Agriculture is a pillar of Minnesota’s economy, creating $112 billion in economic activity and more than 430,000 jobs across the state. However, Minnesota farmers have been facing devastating challenges, from the weather to low commodity prices to health crises.
Senate DFLers have made working with farmers and responding to the challenges they face a priority. A bill that appropriates $50 million for user finance loans was referred to the Senate floor. The money used for this program lowers the interest rates on loans issued to qualifying farmers for several programs under the direction of the Rural Finance Authority (RFA). While the RFA has the ability to issue loans directly to farmers, it usually partners with private lenders. The RFA purchases a portion of the loan from the lender and charges a lower interest rate than the market would allow. This results in a blended rate that is lower than what is typically available in the private market.
The RFA was established in the 1980s in response to the farm credit crisis. The Authority is controlled by a board that consists of commissioners, the state auditor, and six members appointed by the governor and approved by the Senate. (SF 3408)