2: Rural and Farm Economies
Enhance the Competitiveness and Sustainability of Rural and Farm Economies Other Information:
An economically prosperous agricultural production sector contributes to the Nation’s economic vitality and standard of living.
Consumers benefit from efficiently produced and marketed agricultural products that minimize their food costs and maximize
their consumption choices. The sector’s success depends on the ability to expand into new markets, gain adequate capital,
protect itself adequately against financial risk and adjust to changing market conditions. This success also depends on the
economic well-being of producers and their ability to increase production potentially through increased farm acreage and/or
other methods, maintain their farms and equipment, and utilize tools to mitigate risks associated with various aspects of
production. There is much diversity in the farm sector driven by diversity in resources, climate, individual preferences,
and even lifestyles. The needs, concerns, and opportunities of larger, commercially oriented farms differ from those of smaller,
intermediate farms, regardless of location. For these reasons, USDA has a variety of farm related programs designed to enhance
the economic opportunities for all agricultural producers, while providing individual producers options in terms of what is
best for them in their specific situations. Through the Federal Crop Insurance Corporation (FCIC), the Department provides
insurance that allows the individual producer the flexibility of determining the appropriate level and type of insurance they
need to protect their operation. The Department partners with commercial lenders to guarantee ownership and operating loans.
It also makes direct loans to producers to finance operating expenses and farm ownership loans. USDA provides income stability
to keep producers economically viable through economic safety net programs in the form of crop insurance, direct payments,
marketing assistance loans and commodity support programs. When natural disasters strike, USDA reacts quickly to help affected
producers recover from their losses and restore their lands to prior productivity levels. USDA supports much-needed basic
research, economic analysis, and baseline information to identify new uses and more efficient technology for producing and
marketing agricultural products. USDA marketing programs help agricultural producers to determine consumer preferences, find
more efficient and effective ways to transport and market and receive fair payment for their products. USDA constantly works
with the agricultural community to monitor changes in production and processing methods, and in consumer preferences. By adjusting
services or developing new market facilitating programs, USDA ensures that these programs continue to help producers to be
successful in meeting the needs and expectations of consumers. USDA’s Noninsured Crop Disaster Program (NAP) reduces agricultural
producers’ economic losses due to natural disasters. NAP provides financial assistance to producers of noninsurable crops
when natural disasters cause low yields, loss of inventory or prevent planting. To be eligible for NAP assistance, crops must
not be insurable through the Federal crop insurance program. The USDA farm credit programs provide an important safety net
for producers temporarily unable to obtain credit from commercial sources. Financial risk derives partially from the lag between
the costs incurred and the revenue generated. Agricultural producers unable to obtain sufficient credit at reasonable rates
and terms risk being unable to afford the up-front costs for a successful farming operation. The Department expands and improves
these safety net programs, and provides research and education to help producers better manage their natural, financial and
market risks. USDA also ensures that minority and socially disadvantaged farmers and ranchers have the opportunity to participate
fully in all programs. To provide income stability, USDA makes direct payments to farmers, ranchers and eligible landowners.
The Department works diligently to provide assistance and marketing loans promptly, efficiently and equitably. During the
next six years, USDA plans to increase the percentage of transactions completed via the Internet. Administering farm programs
in a Web environment will reduce greatly the number of hours needed to verify and disburse program benefits. This plan also
will improve customer service and satisfaction by delivering benefits to producers in a timely manner. USDA loan programs
allow farmers and ranchers to acquire loans that they cannot obtain through traditional credit sources and reasonable rates
and terms. USDA specifically allocates funds and offers programs to beginning farmers, minorities and women. By providing
loans and loan guarantees, the Department aids and sustains the productivity of family-sized farms and ranches. USDA underwrites
high-risk loans to minimize losses caused by loan defaults. One major initiative that will improve USDA’s loan programs is
the development of a Web-based farm business plan. This Web-based system provides farmers and ranchers with better business
and management planning. It also enables USDA to manage its loan portfolio better. Once the system is populated adequately
with borrower data, USDA will be able to perform more thorough analyses of its borrowers’ financial positions. This effort
will lead to earlier identification of borrower financial weaknesses, enhanced performance measurement and improvements in
overall program management. Farming in the 21st century requires substantial resources and extensive management skills. USDA
farm programs help agricultural producers obtain the commercial and non-commercial credit they need, manage the risks associated
with agricultural production, improve good farming practices and become good stewards of the land, and recover economically
and structurally when natural disaster strikes.
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