A Summary of the Report on the Relative Cost Effectiveness of the Farm Service Agency’s Farm Loan Programs
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Results of a study completed for Congress indicate direct program borrowers are more
financially stressed than guaranteed borrowers and that many current farm loan program
borrowers may not be able to continue farming, at least in the short-term, without access to
government subsidized credit. The study findings are generally consistent with the missions of
the direct and guaranteed farm loan programs, yet the combination of higher delivery costs and
loan subsidy costs means direct lending programs require larger amounts of federal resources to
meet their objectives than do similar guaranteed farm loan programs. However, serving many
limited resource or otherwise economically disadvantaged farmers through guaranteed loan
programs may be difficult without significant program adjustments or additional financial
subsidies.