Text: H.R.2348 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in House (05/16/2007)


110th CONGRESS
1st Session
H. R. 2348


To amend the Farm Security and Rural Development Act of 2002 to support beginning farmers and ranchers, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

May 16, 2007

Ms. Herseth Sandlin (for herself, Mr. Walz of Minnesota, and Ms. McCollum of Minnesota) introduced the following bill; which was referred to the Committee on Agriculture


A BILL

To amend the Farm Security and Rural Development Act of 2002 to support beginning farmers and ranchers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “Beginning Farmer and Rancher Opportunity Act of 2007”.

(b) Table of contents.—The table of contents for this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Beginning farmer and rancher development program.

Sec. 3. Beginning farmer and rancher individual development accounts pilot program.

Sec. 4. Down payment loan program.

Sec. 5. Beginning farmer or rancher contract land sales program.

Sec. 6. Inventory sales preferences.

Sec. 7. Agricultural loans.

Sec. 8. Loan authorization levels and fund set-asides.

Sec. 9. Soil and water conservation and protection.

Sec. 10. Conservation Reserve Program transition incentives.

Sec. 11. Conservation cost sharing.

Sec. 12. Research programs.

Sec. 13. Risk management education for beginning farmers or ranchers.

SEC. 2. Beginning farmer and rancher development program.

(a) Grants.—Section 7405(c) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 3319f(c)) is amended—

(1) in paragraph (1)—

(A) in subparagraph (I), by inserting “, including energy conservation and efficiency” before the semicolon; and

(B) in subparagraph (K), by inserting “, including transition to organic and other source-verified and value-added alternative production and marketing systems”;

(2) by striking paragraph (3) and inserting the following:

“(3) MAXIMUM TERM AND SIZE OF GRANT.—

“(A) IN GENERAL.—A grant under this subsection shall—

“(i) have a term that is not more than 3 years; and

“(ii) be in an amount that is not more than $250,000 a year.

“(B) CONSECUTIVE GRANTS.—An eligible recipient may receive consecutive grants under this subsection.”;

(3) by redesignating paragraphs (5) through (7) as paragraphs (9) through (11), respectively;

(4) by inserting after paragraph (4) the following:

“(5) EVALUATION CRITERIA.—In making grants under this subsection, the Secretary shall evaluate—

“(A) relevancy;

“(B) technical merit;

“(C) achievability;

“(D) the expertise and track record of the principal partners;

“(E) the adequacy of plans for participatory evaluation process, outcome-based reporting, and the communication of findings and results beyond the immediate target audience; and

“(F) other appropriate factors, as determined by the Secretary.

“(6) REGIONAL BALANCE.—In making grants under this section, the Secretary shall, to the maximum extent practicable, ensure geographic diversity.

“(7) ORGANIC CONVERSION.—The Secretary may make grants under this section to support projects that provide comprehensive technical assistance to beginning farmers or ranchers who are in the process of converting to certified organic production.

“(8) PRIORITY.—In making grants under this section, the Secretary shall give priority to partnerships and collaborations that are led by or include non-governmental and community-based organizations with expertise in new farmer training and outreach.”; and

(5) in paragraph (9) (as redesignated by paragraph (3))—

(A) in subparagraph (B), by striking “and” at the end;

(B) in subparagraph (C), by striking the period and adding “; and”; and

(C) by adding at the end the following:

“(D) farmers or ranchers that are refugees or immigrants (as those terms are defined in section 101(a) of the Immigration and Nationality Act (8 U.S.C. 1101(a)).”.

(6) EDUCATION TEAMS.—Section 7405(d)(2) of the Farm Security and Rural Investment At of 2002 (7 U.S.C. 3319f(d)(2)) is amended by inserting “and including sustainable and organic farming production and marketing methods” before the period at the end.

(b) Stakeholder input.—Section 7405(f) of the Farm Security and Rural Investment At of 2002 (7 U.S.C. 3319f(f)) is amended—

(1) by redesignating paragraphs (1) through (3) as subparagraphs (A) through (C), respectively, and indenting appropriately;

(2) by striking “In carrying out” and inserting the following:

“(1) IN GENERAL.—In carrying out”; and

(3) by adding at the end the following:

“(2) REVIEW PANELS.—In forming review panels to evaluate proposals submitted under this section, the Secretary shall include individuals from the categories described in paragraph (1).”.

(c) Funding.—Section 7405(h) of the Farm Security and Rural Investment At of 2002 (7 U.S.C. 3319f(h)) is amended to read as follows:

“(h) Funding.—

“(1) IN GENERAL.—On October 1, 2007, and on each October 1 thereafter through October 1, 2011, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this section $25,000,000, to remain available for 2 fiscal years.

“(2) RECEIPT AND ACCEPTANCE.—The Secretary shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation.

“(3) LIMITATION.—The Secretary shall use not more than 10 percent of the total funds made available under paragraph (1) to carry out subsections (d) and (e).”.

SEC. 3. Beginning farmer and rancher individual development accounts pilot program.

The Consolidated Farm and Rural Development Act is amended by adding after section 333A (7 U.S.C. 1983a) the following:

“SEC. 333B. Beginning farmer and rancher individual development accounts pilot program.

“(a) Definitions.—In this section:

“(1) DEMONSTRATION PROGRAM.—The term ‘demonstration program’ means a demonstration program carried out by a qualified entity under the pilot program established in subsection (b)(1).

“(2) ELIGIBLE PARTICIPANT.—The term ‘eligible participant’ means a qualified beginning farmer or rancher that—

“(A) has knowledge, experience, and a demonstrated commitment to agriculture;

“(B) lacks significant financial resources or assets; and

“(C) has an income that is less than—

“(i) 80 percent of the median income of the area in which the eligible participant is located; or

“(ii) 200 percent of the most recent Federal Poverty Income Guidelines published by the Department of Health and Human Services.

“(3) INDIVIDUAL DEVELOPMENT ACCOUNT.—The term ‘individual development account’ means a savings account described in subsection (b)(4)(A).

“(4) QUALIFIED ENTITY.—

“(A) IN GENERAL.—The term ‘qualified entity’ means—

“(i) 1 or more organizations—

“(I) described in section 501(c)(3) of the Internal Revenue Code of 1986; and

“(II) exempt from taxation under section 501(a) of such Code; or

“(ii) a State, local, or tribal government submitting an application jointly with an organization described in clause (i).

“(B) NO PROHIBITION ON COLLABORATION.—An organization described in subparagraph (A)(i) may collaborate with a financial institution or for-profit community development corporation to carry out the purposes of this section.

“(b) Pilot program.—

“(1) IN GENERAL.—The Secretary shall establish a pilot program to be known as the ‘New Farmer Individual Development Accounts Pilot Program’ under which the Secretary shall work through qualified entities to establish demonstration programs—

“(A) of at least 5 years in duration; and

“(B) in at least 15 States.

“(2) COORDINATION.—The Secretary shall operate the pilot program through, and in coordination with the farm loan programs of, the Farm Service Agency.

“(3) RESERVE FUNDS.—

“(A) IN GENERAL.—Each demonstration program shall establish a reserve fund consisting of a non-Federal match of 25 percent of the total amount of the grant awarded to the demonstration program under this section.

“(B) FEDERAL FUNDS.—After a demonstration program has deposited in the reserve fund the non-Federal matching funds described in subparagraph (A), the Secretary shall provide to the demonstration program for deposit in the reserve fund the total amount of the grant awarded under this section.

“(C) USE OF FUNDS.—Of the Federal funds deposited in a reserve fund under subparagraphs (A) and (B), a demonstration program—

“(i) may use up to 20 percent for administrative expenses; and

“(ii) shall use the remainder to make matching awards described in paragraph (4)(B)(ii)(I).

“(D) INTEREST.—Any interest earned on amounts in a reserve fund established under subparagraph (A) may be used as additional matching funds for, or to administer, the demonstration program.

“(E) GUIDANCE.—The Secretary shall implement guidance regarding the investment requirements of reserve funds established under this paragraph.

“(4) INDIVIDUAL DEVELOPMENT ACCOUNTS.—

“(A) IN GENERAL.—A demonstration program shall establish and administer an individual development account for each eligible participant.

“(B) CONTRACT REQUIREMENTS.—To be eligible to receive funds under this section, each eligible participant shall enter into a contract with a demonstration program under which—

“(i) the eligible participant shall agree—

“(I) to deposit a certain amount of funds of the eligible participant in a personal savings account, as prescribed by the contractual agreement between the eligible participant and the demonstration program;

“(II) to use the funds described in subclause (I) only for 1 or more eligible expenditures described in paragraph (5)(A);

“(III) to forfeit any right to amounts in the individual development account in any case in which the eligible participant is more than 1 month delinquent in fulfilling the obligation under subclause (I) or in which the eligible participant uses funds described in that subclause for a purpose other than an eligible expenditure; and

“(IV) to complete qualified financial training; and

“(ii) the demonstration program shall agree—

“(I) to deposit not later than 1 month after a deposit described in clause (i)(I) a 300-percent match of that amount into the individual development account established for the eligible participant;

“(II) to use the funds described in subclause (I) only for 1 or more eligible expenditures selected by the eligible participant; and

“(III) to provide a financial education course to all eligible participants.

“(C) LIMITATION.—

“(i) IN GENERAL.—A demonstration program may provide not more than $9,000 for each fiscal year in matching funds to any eligible participant.

“(ii) TREATMENT OF AMOUNT.—An amount provided under clause (i) shall not be considered to be a gift or loan.

“(D) FORFEITS.—Any amounts forfeited under subparagraph (B)(i)(III) shall be returned to the reserve fund of the demonstration program.

“(E) INTEREST.—Any interest earned on amounts in an individual development account shall be compounded with amounts otherwise deposited in the individual development account.

“(F) TREATMENT OF FUNDS.—

“(i) IN GENERAL.—Of the funds described in this paragraph, only the funds deposited by the eligible participant in a personal savings account under subparagraph (A)(i)(I) (including interest accruing on those funds) may be considered to be income.

“(ii) DETERMINATION OF ELIGIBILITY AND AMOUNT.—For purposes of determining eligibility for, or the amount of assistance provided under, any need-based Federal or federally-assisted program, amounts held in an individual development account shall be excluded.

“(5) ELIGIBLE EXPENDITURES.—

“(A) IN GENERAL.—An eligible expenditure described in this subparagraph is an expenditure—

“(i) to purchase farmland;

“(ii) to make a down payment on an accepted purchase offer for farmland;

“(iii) to make mortgage payments for up to 180 days after the date of purchase of farmland;

“(iv) to purchase farm equipment or production, storage, or marketing infrastructure;

“(v) to purchase breeding stock;

“(vi) to purchase fruit or nut trees or trees to harvest for timber;

“(vii) to purchase other assets that improve the financial viability of the farming operation;

“(viii) to make a transition to organic production;

“(ix) to pay training or mentorship expenses to facilitate specific entrepreneurial agricultural activities; and

“(x) for other similar expenditures, as determined by the Secretary.

“(B) TIMING.—

“(i) IN GENERAL.—An eligible expenditure may be made at any time during the 2-year period beginning on the date on which the last matching funds are provided under paragraph (4)(B)(ii)(I).

“(ii) UNEXPENDED FUNDS.—Funds remaining in an individual development account after the period described in clause (i) shall revert to the reserve fund of the demonstration program.

“(c) Applications.—

“(1) ANNOUNCEMENT OF DEMONSTRATION PROGRAMS.—Not later than 180 days after the date of enactment of this section, the Secretary shall—

“(A) publicly announce the availability of funding under this section for demonstration programs; and

“(B) ensure that applications to carry out demonstration programs are widely available to qualified entities.

“(2) SUBMISSION.—Not later than 270 days after the date of enactment of this section, a qualified entity may submit to the Secretary an application to carry out a demonstration program.

“(3) CRITERIA.—In considering whether to approve an application to carry out a demonstration program, the Secretary shall assess—

“(A) the degree to which the demonstration program described in the application is likely to aid eligible participants in successfully pursuing new farming opportunities;

“(B) the experience and ability of the qualified entity to responsibly administer the project;

“(C) the experience and ability of the qualified entity in recruiting, educating, and assisting eligible participants to increase economic independence and pursue or advance farming opportunities;

“(D) the aggregate amount of direct funds from non-Federal public sector and private sources that are formally committed to the demonstration program as matching contributions;

“(E) the adequacy of the plan for providing information relevant to an evaluation of the demonstration program; and

“(F) such other factors as the Secretary considers to be appropriate.

“(4) PREFERENCES.—In considering an application to conduct a demonstration program under this part, the Secretary shall give preference to an application from a qualified entity that—

“(A) demonstrates—

“(i) a track record of serving targeted clients; and

“(ii) expertise in dealing with financial management aspects of farming; or

“(B)(i) targets underserved and socially disadvantaged farmers or ranchers; and

“(ii) demonstrates a track record of reaching and serving those clients.

“(5) APPROVAL.—

“(A) IN GENERAL.—Not later than 1 year after the date of enactment of this section, in accordance with this section, the Secretary shall, on a competitive basis, approve such applications to conduct demonstration programs as the Secretary considers appropriate.

“(B) DIVERSITY.—The Secretary shall ensure, to the maximum extent practicable, that approved applications involve demonstration programs for a range of geographic areas and diverse populations.

“(6) TERM OF AUTHORITY.—If the Secretary approves an application to carry out a demonstration program, the Secretary shall authorize the applying qualified entity to carry out the project for a period of 5 years, plus an additional 2 years for the making of eligible expenditures in accordance with subsection (b)(5)(B).

“(d) Grant authority.—

“(1) IN GENERAL.—For each year during which a demonstration program is carried out under this section, the Secretary shall make a grant to the qualified entity authorized to carry out the demonstration program.

“(2) MAXIMUM AMOUNT OF GRANTS.—The aggregate amount of grant funds provided to a demonstration program carried out under this section shall not exceed $300,000.

“(e) Reports.—

“(1) ANNUAL PROGRESS REPORTS.—

“(A) IN GENERAL.—Not later than 60 days after the end of the calendar year in which the Secretary authorizes a qualified entity to carry out a demonstration program, and annually thereafter until the conclusion of the demonstration program, the qualified entity shall prepare an annual report that includes, for the period covered by the report—

“(i) an evaluation of the progress of the demonstration program;

“(ii) information about the demonstration program and eligible participants;

“(iii) the number and characteristics of individuals that have made 1 or more deposits into an individual development account;

“(iv) the amounts in the reserve fund established with respect to the program;

“(v) the amounts deposited in the individual development accounts;

“(vi) the amounts withdrawn from the individual development accounts and the purposes for which the amounts were withdrawn;

“(vii) the balances remaining in the individual development accounts;

“(viii)(I) the development account characteristics (such as threshold amounts and match rates) required to stimulate participation in the demonstration program; and

“(II) how the characteristics vary among different populations or communities;

“(ix)(I) what service configurations of the qualified entity (such as peer support, structured planning exercises, mentoring, and financial management) increased the rate and consistency of participation in the demonstration program; and

“(II) how the configurations varied among different populations or communities; and

“(x) such other information as the Secretary may require.

“(B) SUBMISSION OF REPORTS.—A qualified entity shall submit each report required under subparagraph (A) to the Secretary.

“(C) 5-YEAR EVALUATION.—In addition to the annual evaluations required under subparagraph (A)(i), not later than 5 years after the date on which a qualified entity begins to carry out a demonstration program, the qualified entity shall submit to the Secretary a comprehensive evaluation of the demonstration program.

“(2) REPORTS BY THE SECRETARY.—

“(A) INTERIM REPORTS.—Not later than 90 days after the end of the calendar year in which the Secretary first authorizes a qualified entity to carry out a demonstration program under this section, and annually thereafter until all demonstration programs are completed, the Secretary shall submit to Congress an interim report that describes the reports submitted by each demonstration program under paragraph (1).

“(B) FINAL REPORTS.—Not later than 1 year after the date on which all demonstration programs under this section are concluded, the Secretary shall submit to Congress a final report that describes the results and findings of all reports and evaluations carried out under this section.

“(f) Regulations.—The Secretary shall promulgate regulations to carry out this section, including regulations relating to—

“(1) the termination of demonstration programs;

“(2) control of the reserve funds in the case of such a termination;

“(3) transfer of demonstration programs to other qualified entities; and

“(4) remissions from a reserve fund in a case in which a demonstration program is terminated without transfer to a new qualified entity.

“(g) Funding.—

“(1) IN GENERAL.—On October 1, 2007, and on each October 1 thereafter through October 1, 2012, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this section $5,000,000, to remain available until expended.

“(2) ADMINISTRATION AND TRAINING.—Of the total funds made available under paragraph (1), not more than 5 percent for administration and 5 percent for training may be used by the Secretary—

“(A) to administer the pilot program; and

“(B) to provide training, or hire 1 or more consultants to provide training, to instruct qualified entities in carrying out demonstration programs, including payment of reasonable costs incurred with respect to that training for—

“(i) staff or consultant travel;

“(ii) lodging;

“(iii) meals; and

“(iv) materials.

“(3) RECEIPT AND ACCEPTANCE.—The Secretary shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation.”.

SEC. 4. Down payment loan program.

Section 310E of the Consolidated Farm and Rural Development Act (7 U.S.C. 1935) is amended—

(1) in subsection (b)—

(A) by striking paragraph (1) and inserting the following:

“(1) PRINCIPAL.—

“(A) PURCHASE PRICE OF $500,000 OR LESS.—Except as provided in subparagraph (C), each loan made under this section for a purchase price that is $500,000 or less, shall be in an amount that does not exceed 45 percent of the lesser of—

“(i) the purchase price; or

“(ii) the appraised value of the farm or ranch to be acquired.

“(B) PURCHASE PRICE GREATER THAN $500,000.—Except as provided in subparagraph (C), each loan made under this section for a purchase price that is greater than $500,000, shall be in an amount that does not exceed 45 percent of the lesser of—

“(i) $500,000; or

“(ii) the appraised value of the farm or ranch to be acquired.

“(C) BORROWER REQUEST.—A borrower may request a lower loan amount than an amount specified in subparagraph (A) or (B).”;

(B) by striking paragraph (2) and inserting the following:

“(2) INTEREST RATE.—The interest rate on any loan made by the Secretary under this section shall be a rate equal to the greater of—

“(A) the difference obtained by subtracting 4 percent from the interest rate for regular ownership loans under this subtitle; or

“(B) 1 percent.”; and

(C) in paragraph (4)—

(i) by striking “Each” and inserting the following:

“(A) IN GENERAL.—Each”; and

(ii) by adding at the end the following:

“(B) FIRST INSTALLMENT.—The first installment for a loan made under this section shall be due 2 years after the date on which the loan is made, with annual installments being due thereafter.”;

(2) in subsection (c)—

(A) by striking paragraph (2); and

(B) by redesignating paragraph (3) as paragraph (2); and

(3) in subsection (d)—

(A) in paragraph (3), by striking the “and” at the end;

(B) in paragraph (4), by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following:

“(5) establish annual performance goals to promote the use of the down payment loan program and other joint financing participation loans as the preferred choice for direct real estate loans made by any lender to a qualified beginning farmer or rancher.”.

SEC. 5. Beginning farmer or rancher contract land sales program.

Section 310F of the Consolidated Farm and Rural Development Act (7 U.S.C. 1936) is amended to read as follows:

“SEC. 310F. Beginning farmer or rancher contract land sales program.

“(a) In general.—Subject to subsection (c), the Secretary shall, in accordance with each condition described in subsection (b), guarantee any loan made by a private seller of a farm or ranch to a qualified beginning farmer or rancher on a contract land sale basis.

“(b) Conditions for guarantee.—To receive a guarantee for a loan by the Secretary under subsection (a)—

“(1) the qualified beginning farmer or rancher shall—

“(A) on the date on which the contract land sale that is the subject of the loan is complete, own or operate the farm or ranch that is the subject of the contract land sale;

“(B) have a credit history that—

“(i) includes a record of satisfactory debt repayment, as determined by the Secretary; and

“(ii) is acceptable to the Secretary; and

“(C) demonstrate to the Secretary that the qualified beginning farmer or rancher is unable to obtain sufficient credit without a guarantee to finance any actual need of the qualified beginning farmer or rancher at a reasonable rate or term;

“(2) the loan made by the private seller of a farm or ranch to the qualified beginning farmer or rancher on a contract land sale basis shall meet applicable underwriting criteria, as determined by the Secretary; and

“(3) to carry out the loan—

“(A) a commercial lending institution shall agree to serve as an escrow agent; or

“(B) the private seller of a farm or ranch, in cooperation with the qualified beginning farmer or rancher, shall use an appropriate alternate arrangement, as determined by the Secretary.

“(c) Limitations.—

“(1) DOWN PAYMENT.—The Secretary shall not guarantee a loan made by a private seller of a farm or ranch to a qualified beginning farmer or rancher under subsection (a) if the contribution of the qualified beginning farmer or rancher to the down payment for the farm or ranch that is the subject of the contract land sale would be an amount less than 5 percent of the purchase price of the farm or ranch.

“(2) MAXIMUM PURCHASE PRICE.—The Secretary shall not guarantee a loan made by a private seller of a farm or ranch to a qualified beginning farmer or rancher under subsection (a) if the purchase price or the appraisal value of the farm or ranch that is the subject of the contract land sale is an amount greater than $500,000.

“(d) Period of guarantee.—The Secretary shall guarantee a loan made by a private seller of a farm or ranch to a qualified beginning farmer or rancher under subsection (a) for a 10-year period beginning on the date on which the Secretary guarantees the loan.

“(e) Guarantee plans.—A private seller of a farm or ranch who makes a loan to a qualified beginning farmer or rancher that is guaranteed by the Secretary under subsection (a) may select—

“(1) a prompt payment guarantee plan, which shall cover—

“(A) 3 amortized annual installments; or

“(B) an amount equal to 3 annual installments (including an amount equal to the total cost of any tax and insurance incurred during the period covered by the annual installments); or

“(2) a standard guarantee plan, which shall cover an amount equal to 90 percent of the outstanding principal of the loan made by the private seller of a farm or ranch to the qualified beginning farmer or rancher.”.

SEC. 6. Inventory sales preferences.

Section 335(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1985(c)) is amended—

(1) in paragraph (1)—

(A) in subparagraph (B)—

(i) in the subparagraph heading, by inserting “; socially disadvantaged farmer or rancher” after “or rancher”;

(ii) in clause (i), by inserting “or a socially disadvantaged farmer or rancher” after “or rancher”;

(iii) in clause (ii), by inserting “or socially disadvantaged farmer or rancher” after “or rancher”;

(iv) in clause (iii), by inserting “or a socially disadvantaged farmer or rancher” after “or rancher”; and

(v) in clause (iv), by inserting “and socially disadvantaged farmers and ranchers” after “and ranchers”; and

(B) in subparagraph (C), by inserting “or a socially disadvantaged farmer or rancher” after “or rancher”;

(2) in paragraph (5)(B)—

(A) in clause (i)—

(i) in the clause heading, by inserting “; socially disadvantaged farmer or rancher” after “or rancher”;

(ii) by inserting “or a socially disadvantaged farmer or rancher” after “a beginning farmer or rancher”; and

(iii) by inserting “or the socially disadvantaged farmer or rancher” after “the beginning farmer or rancher”; and

(B) in clause (ii)—

(i) in the matter preceding subclause (I), by inserting “or a socially disadvantaged farmer or rancher” after “or rancher”; and

(ii) in subclause (II), by inserting “or the socially disadvantaged farmer or rancher” after “or rancher”; and

(3) in paragraph (6)—

(A) in subparagraph (A), by inserting “or a socially disadvantaged farmer or rancher” after “or rancher”; and

(B) in subparagraph (C)—

(i) in clause (i)(I), by inserting “and socially disadvantaged farmers and ranchers” after “and ranchers”; and

(ii) in clause (ii), by inserting “or socially disadvantaged farmers or ranchers” after “or ranchers”.

SEC. 7. Agricultural loans.

(a) Direct loans.—Section 302 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1922) is amended by striking subsection (b) and inserting the following:

“(b) Direct loans.—The Secretary may make a direct loan under this subtitle only to a farmer or rancher who has participated in the business operations of a farm or ranch for not less than 3 years.”.

(b) Limitations on amount of farm ownership loans.—Section 305(a)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1925(a)(2)) is amended by striking “$200,000” and inserting “$300,000”.

(c) Limitations on amount of operating loans.—Section 311 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941) is amended by striking subsection (c).

(d) Limitations on amount of operating loans.—Section 313(a)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1943(a)(1)) is amended by striking “$200,000” and inserting “$300,000”.

(e) Transition to private commercial or other sources of credit.—Subtitle D of the Consolidated Farm and Rural Development Act is amended by inserting after section 344 (7 U.S.C. 1992) the following:

“SEC. 345. Transition to private commercial or other sources of credit.

“(a) In general.—In making or insuring a farm loan under subtitle A or B, the Secretary shall establish a plan and promulgate regulations (including performance criteria) that promote the goal of transitioning borrowers to private commercial credit and other sources of credit in the shortest practicable period of time.

“(b) Coordination.—In carrying out this section, the Secretary shall integrate and coordinate the transition policy described in subsection (a) with—

“(1) the borrower training program established by section 359;

“(2) the loan assessment process established by section 360;

“(3) the supervised credit requirement established by section 361;

“(4) the market placement program established by section 362; and

“(5) other appropriate programs and authorities, as determined by the Secretary.”.

SEC. 8. Loan authorization levels and fund set-asides.

(a) Authorization of loans.—Section 346(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1994(b)) is amended—

(1) in paragraph (1)—

(A) in the matter preceding subparagraph (A), by striking “$3,796,000,000” and inserting “$4,226,000,000”; and

(B) in subparagraph (A)—

(i) in the matter preceding clause (i), by striking “$770,000,000” and inserting “$1,200,000,000”;

(ii) in clause (i), by striking “$205,000,000” and inserting “$350,000,000”; and

(iii) in clause (ii), by striking “$565,000,000” and inserting “$850,000,000”;

(2) in paragraph (2)—

(A) in the paragraph heading, by striking “and ranchers” and inserting “or ranchers or socially disadvantaged farmers or ranchers”;

(B) in subparagraph (A)—

(i) in clauses (i)(I), (ii), and (iii), by striking “and ranchers” each place it appears and inserting “or ranchers or socially disadvantaged farmers or ranchers”;

(ii) in clause (i)—

(I) in subclause (I), by striking “70 percent” and inserting “an amount that is not less than 75 percent of the total amount made available under paragraph (1)”; and

(II) in subclause (II)—

(aa) in the subclause heading, by inserting “; participation loans” after “payment loans”;

(bb) by striking “60 percent” and inserting “an amount not less than 23 of the amount reserved under subclause (I)”; and

(cc) by inserting “and participation loans” after “section 310E”;

(iii) in clause (ii)(III), by striking “2003 through 2007, 35 percent” and inserting “2008 through 2012, an amount that is not less than 50 percent of the total amount made available under paragraph (1)”; and

(iv) in clause (iii)—

(I) in the clause heading, by striking “september 1” and inserting “august 15”; and

(II) by striking “September 1” and inserting “August 15”;

(C) in subparagraph (B)—

(i) in clause (i), by striking “25 percent” and inserting “an amount that is not less than 40 percent of the total amount made available under paragraph (1)”; and

(ii) in clauses (i) and (ii), by striking “farmers and ranchers” each place it appears and inserting “farmers or ranchers”; and

(D) in the subparagraph heading of subparagraph (C), by striking “farmers and ranchers” and inserting “farmers or ranchers”;

(3) by striking paragraph (3); and

(4) by redesignating paragraph (4) as paragraph (3).

(b) Reallocation.—Section 346(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1994(b)) (as amended by subsection (a)) is amended by adding at the end the following:

“(4) REALLOCATION.—

“(A) QUALIFIED BEGINNING FARMERS OR RANCHERS.—Any funds reserved and allocated under paragraph (2) for qualified beginning farmers or ranchers in a State but not used within the State as of the applicable date specified in subparagraph (A)(iii) or (B)(iii) of paragraph (2), shall be redistributed by the Secretary, in order of priority, to make or guarantee loans for—

“(i) pending applications from qualified beginning farmers or ranchers in other States for the same type and category of loan under this title as the unused funds were originally made available;

“(ii) pending applications from qualified beginning farmers or ranchers within the State or in other States for farm ownership (including down payment loans) or operating loans or loan guarantees under this title;

“(iii) pending applications from socially disadvantaged farmers or ranchers within the State or in other States for farm ownership (including down payment loans) or operating loans or loan guarantees under this title;

“(iv) pending applications within the State for farm ownership (including down payment loans) or operating loans or loan guarantees under this title; and

“(v) pending applications for farm ownership (including down payment loans) or operating loans or loan guarantees under this title in other States, as determined by the Secretary.

“(B) SOCIALLY DISADVANTAGED FARMERS OR RANCHERS.—Any funds reserved and allocated under paragraph (2) for socially disadvantaged farmers or ranchers in a State but not used within the State as of the applicable date specified in subparagraph (A)(iii) or (B)(iii) of paragraph (2), shall be redistributed by the Secretary, in order of priority, to make or guarantee loans for—

“(i) pending applications from socially disadvantaged farmers or ranchers in other States for the same type and category of loan under this title as the unused funds were made available;

“(ii) pending applications from socially disadvantaged farmers or ranchers within the State or in other States for farm ownership (including down payment loans) or operating loans or loan guarantees under this title;

“(iii) pending applications from beginning farmers or ranchers within the State or in other States for farm ownership (including down payment loans) or operating loans or loan guarantees under this title;

“(iv) pending applications within the State for farm ownership (including down payment loans) or operating loans or loan guarantees under this title; and

“(v) pending applications for farm ownership (including down payment loans) or operating loans or loan guarantees under this title in other States, as determined by the Secretary.”.

SEC. 9. Soil and water conservation and protection.

Section 304 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1924) is amended by striking subsections (b) and (c) and inserting the following:

“(b) Priority.—In making or guaranteeing loans under this section, the Secretary shall give priority to—

“(1) qualified beginning farmers or ranchers;

“(2) socially disadvantaged farmers or ranchers;

“(3) owners or tenants who use the loans to convert to sustainable or organic agricultural production systems; and

“(4) producers who use the loans to build conservation structures or establish conservation practices to comply with section 1212 of the Food Security Act of 1985 (16 U.S.C. 3812).”.

SEC. 10. Conservation Reserve Program transition incentives.

Section 1235(c) of the Food Security Act of 1985 (16 U.S.C. 3835(c)) is amended—

(1) in paragraph (1)(B)—

(A) in clause (ii), by striking “or” at the end;

(B) by redesignating clause (iii) as clause (iv); and

(C) by inserting after clause (ii) the following:

“(iii) to facilitate a transition of land subject to the contract from a retired or retiring owner or operator to a beginning farmer or rancher or socially disadvantaged farmer or rancher for the purpose of returning some or all of the land into production using sustainable grazing or crop production methods; or”; and

(2) by adding at the end the following:

“(3) TRANSITION OPTION FOR BEGINNING FARMERS OR RANCHERS AND SOCIALLY DISADVANTAGED FARMERS OR RANCHERS.—

“(A) IN GENERAL.—In the case of a contract modification approved in order to facilitate the transfer of land subject to a contract from a retired or retiring owner or operator to a beginning farmer or rancher or socially disadvantaged farmer or rancher under paragraph (1)(B)(iii), the Secretary shall—

“(i) beginning on the date that is 1 year before the date of termination of the contract—

“(I) allow the beginning farmer or rancher or socially disadvantaged farmer or rancher, in conjunction with the retired or retiring owner or operator, to make conservation and land improvements; and

“(II) allow the beginning farmer or rancher or socially disadvantaged farmer or rancher, at the election of the farmer or rancher, to begin the certification process under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.);

“(ii) beginning on the date of termination of the contract, allow the retired or retiring owner or operator to sell or lease (under a long-term lease or a lease with an option to purchase) to the beginning farmer or rancher or socially disadvantaged farmer or rancher the land subject to the contract for production purposes;

“(iii) require the beginning farmer or rancher or socially disadvantaged farmer or rancher to develop and implement a comprehensive conservation plan that meets such sustainability criteria as the Secretary may establish;

“(iv) provide to the beginning farmer or rancher or socially disadvantaged farmer or rancher an opportunity to enroll in the conservation security program established under subchapter A of chapter 2 or the environmental quality incentives program established under chapter 4 by not later than the date on which the farmer or rancher takes possession, through ownership or lease, of the land; and

“(v) continue to make annual payments to the retired or retiring owner or operator for not more than an additional 2 years after the date of termination of the contract, if the retired or retiring owner or operator is not a family member (as defined in section 1001A(b)(3)(B) of the Food Security Act of 1985 (7 U.S.C. 1308–1(b)(3)(B)) of the beginning farmer or rancher or socially disadvantaged farmer or rancher.

“(B) REENROLLMENT.—The Secretary shall provide to a beginning farmer or rancher or socially disadvantaged farmer or rancher described in subparagraph (A) the option to reenroll any applicable partial field conservation practice that is—

“(i) eligible for enrollment under the continuous signup requirement of section 1231(h)(4)(B); and

“(ii) part of an approved comprehensive conservation plan.”.

SEC. 11. Conservation cost sharing.

(a) Conservation security program.—Section 1238C(b)(1) of the Food Security Act of 1985 (16 U.S.C. 3838c(b)(1)) is amended in subparagraphs (C)(ii), (D)(ii), and (E)(ii), by striking “rancher, 90 percent” each place it appears and inserting “rancher, or a socially disadvantaged farmer or rancher, does not exceed the lesser of 90 percent or an amount equal to 15 percent more than the rate offered to other farmers”.

(b) Environmental quality incentives program.—Section 1240B(d)(2) of the Food Security Act of 1985 (16 U.S.C. 3839aa–2(d)(2)) is amended by striking subparagraph (A) and inserting the following:

“(A) BEGINNING FARMERS OR RANCHERS AND SOCIALLY DISADVANTAGED FARMERS OR RANCHERS.—The Secretary may increase the amount provided to a producer under paragraph (1) that is a beginning farmer or rancher or a socially disadvantaged farmer or rancher, as determined by the Secretary, to an amount not more than the lesser of—

“(i) 90 percent; and

“(ii) 15 percent more than the rate offered to other farmers or ranchers.”.

(c) Conservation incentives and reserved funding.—Section 1244 of the Food Security Act of 1985 (16 U.S.C. 3844) is amended—

(1) in subsection (a)—

(A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and indenting the subparagraphs appropriately;

(B) by striking “In carrying out” and inserting the following:

“(1) IN GENERAL.—In carrying out”;

(C) in paragraph (1) (as designated by subparagraph (B)), by striking “and Indian tribes” and all that follows through “agricultural producers” and inserting “, Indian tribes, and socially disadvantaged farmers or ranchers”; and

(D) by adding at the end the following:

“(2) REQUIREMENTS.—In carrying out this subsection, the Secretary shall—

“(A) develop a definition of the term ‘beginning farmer or rancher’ that—

“(i) is based, to the maximum extent practicable, on the definition of that term under section 343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)); and

“(ii) includes—

“(I) a fair and reasonable test of net worth; and

“(II) such other criteria as the Secretary determines to be appropriate;

“(B) develop and implement cooperative agreements with entities, including the Natural Resources Conservation Service, Extension entities, nongovernmental and community-based organizations, educational institutions, and private technical service providers, with expertise in addressing the needs of beginning farmers or ranchers and socially disadvantaged farmers or ranchers to provide—

“(i) sustainable agricultural systems training and technical assistance; and

“(ii) comprehensive whole-farm conservation planning education and technical assistance;

“(C) offer to beginning farmers or ranchers and socially disadvantaged farmers or ranchers a special incentive or bonus payment for developing comprehensive whole-farm or -ranch resource management system conservation plans as part of participation in—

“(i) the conservation security program established under subchapter A of chapter 2 of subtitle D; or

“(ii) the environmental quality incentives program established under chapter 4 of that subtitle;

“(D) provide a substantial number of ranking points—

“(i) for beginning farmers or ranchers and socially disadvantaged farmers or ranchers within each conservation program under this title that uses a ranking system to determine enrollment; and

“(ii) for detailed farm transition planning under the farmland protection program established under subchapter B of chapter 2 of subtitle D; and

“(E) provide such other incentives and benefits as the Secretary determines to be appropriate.

“(3) RESERVATION OF FUNDING.—

“(A) IN GENERAL.—Of funds made available for a fiscal year to carry out this title, the Secretary shall reserve, for a period of not less than 120 days after the date on which the funds are made available—

“(i) not less than 10 percent for beginning farmers or ranchers; and

“(ii) not less than 10 percent of funds for socially disadvantaged farmers or ranchers.

“(B) TECHNICAL ASSISTANCE.—Of amounts reserved under subparagraph (A), the Secretary may provide to beginning farmers or ranchers and socially disadvantaged farmers or ranchers technical assistance at a rate that is not more than 15 percent higher than the rate that would otherwise apply to the farmers or ranchers.

“(4) EFFECT OF SUBSECTION.—Nothing in this subsection prohibits any beginning farmer or rancher or any socially disadvantaged farmer or rancher from—

“(A) participating in any other program; or

“(B) receiving funds made available under this title that are not reserved pursuant to paragraph (3)(A).”.

SEC. 12. Research programs.

(a) Competitive, special, and facilities research grants.—Section 2(b)(2) of the Competitive, Special, and Facilities Research Grant Act (7 U.S.C. 450i(b)(2)) is amended—

(1) in the first sentence of the matter preceding subparagraph (A), by striking “(F)” and inserting “(G)”;

(2) in subparagraph (E), by striking “and” at the end;

(3) in subparagraph (F), by striking the period at the end and inserting “; and”; and

(4) by adding at the end the following:

“(G) areas of concern to beginning farmers or ranchers, including—

“(i) farm transfer and farm entry;

“(ii) farm transition options for retiring farmers or ranchers;

“(iii) land tenure;

“(iv) farm viability;

“(v) socially disadvantaged farmers or ranchers and immigrant farmers or ranchers; and

“(vi) production, marketing, conservation, and risk management alternatives relevant to new and beginning farmers or ranchers.”.

(b) Initiative for future agriculture and food systems.—Section 401(c)(2)(F) of the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 7621(c)(2)(F)) is amended—

(1) by striking “including the viability” and inserting the following: “including—

“(i) the viability”; and

(2) by striking “operations.” and inserting the following: “operations;

“(ii) farm transition options for retiring farmers or ranchers; and

“(iii) farm transfer and entry alternatives for beginning farmers or ranchers or socially disadvantaged farmers or ranchers.”.

SEC. 13. Risk management education for beginning farmers or ranchers.

Section 524(a) of the Federal Crop Insurance Act (7 U.S.C. 1524(a)) is amended—

(1) by redesignating paragraph (4) as paragraph (5); and

(2) by inserting after paragraph (3) the following:

“(4) REQUIREMENTS.—In carrying out the programs established under paragraphs (2) and (3), the Secretary shall place special emphasis on risk management strategies, education, and outreach specifically targeted at—

“(A) beginning farmers or ranchers;

“(B) immigrant farmers or ranchers that are attempting to become established producers in the United States;

“(C) socially disadvantaged farmers or ranchers;

“(D) farmers or ranchers that—

“(i) are preparing to retire; and

“(ii) are using transition strategies to help new farmers or ranchers get started; and

“(E) new or established farmers or ranchers that are converting production and marketing systems to pursue new markets.”.