$4 Billion in Payments to ‘Erase Debt’ of “Socially Disadvantaged” Farmers to Be Issued Next Month

The U.S. Department of Agriculture is planning on rolling back almost $4 billion in debt owed by minority farmers.

The agency said last week that the move is part of one to address racial discrimination and follows a line item in the American Rescue Plan Act directing the USDA to eliminate all farm debt held by “socially disadvantaged” minority farmers. While the mega legislation did not include a specific dollar amount, the USDA has since estimated the total amount owed to the federal government and private entities by minority farmers to equal roughly $3.9 billion. 

“Socially disadvantaged” is defined in the legislation as a farmer or rancher “who is a member of a socially disadvantaged group, which is further defined as a group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.”

The USDA is going to issue direct payments to some 15,000 farmers and their banks beginning next month. The agency is authorized to pay up to 120% of the outstanding balance.

Secretary Tom Vilsak said in an interview with Reuters that the payments are needed ‘because minority farmers did not have full access to USDA programs over the last 100 years.’

“Chances are pretty good that you weren’t able to be competitive with white farmers, in purchasing land and purchasing equipment, having your crop planted at the right time. In some cases, those policies were designed specifically to remove socially disadvantaged farmers from their land,” Vilsak said.

A monumental case that changed the trajectory of how the USDA programs were operating actually stemmed from claims brought by more than 400 black farmers, including dozens from Georgia.

In 1997 and 1998, Pigford v. Glickman and Brewington v. Glickman were filed on behalf of groups of African-American farmers asserting that the USDA had “systematically discriminated against African-American farmers on the basis of race, in violation of the Fifth Amendment to the United States Constitution, the Equal Credit Opportunity Act, Title VI of the Civil Rights Act, and the Administrative Procedure Act.” Specifically, the farmers claimed that between 1981 and 1996, allocation of farm loans and assistance by the USDA were determined – or denied – based on race.

An eventual consent decree was entered into in one of the nation’s largest civil rights settlements ever. That decree provided two options for those who were party to the suit:

• “Track A” which could provide a pre-determined monetary settlement of $50,000 plus relief in the form of loan forgiveness and offsets of tax liability after presenting substantial evidence and a reasonable basis for finding that discrimination happened, OR
• “Track B,” which required claimants to prove their claims and actual damages by a preponderance of the evidence (that it is more likely than not that their claims are valid). Those claims would then be reviewed by a third-party who would be responsible for making a binding decision.

Just over 22,500 farmers opted for “Track A” and 59% were approved (13,348) for amounts totaling $995 million.  Fewer than 200 farmers opted for the “Track B” process.

In 2008, as part of the annual Farm Bill, Congress passed and President Bush signed into law a provision to allow individuals who did not file on time according to the Pigford settlement. $100 million was allocated for funding valid claims stemming from new filings, but after additional lawsuits against the federal government, another settlement agreement was entered into in 2010 requiring Congress to fund an additional $1.15 billion for successful claimants. This became known as “Pigford II.” In 2013, a judge signed off on an order distributing a total of $1,200,425,182.08 to the farmers who filed claims.

But even as recently as October 2020 did the claims of inequity surface. Georgia farmer Eddie Slaughter said in an NBC interview that black farmers were still living under “economic terrorism.”

You can read the USDA’s First Notice of Funding Availability here.