The American Rescue Plan offers debt relief for farmers of color, but structural factors have kept many from getting loans in the first place

By Charlie Mitchell

Mhonpaj Lee’s family has been farming in the Twin Cities area for decades. For the past fifteen years Lee and her husband have been working on four acres at Big River Farm, where they grow produce that they sell through farmers’ markers, a CSA, and, come pandemic, their own vegetable delivery service. Last year they took out a Farm Service Agency (FSA) loan to buy twenty acres of their own in Hugo, Minnesota. Lee, whose family migrated from Laos in the 1980s, told me she bought the lot in Hugo “for its potential.” It doesn’t have a well, but a “beautiful creek” runs across it, she told me. She’s looking for a builder to put a house on the hill. Already she sees her chickens running around the property, the pumpkin patch, the floral garden her sister will plant.

Historically, people of color have faced higher barriers to fulfilling their agrarian dreams than white Americans. Farmers of color have had a difficult time acquiring and keeping land in this country, due in part to the Department of Agriculture (USDA)’s long and shameful record of discriminatory loan practices, particularly toward Black farmers. The USDA’s FSA provides low-interest, farm-specific loans that give farmers a big leg up, but often, outreach to communities of color falls short, so few are even aware of the services. And even when farmers of color did acquire land, it was often systematically taken away. The results are predictable: according to a 2017 Census by the U.S. Department of Agriculture (USDA), people of color made up just 1.4 percent of the country’s farmers; in the Rust Belt, that number is 1.5 percent.

Mhonpaj Lee and her mother, May Lee, are the owners of Mhonpaj’s Garden in Hugo, Minnesota. Photo courtesy Mhonpaj Lee.

But the $1.9 trillion American Rescue Plan signed by President Biden last month included a surprising, historic provision: loan forgiveness, including tax liability, for farmers of color who have loans through the FSA or another USDA-guaranteed lender, and another $1 billion to improve programs and outreach by USDA to farmers of color. The provision is a major victory for advocates and will benefit a small group of farmers of color—including, perhaps, Mhonpaj Lee (she’s still waiting to hear from her loan officer at the FSA).

In the eyes of the USDA, Lee, who is Hmong, falls into the category “Asian American or Pacific Islander,” which qualifies her for loan forgiveness in the American Rescue Plan, alongside farmers labeled “Black/African American, American Indian or Alaskan native,” and “Hispanic or Latino.” Based on USDA data, 6,440 Rust Belt farmers fall into these categories. But not all of them have taken out the specific kind of FSA loans that will be forgiven under the program; that number is much, much smaller.

Here’s the math: according to the USDA, as of September 2020, the FSA had 605 outstanding loans from what USDA calls “socially disadvantaged” farmers in the Rust Belt states of Michigan, Minnesota, Illinois, Indiana, Ohio, and Wisconsin combined. “Socially disadvantaged” includes both women and people of color;according to the 2017 farm census, farmers of color made up 17.2 percent of this group; the rest, presumably, are white women. So if we apply that ratio to the 605 outstanding loans—which could be an underestimate, given that the region is whiter than other areas of the rest of the country—the FSA loan forgiveness will apply to around a hundred farmers in the Rust Belt, or just 1.5 percent of all regional farmers of color. (Commercial loans guaranteed by USDA will also be forgiven, but we don’t have data on that. However, it’s difficult to get loans on a farm business from a traditional lender, hence USDA’s FSA programs.)

Why is that number so low? One fundamental problem is that a lot of farmers of color just don’t trust the USDA.

Cary Junior founded SEMPA, the SouthEast Michigan Producers Association, eight years ago. SEMPA is a cooperative group of Black farmers from three counties surrounding the Detroit metro that pools farmers’ resources to bring produce to food insecure areas of the city. Junior has “a good relationship with USDA officials all the way up to Washington,” but none of his members have taken out loans, he said, “because of the whole history of USDA and Black farmers.”

Late in 2019, Junior was appointed to USDA’s Advisory Committee on Minority Farmers, where he’s trying to help the agency “understand what it takes to do outreach to these farmers.” It’s slow work. The cohort he works with is seventy years old on average and “already a bit stuck in their ways.” He knows his farmers don’t trust USDA, nor should they—he’s heard all the stories of Black farmers being lied to, ignored, and intimidated in FSA offices, and, he says, “unfortunately stuff like that is still going on.” But he also believes USDA support can be truly useful.

BruceMichael Wilson is a farmer based in Ottawa County, Michigan. Photo courtesy BruceMichael Wilson.

“I would like to work with the USDA as much as I can,” BruceMichael Wilson, a Black farmer in Southwest Michigan, told me. His parents were born into agrarian families in Mississippi; the land in his mother’s family was “taken out from underneath them,” and his father, a sharecropper, had been turned down at FSA before. They raised Wilson on a 160-acre plot in Hopkins, Michigan. He bought his own farm in the same area two seasons ago. “I know the history, so my part is to rehabilitate these things that my ancestors, my lineage, the people I’m connected to, have gone through.”

But even if you could take discrimination out of the equation, the structures built into the FSA to vet potential loan applications make it difficult for under-resourced farmers to navigate, and farmers of color face these conditions at much higher rates than white ones. Everybody I talked to agreed that the best way to qualify for and secure a USDA loan is to be a typical farmer with a long record of producing commodity crops or livestock with reliable, uniform value; own land and equipment to borrow against; and generally fit the expected model of a farm business. But farmers of color generally grow more “specialty crops,” such as vegetables and non-commercial meats—as opposed to large-scale commodity crops that make up the vast majority of farm production. And they’re far less likely to inherit land or family wealth that makes for effective collateral.

Two years ago, Colin Brown, a Black farmer who owns and runs Gifted Grass Farms in Medina County, Ohio, was looking for a $90,000 loan for a refrigerated van. He raises poultry, pork, and beef for restaurants, butcher shops, and farmers’ markets, and had been making deliveries with coolers and a minivan with the seats ripped out. So he went to the USDA. But even though he had a great relationship with his loan officer—he said she was “lovely,” and that she “tried to pull as many strings as possible to get the USDA to understand what it is that I do”—FSA’s paperwork and methods of evaluating loan applications couldn’t capture his business on paper well enough to deem him worthy of the full loan.

While Brown was able to secure $15,000—he paid it off in a year—“the $90,000 would have really gotten me the more appropriate funding to do what I needed to do.” It’s not a USDA problem exclusively, he said: “you would not believe how difficult it is for me to find any level of funding. It is incredible saying, ‘We had half a million dollars in revenue last year, and we’re growing every year,’ and they look at you like you’ve got three heads.”

Another challenge is the fact that to secure a loan from USDA, farmers must first be rejected by a traditional lender, which necessitates that the applicant begin the process in a weak financial position. Farmers are also asked to provide substantial capital for collateral, which limits upstart farmers massively, given that capital is something they inherently lack, unless they have inherited wealth or land to put at risk. There are workarounds within this system available to white people with ample capital, Lee told me, providing a generational advantage that has had direct and obvious consequences for the racial disparities in today’s farm economy—and the racial wealth gap in general.

Junior ran SEMPA as a volunteer for years, but recently secured a grant to run workshops for his members to help them improve business planning, learn about financing, marketing, and soil conservation, plan crops together, and find buyers they can work with collectively. He’s trying to find them markets to sell to schools or retail outlets. He told me that in Michigan, the USDA is making more of an effort to reach and resource Black farmers, and there’s a lot of nonprofit funding to build Black farmer capacity. So “on the one hand, the money is being spent,” he said. “But as you can see, the farms aren’t increasing.”

Colin Brown is the owner of Gifted Grass Farms in Medina, Ohio. Photo courtesy Colin Brown.

That’s where he’d like to see USDA push further: benefits won’t help the farmers who need them unless they address the structural issues keeping farmers of color out of the loop. “With the money that’s left, do extensive, aggressive outreach” to Black farming communities, Junior said, employing in the process people who live in those communities and can show a track record of earning farmers’ trust. The $5 billion appropriated in the American Rescue Plan has $1 billion set aside to “create a racial equity commission” and put resources towards “land access, outreach, education, assistance overcoming barriers to access to USDA programs, business development, and more.”

Fine, says Junior, but accountability is key. So are relationships. Because of the poor connection between his farmers and the USDA, he told me, they weren’t counted on the USDA Ag Census. If the USDA doesn’t know they exist, the department can’t send resources their way.

Mhonpaj Lee is also fond of her FSA loan officer, but she recognizes that she’s overworked and doesn’t have the support she needs. Lee pointed out that at the St. Paul Farmers’ Market, where she estimates that eighty percent of the farmers are Hmong, “none of them have USDA loans. They’re all renting.” The reasons why are consistent: “If you don’t speak English, first off, you won’t even get the loan,” she told me. “I spoke full English, and I still needed a consultant.” Her parents should have had access to subsidized credit, she said. “You should be able to walk in speaking your language and get these resources, and say, ‘I wanna buy this land.’”

As Lee and I spoke, she was driving to show a house. In addition to working as a mother of five and a vegetable farmer, she’s also a full-time realtor. Several years ago when she set out looking for land to buy, she found that realtors wouldn’t work with her because to get a farm loan, she couldn’t get pre-approval, a common obstacle for farmers seeking loans through FSA. So after two years she got her real estate license to go find land for herself.

Debt forgiveness would be a huge deal for Lee. With the mortgage for her land taken care of “we can put some of our money into the tractor and the fencing,” she told me. “We can operate our farm and continue to feed people.” To get the property farm-ready, a road also needs to be put in, and she told me the contractor she hired for the job has already run away with the $5,000 she was going to pay him to do it.

Toward the end of our conversation, Lee lamented the fact that decades of her life had already been guided by debt—first for college and grad school, then farming. Other structural factors compound the issue for immigrant families like Lee’s. Her father fought on behalf of the United States in Vietnam, in what’s known as the “secret war,” then came to the Twin Cities as a refugee. But because he was never a formal member of the U.S. military, he never received veteran’s benefits like the G.I. Bill or V.A. housing assistance, which provided so many American families with a pathway into the middle class. “If my dad was a veteran, I probably wouldn’t have to worry about this,” she said

Every farmer I spoke to saw their story in a generational context. BruceMichael Wilson told me: “I’m trying to help all my ancestors from the past, and whatever I can get out of this new bill…a lot of that’s going to be paying homage to the people that came before me that should have received it, because there’s a lot of farmers that are no longer with us that should have gotten relief a long time ago, a hundred years ago. And they just didn’t.” ■

Note: The latest updates to USDA’s rules and implementation for the debt forgiveness discussed in this article will be updated on Farmers.gov.

Charlie Mitchell‘s work has appeared in The New Republic, The Baffler, and Vox. He’s recently worked on Mark Bittman’s new book and a podcast for Wisconsin Farmers Union. He lives in Chicago.

Cover image by Christian Collins (creative commons).

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