Farm Bill: Matched Savings Accounts for Beginning Farmers

Readers of my wife’s food blog will know that she’s passionate about agricultural policy. She and I have imagined ways that some wasteful farm bill spending could be better invested in small farms which would create new entrepreneurial farming jobs and produce healthful food that might actually get consumed locally (as opposed to paying agri-business farmers to raise more surplus export crops, so much of which literally gets left to rot every year).

So I was pleased to get an email today from the terrific folks at the Center for Enterprise Development suggesting that there is at least one innovative new idea in farm policy that’s being seriously discussed in congress this year, and I suspect this is not the only one.

A new Individual Development Account (IDA) pilot program for beginning farmers and ranchers could become law as part of the Farm Bill reauthorization. 

The Beginning Farmer and Rancher Opportunity Act of 2007 (S. 1412) would provide $5 million for financial education provided to savers by nonprofits and matching funds for individual savings.  Savers would receive a 3:1 match, up to $9,000, towards the purchase of farming or ranching equipment, supplies, training, livestock, land, building, or other necessary items.  The U.S. Department of Agriculture would be required to fund programs in at least 15 states.   The maximum grant size would be $300,000 and requires a 25% local match.  Program functions, including account management and financial education could be supported by 20% of the federal grant award, interest on the matching funds, or the entire local match.

The Beginning Farmer and Rancher Opportunity Act of 2007 was introduced by Senators Tom Harkin (D-IA), Charles Grassley (R-IA), Sherrod Brown (D-OH), and Max Baucus (D-MT) and includes public policies like IDAs that will enable future farmers and ranchers to successfully enter into farming and ranching.

Not that $5 million represents a huge re-direction of overall agricultural policy, but it’s a promising start. The emphasis on beginning farmers and ranchers is encouraging, as that population is more likely to produce for the growing local food market and help diversify our agricultural base. And the linking of IDAs (a favorite approach of mine ) with agricultural policy is an interesting way to bring asset-building policy into other settings.

It’s an experiment worth trying, and I hope it gets passed.