Annual Report to Congress 

Regarding 

Term Limits on Direct Operating Loans 

As 

Required by 

Section 5104 of the Agricultural Act of 2014 

February 2020 

USDA/Farm Production and Conservation Business Center, 

Economic and Policy Analysis Division 

in collaboration with the Farm Service Agency 
Executive Summary 

Term limits, which impose a statutory maximum on the number of years a fanner may receive a 

Farm Service Agency (FSA) direct operating loan (DOL), have not appeared to have had a major 

impact on FSA's loan portfolio over the past two decades, though there are some areas of 

concern arising. Term limits stipulate that an eligible applicant must have a DOL obligated in 6 

or fewer calendar years. The years need not be consecutive and multiple loans received during a 

year count only. against 1 year of loan eligibility. The eligible applicant is able to close an 

additional DOL in the 7th year. The limitation does not apply to beginning farmers through their 

first 10 years of farming. Waivers that allow an additional 2 years of eligibility are provided on 

a case-by-case basis, if borrowers continue to meet all other eligibility criteria. Youth loans and 

microloans to beginning farmers and veterans are exempt and do not count against the limitation. 

Key findings are: 

In calendar 2018 and 2019, an additional 886 farm businesses reached the DOL term limit. 

This includes 365 farm businesses in 2018 and 521 in 2019 and brings the total number of farm 

borrowers reaching term limits since their inception in 1993 to 8,140. 

Term-limited borrowers represented 5.1 percent of total DOL borrowers with a positive loan 

balance at the end of 2019. This reflects the importance of DOLs as a temporary credit source. 

Nearly half of DOL borrowers over the last 25 years received a DOL in only 1 year and over 80 

percent were recipients of DOLs for 3 years or less. 

There is no indication that term limits have hastened farm exits. Over 75 percent of farm 

borrowers who have reached term limits since their implementation in 1993 were still active in 

farming through 2019 as indicated by eligibility to vote in the most recent county office 

committee elections. Most borrowers reaching term limits since 2012 remain active borrowers 

with a positive loan balance and may participate in non-DOL credit programs, including direct 

farm ownership, emergency, and guaranteed loans. Also, term-limited borrowers unable to make 

scheduled payments are eligible for loan restructuring. 

Term limits have had a greater impact on crop farms than livestock farms. This was especially 

true among direct cotton borrowers with 27 percent using 5 or more years of eligibility by 2019. 

Likewise, 23 percent of all corn-soybean direct borrowers had used 5 or more years of eligibility 

by 2019. 

Term limits have a greater impact in regions more dependent on FSA credit where overall 

incomes are lower and farms smaller. Combined, the Appalachia and Northern Plain regions 

represented 28 percent of all DOL borrowers but held 35 percent of all term-limited borrowers at 

the end of 2019. 

2 
Introduction 

This report was undertaken in fulfillment of requirements specified in Section 5104 of the 

Agricultural Act of 2014, which amended the Consolidated Farm and Rural Development Act 

(ConAct) and requires an annual report on term limits for direct operating loans (see Appendix 

1). As directed by the statute, this report documents the number and characteristics of DOL 

borrowers who have reached their term limits. 

Term limits impose a statutory limit on the number of years that a farm borrower may receive 

loan funds through programs administered by the U.S. Department of Agriculture (USDA).1 

DOLs are authorized under Section 311(c)(2) of the ConAct to provide a source of credit for 

qualified farmers. Term limits were initially enacted for both direct and guaranteed farm 

ownership and operating loan programs by the Agricultural Credit Improvement Act of 1992.2 

Term limits have never applied to emergency loan borrowers. 

Subsequent legislation exempted all guaranteed loans from term limits. Microloans made to 

veterans and beginning farmers are also exempt from term limits. Moreover, the limitation does 

not apply if a borrower's farm is subject to the jurisdiction of an Indian tribe. FSA can obligate, 

in certain circumstances, DOLs to borrowers beyond their term limit. For example, waivers are 

granted to qualified beginning farmers through their 10th year of farming. Non-beginning 

fanners may receive a 2-year waiver, provided the operation is viable, the borrower has or will 

complete financial training, and commercial credit is unavailable. 

Farm Economic Outlook Remains Tenuous 

Background on farm economic conditions helps provide context for the analysis of term limit 

data. USDA's Economic Research Service (ERS) forecasts net farm income3to increase $9.8 

billion (11.7 percent) to $93.6 billion in 2019, after increasing in both 2017 and 2018. In 

inflation-adjusted 2020 dollars, net farm income is forecast to increase $8.4 billion (9.6 percent) 

from 2018. If realized, in inflation-adjusted terms, net farm income in 2019 would be 31.5 

percent below its peak of $139.1 billion in 2013 but 3.9 percent above its 2000-2018 average 

($91.6 billion). Much of the expected increase is attributable to direct government payments 

from Federal crop insurance indemnities, Market Facilitation Program payments, and other 

programs, which combined are projected to exceed $23 billion in 2019. 

1A farm borrower may be an individual, partnership, or legal entity. Term limits apply to both the entity and 

underlying individuals who are obligated as co-borrowers. This includes the spouse of married borrowers as well as 

legal partners. FSA uses the term 'borrower case' to refer to the borrowing individual or entity listed on the 

promissory note. 

2The ConAct states that an applicant is eligible for a direct operating loan if the applicant received a DOL in 6 or 

fewer years. The regulations (7 CFR 764.252), which were implemented in 1993, state that an applicant is not 

eligible if the applicant has closed a DOL in 7 or more years. The net impact of these provisions is that a borrower 

has 6 full years of eligibility for direct operating loans before reaching the term limit. In accordance with language 

in the ConAct, this report considers term limits to have been met at the end of 6 full years of receiving DOLs. 

ERS farm income forecast as of February 2020. 

3 
Profit margins for most commodities remain tight with prices at or near break-even levels. Large 

carryover stocks for corn and soybeans, combined with reduced exports for corn and modest 

gains for soybean exports, are expected to limit the upside price potential. Despite a strong start 

to export sales in 2019 and the highest forecast exports in several years, cotton prices have been 

weighed down by very large supplies and fallout from the trade war with China. Similarly, wheat 

prices are down, despite an increase in exports, given record global supplies and record global 

ending stocks. While expanding demand for tree nuts and many fruits have facilitated 

profitability, these types of operations represent only a small share of U.S. farm production and 

FSA lending. 

The overall outlook for the livestock sector has improved from earlier years. U.S. beef and pork 

prices have been buoyed by expectations of increased exports of U.S. pork and beef to offset the 

impact of African Swine Fever on worldwide supplies. Likewise, African Swine Fever is 

expected to increase global demand for poultry, although U.S. export gains were small in 2019 

and prices softened over the year. The all-milk price rose in 2019 on a tighter supply-demand 

situation. Though margins are expected to be positive, some dairy producers will continue to face 

financial stress. 

Five consecutive years of tight profit margins have had a negative impact on farmers' financial 

situations. For most producers, working capital has declined, leaving them more reliant on 

borrowed capital. Farm sector debt is near the peak levels of the late 1970s and early 1980s. 

Among farms with at least $100,000 in annual sales, the share facing financial stress (having a 

low repayment capacity or low levels of solvency) has increased since 2012.4 

Other sources provide similar evidence. The Minnesota Center for Financial Management found 

median farm income for Minnesota farmers in 2018 to be the lowest in 23 years with major 

indicators down (liquidity, net worth, profitability, coverage ratios). Federal Reserve Bank 

surveys indicate a continuation of low farm liquidity, increasing bank delinquencies, and greater 

demand for farm loans. Alongside historically low levels of liquidity, loan performance at 

agricultural banks has declined. 

So far, strong equity positions, stable farm real estate markets, government payments, and bank 

liquidity have provided farmers with the tools to weather financial adversity without relying 

more heavily on USDA credit programs. However, a continuation of working capital erosion will 

likely impose greater stress on both lenders and borrowers, possibly resulting in an enhanced role 

for both direct and guaranteed FSA credit programs in upcoming years. If the farm economy 

deteriorates, the term limit period may be insufficient to overcome temporary financial hardships 

for some types of borrowers. 

4See: USDA, ERS, Financial Conditions in the U.S. Agricultural Sector: Historical Comparisons 

https://www.ers.usda.gov/webdocs/publications/95238/eib-211.pdf?v=8745.1. October 2019. 

4 
Overall Credit Quality Has Not Deteriorated 

Despite reduced farm incomes, there has not been an increase in demand for direct or guaranteed 

loans except for direct farm ownership loans. Both direct operating loan obligations and direct 

loan applications received have been trending downward since 2016 (figure 1). The increase 

noted for direct farm ownership loan obligations has primarily been a consequence of increased 

loan size limits.5For guaranteed loans, obligations and applications have also trended downward 

since 2016 (figure 2). While there have been increases in borrower defaults for both direct and 

guaranteed operating credit, these have, thus far, been modest (figure 3). Neither has there been a 

widespread deterioration of credit quality among commercial banks or the Farm Credit System. 

Through the 3rd quarter of 2019, loan defaults for farm nonreal estate credit were below 2.5 

percent at commercial banks and 1 percent for the Farm Credit System (Ag Finance Databook; 

Farm Credit Funding Corporation). 

There have been no other indicators of stress in FSA's loan portfolio. The average loan 

classification score has remained stable and there have not been increases in losses, loans 

restructured, or accounts flagged for bankruptcy or foreclosure. Borrowers appear to be holding 

their loans longer, however, as indicated by a 2 percent increase in borrower caseload in 2019. 

While there are no widespread indications of stress, financial difficulties are affecting some 

groups more than others. Small and mid-size family farms are more susceptible to lower incomes 

and tend to be more reliant on FSA credit. A combination of Agricultural Resource Management 

Survey and FSA loan data indicated that as of December 2017,6over 18 percent of all mediumsized farms had a direct or guaranteed loan (figure 4). The share of farms utilizing FSA credit 

has been increasing since 2014. Also, there is a great deal of regional disparity in dependence on 

FSA credit programs: FSA serves a larger share of farms in regions which are economically 

challenged, such as Appalachia, the Mississippi Delta, and Indian Country (figure 5). 

DOL Term Limits Affect a Small Share of Borrowers 

111 2018, a total of 365 borrower cases reached the DOL term limit followed by 521 cases in 2019 

(table 1).7A borrower was determined to have met the term limit at the end of the 6th year in 

which they received DOL funds.8The year in which the term limit was reached was the last year 

5The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) increased direct farm ownership loan size limits 

from $300,000 to $600,000 and the direct operating loan size from $300,000 to $400,000. 

6The most recent ARMs data available to make this calculation are from 2017. 

7A borrower case represents the entity which is obligating the loan. It can be an individual, partnership, family 

corporation, or LLC. It includes all co-borrowers who may also sign the promissory note. 

8While a borrower may receive a loan in the following (7th) year, only about half do. A likely explanation is that 

farmers may be saving the last year of eligibility as a risk management tool. Considering term limits to have been 

met at 6 years was judged to provide a more accurate estimate of the number of farmers adversely affected. 

5 
in which DOL funds were received. For example, if a borrower receives funds for 7 years, the 

term limit would have been considered to have been met in the 7th year and not the 6th year.9 

This brings the total number of borrower cases reaching term limits since inception to 8,140 

(table 1). The share of current borrowers reaching term limits is 3.9 percent of the total direct 

borrower caseload and 5.1 percent of the DOL borrower caseload. On average over the past 12 

years, 402 cases reach term limits each year. From 2014 through 2019, over 2,600 additional 

direct borrowers have reached term limits, which represents an increase over historical norms 

(figure 6). This includes about 250 borrowers who, as of calendar year 2020, would have been 

considered a beginning farmer. Beginning farmers meeting all relevant eligibility criteria receive 

a waiver and can receive a DOL during their first 10 years of farming. After 10 years of farming, 

they are no longer considered beginning farmers and therefore no longer qualify for this waiver. 

Further, microloans to beginning farmers and veterans as well as youth loans do not count 

against term limits. Historically, these types of loans have represented about 30 percent of all 

DOL obligations. 

Despite being unable to receive additional DOL loan funds, many term-limited borrowers have 

continued as FSA borrowers. Over 42 percent (3,441/8,140) of borrowers reaching term limits 

in 2019 were still active borrowers with a direct operating loan, farm ownership loan, or an 

emergency loan as of year-end 2019 (table 1). Most of those reaching term limits have remained 

active in farming. Over the past 5 years, over 75 percent of borrowers reaching the term limit 

were still active in farming as indicated by eligibility to vote in county office committee 

elections.1°After adjusting for deceased borrowers," only about 12 percent of those that reached 

their term limits have exited farming (100 minus (6,740 COC eligible voters/ (8,140-473)). 

DOLs Used Primarily as a Temporary Credit Source 

A majority of DOL borrowers use FSA only as a temporary source of credit. Nearly half (48.1 

percent) of all non-exempt DOL borrowers (since 1993) received DOL funds for only 1 year 

(figure 7). Less than 1 in 5 non-exempt borrowers have received DOL funds in 4 or more years. 

The number of years in which borrowers rely on FSA direct loans varies by region (figure 8) and 

production specialization. 

While term-limited borrowers are spread throughout the U.S., there are localities with a greater 

density of term-limited borrowers. Specifically, the Red River Valley, eastern Nebraska and the 

Dakotas, the Texas High Plains, and Appalachia are examples of areas with a greater 

concentration of term-limited borrowers (figure 8). Years of DOL eligibility use varies from 

9This results in revisions to totals from earlier years. Changes in beginning farmer status also result in a revision of 

earlier estimates. For example, a farmer receiving his or her 6thloan in 2016 may have still been eligible in 2018 as a 

beginning farmer and not considered in the term limit totals. But, if they aged past the beginning farmer 

classification in 2019, the earlier 2016 estimates of term-limited borrowers would have been adjusted. 

1° An eligible voter in an FSA county office committee election includes an individual or legal entity which 

participates or cooperates in any FSA program that is provided for by law. 

11 Of the 8,140 cumulative borrowers reaching term limits, about 6 percent (473/8,140) passed away since reaching 

their respective term limit. 

6 
2.23 years in the Southern Plains to 2.9 years in the Northern Plains (figure 9). Term-limited 

borrowers are more heavily concentrated in the Northeast, Lake States, Corn Belt, and Northern 

Plains as indicated by the share of U.S. term-limited borrowers exceeding the share of all U.S. 

DOL borrowers (figure 10). While the Appalachia and Northern Plains regions represented 28 

percent (13% -F 15%) of all DOL borrowers, for example, these regions represented 35 percent 

(19% +16%) of all term-limited borrowers at the end of 2019. The Northern Plain and the Lake 

States had a relatively large share of borrowers who had used 5 or more years of loan eligibility, 

suggesting that they will continue to experience greater impacts from term limits. 

Regional dependence on DOLs may be a function of the predominant types of agriculture. Grain 

and oilseed producers, common in the Northern Plains, Lake States, and Corn Belt, are more 

dependent on DOLs and more likely to be impacted by term limits. Nearly a quarter of cornsoybean farmers had used 5 or more years of eligibility or reached term limits compared to 12.4 

percent for beef producers and 5.4 percent for poultry producers (figure 11). Nearly 27 percent of 

all cotton borrowers had received 5 or more years of DOL assistance, likely explaining the 

cluster of term-limited borrowers in Texas and the coastal Carolinas. 

Term-Limited Borrowers Not Necessarily More Financially Stressed 

In many ways, borrowers reaching term limits are like other direct borrowers (table 2). Indeed, 

the debt-to-asset ratio for term-limited borrowers is lower than for those who are not termlimited and the liquidity ratio is similar. The share of term-limited borrowers receiving writeoffs or restructuring does not differ significantly from all other DOL borrowers. Of all 

borrowers receiving DOLs since 1993, 12.4 percent of term-limited borrowers have had either a 

direct loan write-off or guaranteed loan loss claim since reaching the term limit compared to 11.7 

percent for all other DOL borrowers (figure 12). Also, the share of borrowers receiving loan 

restructuring under primary loan servicing differed by only 0.6 percent between term-limited and 

other borrowers 

Term-limited borrowers operate larger farms, though they tend to be less efficient than other 

borrowers. In 2019, borrowers reaching term limits had nearly $306,000 in gross revenue 

compared to $153,500 for all other borrowers receiving DOLs (table 3). In terms of total assets, 

term-limited borrowers operated farms that were twice as large, with the value of total assets for 

term-limited borrowers at $1.015 million compared to just over $455,000 for other borrowers. 

The net income ratio for term-limited borrowers has been less than for other borrowers, though 

both are in the "cautionary but acceptable" range of 10 to 20 percent. 

Summary 

DOL term limits do not appear to be having a large impact on current farm borrowers. Since 

their inception in 1993, only 8,140 borrowers have reached term limits. While the number 

reached on an annual basis has been increasing, the total reflects 5 percent of current borrowers. 

This is primarily because DOLs have mostly been used as a temporary credit source with most 

borrowers receiving new DOLs for 3 years or less. However, if market conditions in agriculture 

7 
worsen and producers significantly increase their use of FSA credit programs, term limits may 

have a greater impact on the ability of producers to obtain needed credit. 

List of References and Suggested Readings 

Federal Farm Credit Banks Funding Corporation, 3rdQuarter Information Statement of the Farm 

Credit System (November 13, 2019). 

Federal Reserve Bank of Kansas City (a), Ag Credit Survey 3rd Quarter 2019, 

https ://www.kansascityfed. org/research/indicatorsdata/agcreditsurvey/articles/2019/11 -14- 

2019/farm-finances-continue-to-weaken-amid-ongoing-uncertainty 

Federal Reserve Bank of Kansas City (b), Agricultural Finance Databook, October 17,2019, 

https://www.kansascityfed.org/research/indicatorsdata/agfinancedatabook/articles/2019/10-17-

19/ag-finance-dbk-10-17-2019. 

University of Minnesota Center for Financial Management, 2018 FINBIN Report on Minnesota 

Farm Finances, May 2019. https://fmbin.umn.edu/Content/docs/2018-FINBIN-Report-MNFarm-Finances.pdf 

U.S. Department of Agriculture, Economic Research Service and National Agricultural Statistics 

Service. Agricultural Resource Management Study (ARMS), 2014-2017, Version 1. 

U.S. Department of Agriculture, Economic Research Service, 2019 Farm Sector Income 

Forecast, (https ://www. ers.usda. gov/topics/farm-economy/farm-sector-income-finances/farmsector-income-forecast/ 

U.S. Department of Agriculture. FSA Handbook: Farm Loan Program General Program 

Administration. 1-FLP, Farm Service Agency, Washington, D.C. (2016). 

https://www.fsa.usda.gov/FSA/webapp?area=home&subject=empl&topic=hbk 

U.S. Department of Agriculture, Economic Research Service, Farm Income and Wealth 

Statistics: US. and State Farm Income and Wealth Statistics, https://www.ers.usda.gov/dataproducts/fann-income-and-wealth-statistics 

8 
Appendix 1. Text of Legislation from Section 5104 of the Agricultural Act of 2014 

5) ANNUAL REPORT ON TERM LIMITS ON DIRECT OPERATING 

LOANS.— 

(A) IN GENERAL.—The Secretary shall prepare a report annually that describes— 

(i) the status of the direct operating loan program of the Department of 

Agriculture; and 

(ii) the impact of term limits on direct loan borrowers. 

(B) DEMOGRAPHIC INFORMATION.— 

CO IN GENERAL.—The report shall provide a demographic breakdown, on a State-byState basis, of— 

(I) all direct loan borrowers; and 

(II) borrowers that have reached the eligibility limit for direct lending programs 

during the previous calendar year. 

(ii) DEMOGRAPHIC INFORMATION.—The available demographic information shall 

include, to the maximum extent practicable, a description of race or ethnicity, 

gender, age, type of farm or ranch, financial classification, number of years of 

indebtedness, veteran status, and other similar information, as determined by the 

Secretary. 

(C) ADDITIONAL CONTENT.—In addition to information described in subparagraph (B), 

the report shall provide— 

(i) a demographic analysis of the borrowers impacted by term limits; 

(ii) information on the conditions impacting the direct lending portfolio of the 

Department of Agriculture, including impacts by region and agriculture 

sector, and credit availability within those regions and sectors; 

information on the status of borrower operations impacted by term limits; and 

(iv) recommendations, if appropriate, to address any identifiable unmet credit 

needs. 

(D) SUBMISSION.—The Secretary shall— 

(i) annually submit to the Committee on Agriculture of the House of 

Representatives and the Committee on Agriculture, Nutrition, and Forestry of the 

Senate a copy of the report; and 

(ii) make the report available to the public, including posting the report on the 

website of the Department of Agriculture. 

9 
Table 1. Selected characteristics of term-limited direct operating loan (DOL) borrowers 

With With Borrowers 

outstanding DOL Reaching term reaching term 

direct loan balance limits during limits each Eligible county office 

balance' only calendar year - 

cumulative 2 

calendar year committee electors3 

2019 3,441 2,749 8,140 521 6,470 

2018 2,985 2,358 7,619 365 6,004 

2017 2,934 2,309 7,254 381 5,576 

2016 2,889 2,333 6,873 474 5,144 

2015 2,737 2,221 6,399 470 4,662 

2014 3,295 2,843 5,929 401 4,155 

2013 2,483 2,038 5,528 344 3,793 

2012 2,494 2,043 5,184 364 3,505 

2011 2,493 2,066 4,820 308 3,190 

2010 2,454 2,061 4,512 411 2,926 

2009 2,671 2,332 4,101 433 2,582 

2008 2,040 1,761 3,668 352 2,222 

'Includes direct farm ownership, operating, or emergency loan balance outstanding at 

calendar year end. 

2Number of current and past borrowers who have completed their 6 or more years of 

eligibility and have not received subsequent DOLs; excludes beginning farmers currently 

receiving a waiver. 

3Number of term-limited borrowers who are active producers and, therefore, eligible to 

vote in county office committee elections. 

Sources: USDA-FSA OBFN database, December 31, 2019; USDA-FSA PLAS and County Office 

Committee Election Database, December 315t(2008 through 2019). 

10 
Table 2. Summary balance sheet and liquidity characteristics for term-limited direct operating loan borrowers at time of last obligation 

compared with all other borrowers receiving direct operating loans during that year 

Assets Debt Equity Debt-asset Liquidity Ratio 

Not 

Term Term Term Not Term Term Not Term Term Not Term Term Not Term 

Limited Limited Limited Limited Limited Limited Limited Limited Limited Limited 

2019 1,015,256 455,420 520,609 273,312 494,647 182,107 51.30% 60.00% 1 1 

2018 995,520 506,124 517,428 283,563 478,092 222,562 52.00% 56.00% 1 1.1 

2017 904,183 541,634 499,318 302,864 404,864 238,770 55.20% 55.90% 0.9 1.1 

2016 856,648 547,798 459,486 318,804 397,162 228,995 53.60% 58.20% 1 1 

2015 834,120 499,333 445,369 280,550 388,751 218,783 53.40% 56.20% 1 1.1 

2014 816,370 454,428 433,106 254,199 383,264 200,229 53.10% 55.90% 1.1 1.1 

2013 737,570 502,628 410,097 271,088 327,473 231,540 55.60% 53.90% 1.1 1.2 

2012 834,190 446,817 460,617 238,502 373,572 208,316 55.20% 53.40% 1.1 1.1 

2011 777,671 506,564 405,485 272,429 372,186 234,135 52.10% 53.80% 1.1 1.1 

2010 721,795 561,719 416,636 304,121 305,159 257,598 57.70% 54.10% 1 1 

2009 734,598 564,686 401,839 295,650 332,759 269,036 54.70% 52.40% 1.1 1.1 

2008 627,120 429,864 359,611 230,681 267,509 199,183 57.30% 53.70% 1.1 1 

2007 573,183 411,792 335,422 226,697 237,761 185,095 58.50% 55.10% 1 1 

2006 568,620 408,702 324,737 229,960 243,883 178,742 57.10% 56.30% 1 1 

2005 472,535 401,237 288,864 219,712 183,671 181,524 61.10% 54.80% 0.9 1 

Source: Farm Service Agency, Web-Equity Farm Business Plan Database, June 2019. 

11 
Table 3. Income characteristics of direct operating loan borrowers 

Gross Revenue Net Income Net Income Ratio 

Not Term 

Term 

Limited 

Term Not Term Term Not Term 

Limited Limited Limited Limited Limited 

2019 305,706 153,482 35,773 23,319 11.70% 15.20% 

2018 270,931 143,445 37,136 22,768 13.70% 15.90% 

2017 262,119 140,607 30,263 25,134 11.50% 17.90% 

2016 286,429 138,502 34,368 25,259 12.00% 18.20% 

2015 336,058 122,303 36,727 22,795 10.90% 18.60% 

2014 270,376 127,616 33,180 22,581 12.30% 17.70% 

2013 268,714 132,954 35,389 24,067 13.20% 18.10% 

2012 341,856 169,400 44,405 28,480 13.00% 16.80% 

2011 273,498 196,006 37,300 35,209 13.60% 18.00% 

2010 290,557 210,423 34,807 35,850 12.00% 17.00% 

2009 292,832 213,533 39,944 35,876 13.60% 16.80% 

2008 277,754 171,796 43,493 29,672 15.70% 17.30% 

2007 227,760 173,831 34,768 31,194 15.30% 17.90% 

2006 249,730 184,591 34,482 33,128 13.80% 17.90% 

2005 225,916 160,058 33,138 29,468 14.70% 18.40% 

Source: Farm Service Agency, Web-Equity Farm Business Plan Database, June 2019. 

12 
Direct Obligations and Applications 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

INN DOL DFO iApplications Received 

Source: USDA, FSA, Monthly Management Reports for September. Billions (

$2019) 

0.8 

0.6 

0.4 

0.2 

0 

10 

5 

0 

45 

40 

35 

30 

25 

20 

Figure 1. Combined direct operating loan (DOL) and direct farm ownership (FO) loan obligations and 

number of applications received by fiscal year. 

13 
2.5 16 

2.0 

1.5 

1.0 

Billions (

$2019) 

- 14 

G") 

-12 O.) 

n r+ 

- 10m. it) 

< a 

ro 

0.> 

8 0 343 

o = 

o 

6 0 

Sn 

4 

0.5 

2 

0.0 

Figure 2. Guaranteed operating (VOL) farm ownership (FO) loan obligations and number of 

applications received by fiscal year. 

Guaranteed Obligations and Applications 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Fiscal Year 

Guaranteed OL Noi Guaranteed FO Guaranteed applications received 

Source: USDA, FSA, Monthly Management Reports for September. 

14 
% of all GOL Borrowers 

0 

5 

25 

20 

15 

10 

saanno.uoq loaJIP Ile jo % 

Figure 3. Share of direct operating (DOL), direct farm ownership (DFO), and guaranteed operating 

loan (GOL) borrowers in default by quarter, seasonally adjusted. 

% of borrowers in default by quarter 

(seasonally adjusted) 

‘1,1 ' " ' ?)- -"? e - 

- - 

r6.? °‘'ss, ‘, 4 4 '36, 4 °6 4 4 °,6, 4 4 

—GOL •—DOL DFO 

Source: USDA FSA R540 and Guaranteed Loan System (GLS) databases 

15 
18.5 

16.2 

15.6 15.6 

13.8 13.5 

I 

112 

 12.3 12.5 

I I I 

9.7 

1L3 

10.3 ' 

9.4 

Figure 4. Number of total direct and guaranteed borrowers (operating loan & real estate) as a share 

of total indebted farms, by USDNERS farm typology. 

Share of Indebted Family-Size Farms Receiving Direct or Guaranteed Loans 

20 

18 

16 

14 

12 

10 

8 

4 

2 

Small farms Medium-size farms Large farms All farms 

• 2014 • 2015 • 2016 2017 

Small farms--$100,000 to $350,000 in sales or <$100,000 and primary Large farms -Over $1.0 million in sales. 

occupation =farmer; Excludes nonfamily entities and farm <$100,000 in 

Medium size farms--$350,000 to $1.0 million in sales sales with occupation not farmer. 

Source: USDA ARMS and FSA OBFN and GLS Databases 

16 
FSA Has Strang:Market Presence in Many Areas 

Direct or Guaranteed Borrowers/Total Indebted farms 

(1100 of Interest &Keen In sales) 

(County Office Committee Area) 

=Less than 10% 

=110% to 25% 

=25% to 33% 

33% to 50% 

WI Over 50% 

Figure 5. Ratio of the number of FSA direct and guaranteed (operating & real estate) borrowers to 

the number of indebted farms by FSA's county office committee area, December 31, 2017. 

Sources: 2017 Census Agriculture & FSA's R540, PLAS, and OBFN Data files, 2017. 

17 
Nu

mberof DOL borrowersreachingterm limits 

400 

300 

200 

100 

600 

500 

o 

Figure 6. Number of direct operating loan (DOL) borrowers completing 6 years of eligibility, by 

calendar year. 

Current Status of Borrowers Reaching DOL Term Limits 

by Year Limit Reached 

700 

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

• Current borrower in 2019 • Former borrower-written off Former borrower-deceased 

si Other former borrowers m Beginning farmer in 2019 

Source: USDA FSA OBFN Database, December 31, 2019. 

18 
—% of DOL borrowers 

%of DOL borrowerssince 1993 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

48 % 

Years of eligibility used 

Source: USDA FSA OBFN Database, November 1, 2019. 

Figure 7. Distribution of all direct operating loan borrowers since 1993 by years of eligibility used. 

Figure 8. Location of term-limited direct operating borrowers, September 30, 2019. 

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• CA• • 7 • .; '''' • Reached term limits during 2019 

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thin/Ina , • • • Q % 

• Reached term limits prior to 2019 • fie 

Source: USDA FSA OBFN Database 

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19 
Years of direct operating loan (DOL) eligibility used 

2.63 

2.8 2.8 

2.9 

2.63 

2.7 

2.34 

2.23 

2.55 

2.74 

3.5 

3 

2.5 

2 

1.5 

Avg.# of years 

0.5 

0 

Figure 9. Average years of direct operating loan eligibility used by USDA production region. 

Northeast Lake States Corn Belt Northern Appalachia Southeast Delta Southern Mountain Pacific 

Plains Plains 

USDA Production Regions: Northeast: CN,DE,ME,MD,MA,NH,NJ,NY,PA,RI,VT; Lake States: MI,MN,WI; Corn Belt: IL,IN,IA,M0,0H; Northern Plains: 

KS,NE,ND,SD Appalachian: KY,NC,TN,VA,WV; Southeast: AL,FL,GA,SC; Delta: AR,LA,MS; Southern Plains: OK,TX; Mountain: AZ,CO3ID,M1,NV,NM,UT,WY 

Pacific: CA,OR,WA 

Source: USDA FSA OBFN Database, December 31,2019 

20 
10% 

5% 

9% I 

4% I 

7% 7% 

11% 10% 

20% 

18% 

16% 

14% 

14% 

13% 

12% 

12% 

10% 

8% 9% 

8% 

6% 

4% 

2% 

0% 

% of all DOL borrowers inU.S 

15% 

12% 

10% 

19% 

16% 

9% 

12% 

15% 16% 

8% 

8% 

4% Ii 

Figure 10. National distribution of total direct operating loan (DOL) borrowers, term-limited 

borrowers, and DOL borrowers using 5 years or more of eligibility, by USDA production region. 

Northeast Lake States Corn Belt Northern Plains Appalachia Southeast Delta Southern Plants Mountain Pacific 

lil Term Limited LI All DOL borrowers• Using 5 or more years of DOL eligibility 

Source: FSA OBFN Database, December 2019 

21 
Percent of current borrowers facing DOL term limits by farm type 

BEEF CATTLE POULTRY CORN-SOYBEAN COTTON DAIRY 

Es Term limited N 5 or more years of eligibility 

ource EFSA OBFN & Web-Equity Farm Business Plan data, September 2019 

21.0% 

21.6% 

12.4% 

6.1% 

% of all DOL borrowers since 1993 

Not term-limited 

Term-limited 

0% 5% 10% 15% 20% 25% 

• Restrucutured after last loan obligation • Deceased • Debt settlement 

Sources : USDA-FSA OBFN, OMR3S, DSTH,GLSLOSS, and SCIMS databases, November 2019 

Figure 11. Term-limited direct operating loan (DOL) borrowers and borrowers using 5 or more years 

of eligibility as a share of total borrowers by farm production type. 

Figure 12. Share of all direct operating loan (DOL) borrowers receiving debt write-offs, restructuring, 

or becoming deceased after receiving their latest DOL loan. 

22