Black farmers worry new approach on "race neutral" lending leaves them in the shadows

Farmers of color across the country, who'd been promised debt cancelation as part of a special program to address racial disparity in lending, rejoiced when they received letters in 2021 in the mail that said their loans with the Agriculture Department would be canceled.

And then, for over a year, there was nothing.

Multiple lawsuits led by white farmers, who said the program discriminated against them for being white, stymied the race-targeted program.

The debt forgiveness was a congressional effort to help USDA make up for a history of discrimination. For decades, farmers of color have filed individual lawsuits, class action lawsuits and congressional testimony against the department. And for decades, rulings and reports have repeatedly concluded that USDA's lending practices have been discriminatory.

Now, USDA is in the process of rolling out a second, newer, program passed by Congress as a part of the Inflation Reduction Act. But the $3.1 billion now appropriated as payments toward loans don't just go to racial and ethnic minorities. They also go to some white farmers under a new category: "economically distressed."

Economically distressed means farmers of any race who are behind on loan payments or on the brink of foreclosure.

And since this new program is now race-neutral, those who are particularly concerned about the disparate impact of lending practices on Black and other farmers of color say the move could hide the scope of the problem and lead to further disenfranchisement.

Farmers of color wonder if relief is being received as intended

In October, USDA began making automatic payments to the accounts of farmers who were 60 days or more delinquent. In some cases, payments were made without notifying the borrower: a pleasant surprise in some cases and procedural confusion in others.

However, advocates and producers complain there is a lack of clarity and transparency about who is getting the money.

"You lose a lot of the trust when there was very little trust in the beginning," said Brandon Smith, a cattle rancher in Texas who received a payment and is an outreach coordinator for the Federation of Southern Cooperatives/Land Assistance Fund. "No one's trying to be ungrateful, but it's just the trust and what was promised to them."

As of Jan. 30, the USDA paid out more than $823 million for the Inflation Reduction Act program to farmers who were either delinquent on payments or on the verge of foreclosure.

"The steps we've taken so far are really for lack of a better analogy, to stop the bleeding," said Zach Ducheneaux, administrator of the Farm Service Agency, the lending arm of the department.

He said the next step is to deal with 15,600 "complex cases," including borrowers on the brink of foreclosure and those near delinquency.

"As far as I know, we haven't had any foreclosures in our guaranteed loans since we started providing this assistance. That's an ongoing process to clean up those complex cases," Ducheneaux said. "And, of course, having a bankruptcy judge and other creditors make those even more complex."

This case-by-case funding will include some $500 million in payments.

USDA has not outlined what it will do with the remaining over $1 billion allocated by Congress.

States with "Economically distressed borrowers" net high dollars

Data obtained by NPR show that Oklahoma, Arkansas, Texas and Puerto Rico are receiving the largest amounts of dollars from the Inflation Reduction Act towards economically distressed borrowers.

Oklahoma, Arkansas and Texas also happen to be the largest states for FSA lending for what USDA labels "socially disadvantaged" producers – which are people of color and white women. Oklahoma leads the way in lending to those types of borrowers.

These were also the states that were expected to benefit the most from the original race-targeted program.

It is unclear, however, how many of these "socially disadvantaged" borrowers are people of color.

In the state of Oklahoma, out of 129,619 total producers in Oklahoma, 9.2% are American Indian/Alaska Native and 1.4% are Black or African American, and .4% Asian compared to 84.9% white, according to the self-reported 2017 Agriculture Census.

Puerto Rico, which has not recovered from the destruction caused by Hurricane Maria in 2017, also has a large percentage of socially disadvantaged borrowers.

It has a farming population of 8,230 of which 7% identify as Black, 90% identify as white, .8% as other and 1% as more than one race, according to the self-reported 2017 Census of Agriculture. About 99%, regardless of race, identify as Hispanic or Latino ethnic origin, making them socially disadvantaged.

"Economically, they are (also) disadvantaged. That's not surprising to me," said Iris Jannett Rodriguez, president of the coffee sector of the Puerto Rican Farm Bureau. "Many farms might have a lot of land but the land that is producing crops is really small."

Almost any way you slice the numbers: looking at raw totals of borrowers and dollars, or average payments per borrower or loan, Puerto Rico – which is not among the nation's top agriculture producers – consistently lands among the top recipients. With 820 direct loan borrowers receiving $72.3 million and two guaranteed loan borrowers receiving $1.3 million in payments, Puerto Rico ranks fourth in the nation for highest borrowers and IRA payments.

"Both Oklahoma and Puerto Rico have a large share of farm loans. Therefore, it is not surprising that they also have more distressed borrowers relative to other states," said Marissa Perry, press secretary for USDA regarding the rates of payments made toward both states. "In the case of Puerto Rico, in recent years, a number of natural disasters have contributed to delinquencies."

But advocates say they fear the money may now not be reaching all of the producers who benefited from the first program.

USDA officials say that since Congress did not make race a consideration for payments, it does not track that data. Nonetheless, some patterns stick out because some of the states with the highest number of USDA loan borrowers who are socially disadvantaged are getting the most of the IRA payments.

As a part of the American Rescue Plan, the early 2020 pandemic relief bill, lawmakers approved $5 billion toward debt relief and cancellation for minority farmers. The legislation was specifically targeting what was labeled "socially disadvantaged" farmers, or African Americans, Hispanics, Asian Americans and Native Americans, Alaska Natives and Pacific Islanders.

But the program was swiftly blocked by about 12 lawsuits, including one out of Texas led by former President Donald Trump's adviser Stephen Miller and current state Agriculture Commissioner Sid Miller. They argued the program was discriminating against white farmers for being white.

Lawmakers then repealed the program and passed a second one through the Inflation Reduction Act.

"The passage of the Inflation Reduction Act was absolutely a tough pill to swallow with regard to the overturning of American Rescue Plan [program]," said Dãnia Davy, director of Land Retention and Advocacy at the Federation of Southern Cooperatives/Land Assistance Fund, however adding that some results have benefited her membership. "I have to say that a lot of our farmers ultimately have been very positive as they've received benefits under the Inflation Reduction Act that some folks didn't even anticipate receiving. So it's actually been a surprisingly positive response."

The first program was specifically supposed to provide redress to farmers of color, many of who had been a part of class action lawsuits against USDA. Plaintiffs under Pigford v. Glickman, the lawsuit brought by Black farmers settled in 1999. However, tens of thousands missed out due to confusing paperwork and filing deadlines and near attorney malpractice, advocates say.

In 2010, Congress appropriated an additional $1.2 billion in a second round of payouts. But still, many did not receive them due to more denials of claims and deadline and processing issues. Plaintiffs fell even further behind on payments and legal fees — hurting their credit and bottom line for decades to follow.

"There are people who are still living from the first round of Pigford and they've never been made whole," Davy said. "And a lot of times when people talk about Pigford, they think that Pigford addressed all of the racial discrimination that Black farmers faced, but it was really for a finite period of time."

Smith says producers are happy about payments but upset there isn't full loan forgiveness and confused about the rollout.

"They feel robbed about that part," Smith said. "The law was passed almost six months ago and it seems like they [USDA] are a little sluggish."

Much of the money remains to be doled out.

Smith said farmers who received notice in 2021 that their debt would be forgiven sat in limbo for a year, leading to many of them feeling like the department slow-walked the rollout of the original program, giving time for lawsuits to stall it.

"They were promised something by the government and then put on hold for over a year and a half," Smith said. "They were told money was allocated to them during the pandemic. They were not able to use those funds. Now the Inflation Reduction Act was passed, they added more money to that pool but they aren't doing debt forgiveness. They just had a couple of payments."

In response to the concerns, USDA said they worked quickly to dole out the funds to farmers most at risk of losing their farms. The department is now in a more complicated phase, it said.

"This work requires diligence and time to make sure we are doing right by producers and fundamentally changing our approach to be better and in a long-lasting way," said Dewayne Goldmon, senior advisor for racial equity to the Secretary of Agriculture. "I'm in this job to advance racial justice and opportunity – and we will keep mending and improving our approach at USDA to ensure Black farmers and any other farmers who have been left behind in the past are no longer left behind."

Black farmers' concerns over equity remain

Still, some farmers of color argue that they have still not benefited from a program originally designed to help them.

Eddie Lewis, a farmer in Louisiana, said he falls into that "complex case" category — he is delinquent $600,000. While he was poised to receive cancellation under the first program, the delay to get any payment under the new program is affecting his ability to get the capital he needs, he said.

"I would be the perfect candidate for a case-by-case basis. I'm a good farmer. I got good yields, I got good character. I got good credit," he said. Lewis is in limbo, unable to secure other loans he needs because of the outstanding delinquency.

Advocates are also concerned that Black farmers who led the movement to get a debt-relief program will be left out of it.

In June 2022, Rep. Alma Adams, a North Carolina Democratic member of the House Agriculture Committee, sent a letter to USDA asking them to use money appropriated in another section of the COVID-19 relief package, also aimed at tackling inequity, to cover the costs of debt to Black farmers while litigation on the debt relief program continued.

Adams argued that according to USDA data, only 3,100 Black farmers would be eligible for the relief totaling less than $300 million. The most recent FSA report released in September shows the cost of 5,970 loans taken out by "socially disadvantaged farmers," including white women, was $1.2 billion.

Advocates say the amount needed to cover the debt of farmers of color, and especially Black farmers, is so small that the funding should be appropriated — especially out of a multibillion-dollar program.

"Unfortunately, our folks have been so shortchanged that I think the numbers will probably bear out that there's still a significant number of white farmers who not only benefited from the subsidies and the COVID benefits but now even IRA," Davy said. "I think that program can't truly be called a success for civil rights because you have to really intentionally address racial discrimination if you want to call it a success for civil rights."

However, other farmers argue that the new, race-neutral program may be better at providing aid to those immediately struggling without triggering lawsuits. And many of them happen to be farmers of color.

In defense of the original race-targeted program, the government argued in court that white farmers were far less likely to be delinquent on their loans. The ratio of white borrowers who are delinquent on FSA loans in 2021 was 11%, compared to 38% of Black borrowers, 15% of Asian borrowers, 17% of American Indian and Alaskan Natives, and 68% of Hispanic borrowers.

Rod Simmons, a farmer in North Carolina, at first struggled with the department. He cited familiar problems, like a confusing application process and deadlines, as barriers he faced getting involved with the department's programs.

When the pandemic hit, he lost 22% of his inventory. He was on the verge of liquidating his assets in order to get money to make the loan payments And then the Inflation Reduction Act loan payment came through, it amounted to two years worth of money he owed.

"My granddad had never seen any type of program in his time that made an impact for farmers like this one did," Simmons said. "Now, the programs can be designed in a manner that will cater to those that need it versus those that want it. And there's a big difference."

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