USDA’s Lending and Conservation Assistance for Beginning Farmers Has Increased

USDA’s lending and conservation assistance to beginning farmers has  been substantial and is growing. From fiscal year 2000 through 2006, FSA  increased its lending to beginning farmers from $716 million to $1.1 billion  annually, for a total of more than $6 billion during the period. Also, from  fiscal years 2004 through 2006 (the most recent years for which data are  available), NRCS’s assistance to beginning farmers through two key  conservation programs nearly doubled, from over $47 million to about $92  million. However, it is unable to demonstrate the effectiveness  of its assistance to this group because (1) it does not have a crosscutting,  departmental strategic goal to guide its beginning farmer efforts and  because (2) it has only recently begun to develop information on the  characteristics of beginning farmers, which will supplement its existing  research on the age of farmers and changes in the number of farms. USDA Lacks a Crosscutting, Departmental Strategic Goal for Its Beginning Farmer Efforts

Although many reasons exist for helping beginning farmers, USDA has not  transformed these reasons into a crosscutting, departmental strategic goal  that demonstrates the outcomes it expects its beginning farmer efforts to  achieve. Stakeholders cite additional reasons for beginning farmer assistance, such  as promoting social change by increasing the number of immigrant and  minority farmers and changes to the structure of agriculture by increasing  the number of small and middle-sized farms. In 2006, USDA incorporated beginning farmers into its small farms policy  to better recognize the importance of assisting beginning farmers. However, the  policy does not provide a management and accountability focus for  USDA’s efforts. While USDA has not established a crosscutting, departmental strategic  goal for beginning farmers, two USDA agencies—FSA and RMA—have  each developed their own beginning farmer performance goals. These  goals set targets for the volume of their beginning farmer activities—the  number of farmers assisted and the dollars they receive—rather than  outcomes. Among other things, recently  developed analysis of existing data shows that beginning farmers are  younger than established farmers (about 7 in 10 beginning farmers are  under 55 years of age), operate smaller farms, and are slightly more  ethnically diverse and female than other farmers. For example, ERS economists found that roughly one- third of beginning farms in 2005 had no agricultural output and were likely  operated by individuals interested in a rural residential lifestyle. Additional baseline data about  beginning farmer characteristics that provide insight into who beginning  farmers are, which ones USDA assists, and how beginning farmer  operations in agriculture change over time should (1) help USDA track the  changes within this group, (2) provide a basis for more in-depth analyses  about the effects of existing programs on beginning farmers, and (3) help  identify the need for new forms of assistance. Our objectives were  to (1) identify the key steps USDA has taken to help beginning farmers and  (2) assess USDA’s actions to measure the effectiveness of these steps. We focused on departmental efforts to assist beginning  farmers, as well as efforts by individual agencies such as the Farm Service  Agency (FSA) and Natural Resources Conservation Service (NRCS). has not operated a farm or ranch or  has operated a farm or ranch for not  more than 10 years  has not operated a farm or ranch, or  who has operated a farm or ranch for  not more than 10 consecutive years will materially and substantially will materially and substantially  participate in the operation of the farm  or ranch  participate in the operation of the farm  or ranch meets the loan eligibility requirements  of the program to which he/she is  applying  agrees to participate in such loan  assessment, borrower training, and  financial management programs as  the Secretary requires  demonstrates insufficient resources to  continue farming or ranching on a  viable scale  does not own a farm greater than 30  percent of the average size farm in  the county (farm ownership loans  only)

Appendix VI: Comments from the Department of Agriculture

Appendix VII: GAO Contact and Staff Acknowledgments

	Staff Acknowledgments

In addition to the individual named above, Charles Adams, Assistant  Director; Kevin Bray; Barbara El Osta; Paige Gilbreath; Lynn Musser; Carol  Herrnstadt Shulman; and Tracy Williams made key contributions to this  report.
Why GAO Did This Study

U.S. Department of Agriculture (USDA) programs have long supported beginning farmers. USDA generally defines a beginning farmer or rancher as one who has operated a farm or ranch for 10 years or less--without regard for age--and who materially and substantially participates in its operation. USDA's Farm Service Agency (FSA) makes and guarantees loans for farmers who cannot obtain commercial credit, including beginning farmers. FSA also reserves funds for beginning farmers within its loan programs. USDA's Natural Resources Conservation Service (NRCS) provides higher conservation payments for beginning farmers through two of its conservation programs. GAO reviewed the key steps USDA has taken to help beginning farmers and assessed the department's actions to measure the effectiveness of these steps..

What GAO Found

USDA's lending and conservation assistance to beginning farmers has been substantial and is growing. USDA supports beginning farmers primarily through its lending assistance. From fiscal years 2000 through 2006, FSA's lending to beginning farmers rose from $716 million to $1.1 billion annually--totaling more than $6 billion. In addition, from fiscal years 2004 through 2006, the most recent years for which data are available, NRCS's annual financial assistance for beginning farmers through two key conservation programs nearly doubled from over $47 million to nearly $92 million, for a total of $233 million. However, USDA cannot demonstrate the effectiveness of its support for beginning farmers, because it has not developed a crosscutting, departmental strategic goal for its beginning farmer efforts and has only recently begun to analyze the characteristics of this group. Specifically, USDA has not developed a crosscutting, departmental strategic beginning farmer goal that demonstrates the outcomes it expects its beginning farmer efforts to achieve. Such a goal might address, for example, promoting demographic change, such as by decreasing the average age of farmers or changes to the structure of agriculture, such as by increasing the number of small and middle-sized farms. USDA has incorporated beginning farmers into its existing policy for maintaining the viability of small farms. Although this provides added recognition of the need to assist beginning farmers, USDA's policy does not establish a crosscutting, departmental strategic goal that provides a management and accountability focus for the department's several efforts. Furthermore, USDA tracks the numbers of farmers it assists and the dollars they receive, rather than its progress toward achieving a particular beginning farmer outcome. Having a crosscutting, departmental strategic goal could provide better insight into the desired outcomes and impact of USDA's beginning farmer efforts. USDA is just beginning to develop data about the characteristics of beginning farmers to supplement its existing analyses about the age of farmers and changes in the number of farms. For example, one recent analysis shows that beginning farmers are younger than established farmers, operate smaller farms, and are slightly more ethnically diverse and female than other farmers. Another indicates that roughly one-third of beginning farms in 2005 had no agricultural output and were likely operated by individuals interested in a rural residential lifestyle. Continued analysis of such characteristics and trends could provide better insight into who beginning farmers are, which ones USDA assists, and how beginning farmer operations change over time.