Farmers of Color: The Most Recent COVID Bill Provides Complete USDA Loan Forgiveness and More!

By: Andrea Steel

The American Rescue Plan Act of 2021 (the “Act”), signed into law by President Biden on March 11th includes relief specifically for farmers who belong to groups which have been subjected to racial or ethnic prejudice. Section 1005 of the Act provides for up to 120% payoff of each eligible farmer’s qualifying loan:

“(2) The Secretary shall provide a payment in an amount up to 120 percent of the outstanding indebtedness of each socially disadvantaged farmer or rancher as of January 1, 2021, to pay off the loan directly or to the socially disadvantaged farmer or rancher (or a combination of both), on each—

(A) direct farm loan made by the Secretary to the socially disadvantaged farmer or rancher; and

(B) farm loan guaranteed by the Secretary the borrower of which is the socially disadvantaged farmer or rancher.”

Socially disadvantaged farmers or ranchers are those who belong to “a group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities.” This includes farmers who are African American, American Indian, Alaskan Natives, Asian, Hispanic and Pacific Islanders (collectively referred to in this article as “SD Farmers”).

Most reports reflect $4 Billion was allocated for this assistance, but the language in the bill states “such sums as may be necessary,” giving no clear indication if there is any cap (more on this below).  Each loan payoff amount is determined as of January 1, 2021 and is limited to certain types of USDA farm loans (direct or guaranteed) held by certain borrowers (socially disadvantaged), but this relief otherwise appears to be unrestricted.

Another $1.01 Billion was appropriated to cover various programs aimed at assisting and supporting socially disadvantaged farmers, ranchers, forest land owners/operators and groups, including but not limited, to the following:

  • Outreach and training regarding agriculture, food, credit, nutrition, etc.
  • grants and loans to improve land access, including issues with heirs’ property
  • fund at least one equity commission to address racial equity issues within the USDA and its programs
  • support and supplement agricultural research, education, and extension, as well as scholarships and programs to gain Federal employment (including funds to certain Historically Black Colleges and Universities, Tribal Colleges and Universities, Hispanic-Serving Institutions and Institutions of Higher Education in Insular Area (i.e., U.S. Territories))
  • financial assistance to certain former farm loan borrowers that suffered related adverse actions or past discrimination or bias in USDA programs

The concepts behind these measures were rooted in a bill initially introduced last month by newly elected Georgia Senator Raphael Warnock, referred to as the Emergency Relief for Farmers of Color Act.  Warnock’s bill summarized a history of systemic and institutional factors that have contributed to the significant loss of SD Farmers in the United States.  Much of these findings have been detailed in various government-sponsored studies and reports published over the years,[1] and there is no shortage of additional readings on this topic.[2]

Interestingly, Warnock’s bill provided for $4 Billion for the loan payoffs, but the Act appears to have no such cap with respect to the loan forgiveness provisions – rather, it provides for “such sums as may be necessary” and appears to be able to come from any amount in the Treasury not otherwise appropriated. No other provision in the Act has this open dollar amount language.  Press releases, including one from the USDA, indicate $4B was appropriated for this debt forgiveness, though the language of the Act itself is not clear. In a recent Ag Policy blog article, “Analyzing Loan Totals for Socially Disadvantaged Farmers,” the author surmises there is approximately $3.1 Billion in outstanding loans (current and delinquent) for SD Farmers, which would amount to about $3.7 Billion if the extra 20% was added. It appears most of these loans are concentrated in Oklahoma, Arkansas and Texas.

This relief could wipe away farm loan debt for every SD Farmer in the country, removing a significant barrier that may be preventing more farmers of color from expanding into hemp production. Black farmers make up less than 2% of the farmers in the United States, and with the passage of the 2018 Farm Bill (which removed hemp from being a controlled substance and instead deemed it an agricultural commodity), the opportunity to add a new crop may help increase that number.  This new debt relief may also stimulate familial continuity in farming where the financial burden may have been previously discouraging to younger generations.

Another item on the debt forgiveness that beneficiaries should be on the lookout for is whether such relief will result in phantom income taxes due.  Phantom income is a term sometimes used to describe the phenomenon that when debt is forgiven or cancelled, the payoff amount may be deemed taxable income by the IRS. The potential to receive up to 20% in excess of the loan amount due could help offset any potential income taxes, and while there are some exclusions related to canceled farm debt, consultation with a qualified tax professional about any potential tax implications is strongly recommended.

One unique concept from Warnock’s bill that did not make it into the final language of the Act was the establishment of a National Center for Minority Farmer Agricultural Law Research and Information, which would have provided research, education and guidance on these issues, including pro-bono legal services to minority farmers and the coordination of a national network of attorneys to provide assistance to minority farmers and work on relevant issues. While certainly not precluded, there was no direct mandate for it to be created.

While the USDA already has some programs dedicated specifically for SD Farmers, the relief provided in the Act is historic and we will be watching for developments out of the USDA as to how these programs will be administered and their impact.  We anticipate the USDA will soon be releasing details that will likely be found on its webpage devoted to SD Farmers accessible at:

[1] Pamela Browning, et al., United States Commission on Civil Rights, The Decline of Black Farming in America, (Washington, D.C.: February 1982.), available at; Environmental Working Group, Timeline: Black Farmers and the USDA, 1920 to Present,; GAO, Agricultural Lending: Information on Credit and Outreach to Socially Disadvantaged Farmers and Ranchers Is Limited. GAO-19-539 (Washington, D.C.: July 11, 2019), available at; United States Commission on Civil Rights, Equal Opportunity in Farm Programs: An Appraisal of Services Rendered by Agencies of the United States Department of Agriculture, (Washington, D.C.: February 27, 1965.), available at

[2] Mark Bittman, Black Farmers May Finally Get the Help They Deserve,  New York Times, (March 4, 2021),; Environmental Working Group, Obstruction of Justice: USDA Undermines Historic Civil Rights Settlement with Black Farmers (July 20, 2004),; Vann R. Newkirk II, The Great Land Robbery, The Atlantic (September 2019),; Joel Oliphint, The Long Legacy of Discrimination Against Black Farmers, Columbus Alive, (August 19, 2019); Leah Penniman, A New Generation of Black Farmers Is Returning to the Land (November 19, 2019), Yes!,; Nathan Rosenberg & Bryce Wilson Stucki, How USDA Distorted Data to Conceal Decades of Discrimination Against Black Farmers, The Counter, (June 26, 2019); April Simpson, Where are the Black Hemp Farmers? Stateline, an initiative of The Pew Charitable Trusts (April 1, 2019),; Bill Weinberg, Hemp Farming While Black, Project CBD, (June 15, 2020)



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