The U.S. government's $2.65 billion operating loan program to help farmers keep their businesses going has already run out of cash for this fiscal year, as requests for federal financial assistance grow amid the worst agricultural downturn in more than a decade, U.S. officials said in an email on Monday.
As a result, the U.S. Department of Agriculture (USDA) is looking for other money sources "to help bridge the gap in farm operating loans as much as possible until additional funds are made available, either this year or in the next fiscal year," the agency said.
The agency declined to say what other funding it hoped to leverage for assistance.
Such loan guarantees and direct loans through the USDA's Farm Service Agency are often considered loans of last resort, say bankers and economists. Without the financial support, some farmers may struggle to survive until the next cash injection in the fall.
Last month, FSA officials said in an interview they had expected funding for these loans or guarantees to be depleted before the program restarts on Oct. 1, the beginning of the federal fiscal year.
As the rural sector struggles with low commodity prices and mounting trade competition, U.S. grain farmers are increasingly relying on the FSA for loan assistance. Agricultural lenders, too, are turning to the agency to help guarantee the loans they are issuing to farmers - whether for operational or real estate needs.
Even with the operational loan program funding depleted, the applications from farmers and bankers continue to grow.
"At this time, there are already tens of millions (of dollars) in backlog in Direct and Guaranteed operating loan accounts, and that number is expected to increase through the end of the fiscal year," the FSA said in an email on Monday.
FSA added that, overall, farmers and ranchers using the USDA farm loan programs are managing their businesses well and that the agency has not "seen significant increases in delinquencies or defaults" of these federal loans.
Last month, the FSA said it let Congress know it was tapping into $500 million in emergency funding to bolster a related program, its $2 billion guaranteed farm ownership loan program.
Such emergency funding options do not exist for the agency's operating loan programs, the agency added.
Altogether, the FSA's Farm Loan Programs are servicing or guaranteeing to cover operating costs, and to purchase or refinance farm property, for more than 113,000 borrowers for a total of nearly $23 billion.
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