Farm Finance:

Number of New Farmers Is Declining

RCED-93-95: Published: May 3, 1993. Publicly Released: May 3, 1993.

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Pursuant to a congressional request, GAO provided information on people's entry into farming and on the Farmers Home Administration's (FmHA) implementation of Food, Agriculture, Conservation and Trade Act of 1990 provisions to encourage beginning farmers.

GAO found that: (1) the number of new farmers has declined by 25 percent annually due to the agricultural sector's poor economic conditions, the declining farm population and farm families' low birth rate, and obstacles to obtaining agricultural credit and suitable land; (2) FmHA does not target new farmers for assistance, and despite its lenient lending criteria, new farmers have difficulty in obtaining FmHA loans; (3) FmHA does give beginning farmers some priority over others in obtaining its farm inventory properties, but most properties are not suitable for new farmers; (4) some state programs target beginning farmers, but most only finance farmland acquisition, not operating expenses or debt refinancing; (5) beginning farmers often do not meet state eligibility requirements due to their inability to demonstrate they can repay loans; (6) FmHA has implemented only one beginning farmers provision of the 1990 act, partly due to its uncertainty over whether its authorizing legislation permits targeting of loan funds to beginning farmers, the existence of sales options available to all potential buyers, and competing demands for computer resources; (7) 1992 legislation directs FmHA to target its financial assistance to beginning farmers by establishing two new loan programs; and (8) FmHA is preparing proposed regulations to implement the recent legislation.

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