Author: Cesar Escalante

According to the latest national agricultural census (2017), minority farmers account for 9% of the country’s population of beginning farmers.  Asian and Hispanic Americans register the two largest shares of beginning farmers at 40.23 and 36.33 percent, respectively, of their group’s population.  Compared to other minority farmers and their White peers, farmers of Asian and Hispanic origins are usually 5 years younger than the average 60-year old American farmer and operate significantly much larger and more profitable businesses.   

The need for more new entrepreneurial activities in farming is well known, as the sector confronts an aging farmer population and business succession issues.  External financing is crucial to beginning operations, and access to credit has been a perennial concern among budding entrepreneurs unable to compete well with established firms in their loan applications.  After all, regular lenders’ loan approval decisions are not primarily based on business potentials but instead rely more heavily on concrete historical indicators, such as business and credit track records that start-up firms naturally do not have.

Beginning minority farmers can find financial support from USDA’s Farm Service Agency (FSA) through its loan programs designed to cater to their situations – one targeted towards the socially disadvantaged and another for beginning farmers. Consistent with its overriding mission to be the “lender of first opportunity”, FSA’s credit risk assessment policies deviate from commercial/private lending industry norms and may resolve the start-up borrowers’ otherwise limited access to credit.  Notably, FSA’s lending policy explicitly excludes the following in ascertaining “unacceptable credit history:” (1) any foreclosure, judgment, bankruptcy, or delinquent payment caused by temporary circumstances and beyond borrower’s control; (2) isolated instances of late payments that do not indicate an overall delinquency pattern; and (3) lack or absence of a history of credit transactions. Thus, as FSA opens its doors with such provisions, farms operated by beginning minorities can have a greater chance at overcoming start-up hurdles and building flourishing businesses.

Selected Revenue and Income Statistics, By Farmers’ Ethnic/Racial Group

Escalante, Cesar L. . “Alternate FSA’s Lending Programs for Beginning Minority Farmers“. Southern Ag Today 2(9.3). February 23, 2022. Permalink

During the pandemic, the farm sector’s real concern has not been a decline in demand, but rather supply chain disruptions.  Among these potentially disruptive factors was the mobility and availability of foreign contractual workers needed to sustain business operations.  In the early days of the pandemic, the government promptly released regulations to ensure that the supply of H-2A workers would not be hampered.  Indeed, H-2A labor petition approvals remained high during that time. However, border entry restrictions and strict screening procedures disrupted the flow of worker arrivals.  A survey was conducted among farms with approved H-2A petitions in three southern states (Georgia, Florida, and North Carolina) consistently among the top 5 states patronizing the H-2A program in recent years.  Results indicate that more than half of the expected H-2A workers were actually 3 to 5 weeks late in arrival.  In order to mitigate such conditions, the popular coping strategies employed by farmers include maximizing family labor contributions (62.5 percent), reducing off-farm employment hours (52.9 percent), and adjusting production methods to less labor-intensive alternatives (47.1 percent).  Reliance on domestic worker replacements was considered by 30% of the respondents, but this alternative was costly as farmers contend that labor productivity and efficiency differentials between domestic and H-2A workers led to about 52 percent decline in outputs during the interim period.  

H-2A Workers’ Actual Arrival Status during 2021 Planting Season, Survey on Georgia, Florida, and North Carolina Farms

Source:

Cowart, W.L., C.L. Escalante, and V. Shonkwiler. “Agribusiness Employers’ Coping Strategies and Business Effects of Pandemic-Induced Delays in H-2A Worker Arrivals.” Outreach Bulletin, Department of Agricultural and Applied Economics, University of Georgia.  August 2021. (Project is funded by the Georgia Farm Bureau)

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Escalante, Cesar. “Coping with Delayed H-2A Worker Arrivals During the Pandemic.” Southern Ag Today 1(51.3). December 15, 2021. Permalink