Farmers Reject Disaster Loans

According to recent studies by the Associated Press, farmers across the country are declining federal disaster loans. While this fact alone does not necessarily demonstrate larger systematic problems with federal agricultural assistance programs, it raises some important questions.

Over the last year, nearly every state in the country has experienced some variety of severe weather. From flooding along the Mississippi River, to heavy rain in the Midwest, to droughts in the Southwest and Kansas, and hurricanes in the East Coast, farmers across the country have been battered by storms.

In spite of these major crop losses, few farmers have accepted federal disaster aid. Studies of Farm Service Agency loans reveal that only about 300 disaster loans have been made this year, totaling about $33 million. Compare this figure to the over $1 billion lost due to droughts in Texas alone.

Many farmers reject disaster aid because they simply don’t need it. Citing high crop prices and generous crop insurance programs, some farmers have the resources to recover on their own, with many having saved up from years of high crop prices.

Others cite high interest rates on federal disaster loans. FSA disaster loans carry an interest rate of 3.75 percent, significantly higher than standard FSA rates. Hoping to avoid falling deeper into debt, some farmers are simply holding out for FSA disaster grants, which do not have to be repaid.

In light of the reluctance to take advantage of disaster loans, some groups have pushed for their elimination in the upcoming Farm Bill. With Congress eager to cut up to $2 trillion from the federal budget, the disuse of disaster loans could spell their end.

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Written by: Justin Ellison / Farm Plus Staff Writer