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‘‘(B) in at least 15 States.
‘‘(2) COORDINATION.—The Secretary shall oper-
ate 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 demonstra-
tion program under this section.
‘‘(B) FEDERAL FUNDS.—After a demonstra-
tion program has deposited in the reserve fund
the non-Federal matching funds described in sub-
paragraph (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 funds deposited
in a reserve fund under subparagraphs (A) and
(B), a demonstration program—
‘‘(i) may use up to 20 percent for ad-
ministrative expenses; and
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‘‘(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 sub-
paragraph (A) may be used as additional match-
ing funds for, or to administer, the demonstra-
tion program.
‘‘(E) GUIDANCE.—The Secretary shall im-
plement guidance regarding the investment re-
quirements of reserve funds established under
this paragraph.
‘‘(4) INDIVIDUAL DEVELOPMENT ACCOUNTS.—
‘‘(A) IN GENERAL.—A qualified entity re-
ceiving a grant under this section shall establish
and administer an individual development ac-
count for each eligible participant.
‘‘(B) CONTRACT REQUIREMENTS.—To be el-
igible to receive funds under this section from a
qualified entity, each eligible participant shall
enter into a contract with a qualified entity
under which—
‘‘(i) the eligible participant shall
agree—
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‘‘(I) to deposit a certain amount
of funds of the eligible participant in
a personal savings account, as pre-
scribed by the contractual agreement
between the eligible participant and
the qualified entity; and
‘‘(II) to use the funds described in
subclause (I) only for 1 or more eligible
expenditures described in paragraph
(5)(A); and
‘‘(ii) the qualified entity shall agree—
‘‘(I) to deposit not later than 1
month after a deposit described in
clause (i)(I) at least a 100-percent,
and up to a 300-percent, match of that
amount into the individual develop-
ment account established for the eligi-
ble participant;
‘‘(II) with uses of funds proposed
by the eligible participant; and
‘‘(III) to complete qualified finan-
cial training.
‘‘(C) LIMITATION.—
‘‘(i) IN GENERAL.—A qualified entity
administering a demonstration program
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may provide not more than $9,000 for each
fiscal year in matching funds to any eligi-
ble participant.
‘‘(ii) TREATMENT
OF
AMOUNT.—An
amount provided under clause (i) shall not
be considered to be a gift or loan for mort-
gage purposes.
‘‘(D) INTEREST.—Any interest earned on
amounts in an individual development account
shall be compounded with amounts otherwise de-
posited in the individual development account.
‘‘(5) ELIGIBLE EXPENDITURES.—
‘‘(A) IN GENERAL.—An eligible expenditure
described 
in 
this 
subparagraph 
is 
an
expenditure—
‘‘(i) to purchase farmland or make a
down payment on an accepted purchase
offer for farmland;
‘‘(ii) to make mortgage payments for
up to 180 days after the date of purchase of
farmland;
‘‘(iii) to purchase farm equipment or
production, storage, or marketing infra-
structure or buy into an existing value-
added business;
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‘‘(iv) to purchase breeding stock or
fruit or nut trees or trees to harvest for tim-
ber;
‘‘(v) to pay training or mentorship ex-
penses to facilitate specific entrepreneurial
agricultural activities; and
‘‘(vi) for other similar expenditures, as
determined by the Secretary.
‘‘(B) TIMING.—
‘‘(i) IN GENERAL.—An eligible expend-
iture 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 re-
maining in an individual development ac-
count after the period described in clause (i)
shall revert to the reserve fund of the dem-
onstration program.
‘‘(C) PROHIBITION.—An eligible partici-
pant that uses funds in an individual develop-
ment account for an eligible expenditure de-
scribed in subparagraph (A)(viii) shall not be el-
igible to receive funds for a substantially similar
purpose (as determined by the Secretary) under
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the national organic program established under
the Organic Foods Production Act of 1990 (7
U.S.C. 6501 et seq.).
‘‘(c) APPLICATIONS.—
‘‘(1) ANNOUNCEMENT OF DEMONSTRATION PRO-
GRAMS.—Not later than 180 days after the date of en-
actment 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 ap-
prove 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;
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‘‘(B) the experience and ability of the quali-
fied entity to responsibly administer the project;
‘‘(C) the experience and ability of the quali-
fied entity in recruiting, educating, and assist-
ing 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 dem-
onstration 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 con-
siders to be appropriate.
‘‘(4) PREFERENCES.—In considering an applica-
tion to conduct a demonstration program under this
part, the Secretary shall give preference to an appli-
cation from a qualified entity that demonstrates—
‘‘(A) a track record of serving clients tar-
geted by the program, including, as appropriate,
socially disadvantaged farmers and ranchers;
and
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‘‘(B) expertise in dealing with financial
management aspects of farming.
‘‘(5) APPROVAL.—
‘‘(A) IN GENERAL.—Not later than 1 year
after the date of enactment of this section, in ac-
cordance with this section, the Secretary shall,
on a competitive basis, approve such applica-
tions to conduct demonstration programs as the
Secretary considers appropriate.
‘‘(B) DIVERSITY.—The Secretary shall en-
sure, to the maximum extent practicable, that
approved applications involve demonstration
programs for a range of geographic areas and di-
verse populations.
‘‘(6) TERM OF AUTHORITY.—If the Secretary ap-
proves 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 quali-
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fied entity authorized to carry out the demonstration
program.
‘‘(2) MAXIMUM AMOUNT OF GRANTS.—The aggre-
gate amount of grant funds provided to a demonstra-
tion 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 demonstra-
tion 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 demonstra-
tion program and eligible participants;
‘‘(iii) the number and characteristics of
individuals that have made 1 or more de-
posits into an individual development ac-
count;
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‘‘(iv) the amounts in the reserve fund
established with respect to the program;
‘‘(v) the amounts deposited in the indi-
vidual development accounts;
‘‘(vi) the amounts withdrawn from the
individual development accounts and the
purposes for which the amounts were with-
drawn;
‘‘(vii) the balances remaining in the
individual development accounts;
‘‘(viii) such other information as the
Secretary may require.
‘‘(B) SUBMISSION OF REPORTS.—A quali-
fied entity shall submit each report required
under subparagraph (A) to the Secretary.
‘‘(2) REPORTS BY THE SECRETARY.—Not later
than 1 year after the date on which all demonstration
programs under this section are concluded, the Sec-
retary shall submit to Congress a final report that de-
scribes the results and findings of all reports and
evaluations carried out under this section.
‘‘(f) REGULATIONS.—In carrying out this section, the
Secretary may promulgate regulations to ensure that the
program includes provisions for—
‘‘(1) the termination of demonstration programs;
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‘‘(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 to the Sec-
retary in a case in which a demonstration program
is terminated without transfer to a new qualified en-
tity.
‘‘(g) FUNDING.—
‘‘(1) AUTHORIZATION
OF
APPROPRIATIONS.—
There is authorized to be appropriated to carry out
this section $10,000,000 for each of fiscal years 2008
through 2012.
‘‘(2) ADMINISTRATION
AND
TRAINING.—Of the
total funds made available under paragraph (1) and
in addition to any other available funds, not more
than 10 percent 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;
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‘‘(iii) meals; and
‘‘(iv) materials.’’.
SEC. 5202. INVENTORY SALES PREFERENCES; LOAN FUND
SET-ASIDES.
(a) 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 RANCH-
ER’’;
(ii) in clause (i), by inserting ‘‘ or a
socially disadvantaged farmer or rancher’’
after ‘‘or rancher’’;
(iii) in clause (ii), by inserting ‘‘or so-
cially 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 ranch-
ers’’ after ‘‘and ranchers’’; and