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Oregon Ripe for Aggie Bonds?

It’s no big secret that Oregon’s farmer population is aging. On the other hand, increasing demand for locally produced food provides opportunities for a new generation of sustainably minded growers to develop successful farms — if they can get financing, that is. 

A group of farmers and agriculture experts recently testified before the state Legislature on the difficulties small farmers, especially those new to the profession, face getting the credit necessary to purchase farmland or farm equipment. Though some Oregon farmers may qualify for the federal Farm Service Agency’s (FSA) Beginning Farmers and Ranchers Loans program, the state does not have its own credit program to assist inexperienced farmers break into the business.

On Feb. 12, the Oregon House Committee on Agriculture and Natural Resources held a hearing on HB 2700, which would create a Beginning and Expanding Farmer Loan Program to help farmers with less than 10 years experience buy land, equipment, livestock and seed. The program would utilize private bonds exempt from federal taxes, known as “aggie bonds,” which can be bundled with existing FSA lending programs and can lower loan interest rates by as much as 25 percent. Sixteen states already offer aggie bonds.

“The economic downturn and the credit crisis have erected new barriers for those seeking to purchase or refinance farmland,” wrote Michael Selvaggio, policy director for the Oregon State Treasury in testimony supporting the measure. “House Bill 2700 would take direct aim at these barriers, helping to provide low-cost farm loans to creditworthy borrowers who may not otherwise be able to get them.”

“I’m cautiously optimistic we’re going to get this done this year,” says Ivan Maluski, policy director for the Molalla-based Friends of Family Farmers, which is lobbying for the bill. “We had a good hearing on Tuesday. It was the first bill that had a hearing in the agriculture and natural resources committee. It has good bi-partisan support.”

Maluski describes the program as a “no brainer” that should pay for itself in loan fees after it is up and running. Representatives from the FSA, Oregon Farmers’ Markets Association, OSU’s Small Farms Program and Oregon Rural Action all provided testimony in support of the bill.