While farmers in 55 Alabama counties now are eligible for low-interest federal loans because of a recent disaster declaration by U.S. Secretary of Agriculture Mike Johanns, one agricultural economist with the Alabama Cooperative Extension System says disaster relief for American farmers remains flawed.
“What we have in place now is a very poor safety net for our farmers,” says Bob Goodman. “But it’s better than nothing.”
Goodman says these loans will help farmers pay creditors but will not truly compensate farmers for their lost income.
“The loans will help farmers keep their noses above water,” he says. “But we have a lot of farmers who are teetering on the verge of going out of business. This freeze could be the tipping point for some.”
Farmers whose losses are in excess of their crop insurance coverage may qualify for loans at 3.75 percent interest from the USDA’s Farm Service Agency. They can use the money for a number of reasons. Some also may be able to defer payment on existing loans.
But Goodman says the difference between a farmer’s actual loss and crop insurance coverage may not be that large.
“That difference is the real limiting factor on how much a farmer will be able to apply for in loans,” says Goodman.
Goodman says now is the time to fix the problem.
“Congress and the U.S. Department of Agriculture are formulating the new farm bill,” he says. “They have an opportunity to address some of these issues in that new bill.”
Loss estimates top $75 million for Alabama farmers because of the Easter freeze.