Beginning and Socially Disadvantaged Farmer and Rancher Land Contract Guarantee Program
The Beginning and Socially Disadvantaged Farmer and Rancher Land Contract Guarantee Program is designed to encourage retiring landowners to sell to beginning or socially disadvantaged farmers and ranchers through private, contractual agreements.
The program was first created under the 2002 Farm Bill as a pilot program. The 2008 Farm Bill reauthorized the program to be nationwide.
Creative Ways to Access Land and Build Assets
Two of the greatest barriers for beginning farmers and ranchers are access to affordable, quality land and capital in which to begin farming. For beginners to get a foot hold as entrepreneurial farmers or ranchers, they must have access to those two critical elements - land and capital.
Many beginners will work for a farmer or rancher to gain knowledge and experience in running and operating a farm or ranch. Some of those beginners develop longer term relationships that can help them build assets and access land.
Farmers and ranchers who are seeking to retire can leave a lasting legacy by transferring their land to a beginning or socially disadvantaged farmer or rancher.
The ranch in central Nebraska (captured in the picture above) is working to integrate beginners by providing them access to land in which to use for their own production. The next phase would be to transfer ownership of some land through a private contract sale to a beginner interested in staying for the long haul. We all know it is hard for farmers or ranchers to ever really retire but for those ready to make that move, the Beginning Farmer Land Contract Guarantee Program could help make this a reality by providing the selling landowner a little peace of mind through a government backed guarantee.
How Does it Work?
Administered by the Farm Service Agency (FSA), the Land Contract Guarantee Program will provide a government backed guarantee to landowners who sell their land to a beginner or socially disadvantaged farmer or rancher through a private contract.
The program will be structured to provide the seller of the land one of two types of guarantees:
- “prompt payment” guarantee that covers 3 amortized annual installments or an amount equaling 3 amortized annual installments, including 3 years’ taxes and insurance; or a
- 90% principal loan value guarantee.
The guarantee will be in affect for 10 years.
EligibilityThe seller needs to:
- Self-finance the sale of their land, and
- Sell to either a beginning or socially disadvantaged farmer.
The buyer of the farm or ranch must:
- Be a beginning or socially disadvantaged farmer or rancher;
- Be not larger than a family farm (in which most of the management and labor is provided by family members);
- Have an acceptable credit history demonstrated by satisfactory debt repayment;
- Be the owner or operator of the farm or ranch when the contract is complete; and
- Be unable to obtain sufficient credit elsewhere without a guarantee to finance actual needs at reasonable rates or terms.
The parties interested must not be related.
Find the Farm Service Agency definition for beginning farmers and ranchers here.
The definition for socially disadvantaged farmers and ranchers can be found here.
Ready to Apply?Farmers, ranchers and landowners interested in this program need to contact their local Farm Service Agency office. Find your local office here.
Here at the Center for Rural Affairs, we operate a Landlink program, working to connect landowners with beginning farmers and ranchers.
For more information, contact Traci Bruckner by calling (402) 687-2103, Ext. 1016 or by emailing her at email@example.com
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