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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1460 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                S. 1460

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

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 23, 2007

   Mr. Harkin (for himself, Mr. Grassley, Mr. Baucus, and Mr. Brown) 
introduced the following bill; which was read twice and referred to the 
           Committee on Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 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 \2/3\ 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.''.
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