualifies for federal help and a bank loan before the end of the year, but the actual work doesn’t begin until June 2009, for example, Mourdock said they will have one year from that time – until June 2010 – to repay the loan.
While he said there’s a tentative cap of $50,000 state share per individual loan, the treasurer said this is not written in stone. “We’re going to be as flexible as we need to,” he said.
Miller pointed out the biggest hurdle is informing farmers of their options and encouraging them to at least apply for federal help – and to do so quickly, as deadlines are approaching for some of these programs. “It’s very important for farmers not to assume that they can’t (qualify),” he said.
To learn more about T-CAP, visit www.state.in.us/tos/2829.htm
For information on USDA programs linked to this, visit www.in.nrcs.usda.gov and www.fsa.usda.gov |
