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USDA Microloans for Farmers: Participation Patterns and Effects of Outreach

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  • Tulman, Sarah
  • Williams, Robert
  • Higgins, Nathaniel
  • Gerling, Michael
  • Dodson, Charles
  • McWilliams, Bruce

Abstract

The U.S. Department of Agriculture, Farm Service Agency’s (FSA) Microloan program, launched in January 2013, aims to better serve the credit needs of small farms, beginning farmers and ranchers, veterans, and farmers from historically socially disadvantaged groups (women and minorities). These loans are designed to be more convenient and accessible to nontraditional producers, with a shortened and streamlined application and relaxed criteria for managerial experience, production history, and collateral. Using FSA’s direct loan data to examine Microloan uptake patterns, ERS researchers find that, compared with Microloan-sized traditional Direct Operating Loans, (1) a larger share of Microloans have gone to the targeted groups, and (2) Microloans have attracted a larger number and higher share of borrowers who are new to FSA direct loans. Also, an experiment to test the effectiveness of targeted outreach to farmers proved effective within the States that were included in the experiment: significantly more farmers received Microloans in ZIP Codes that had received the informational letters versus those in ZIP Codes that had not.

Suggested Citation

  • Tulman, Sarah & Williams, Robert & Higgins, Nathaniel & Gerling, Michael & Dodson, Charles & McWilliams, Bruce, 2016. "USDA Microloans for Farmers: Participation Patterns and Effects of Outreach," Economic Research Report 253739, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:253739
    DOI: 10.22004/ag.econ.253739
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    References listed on IDEAS

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    1. Susan Dynarski & Judith Scott-Clayton, 2013. "Financial Aid Policy: Lessons from Research," NBER Working Papers 18710, National Bureau of Economic Research, Inc.
    2. Eric P. Bettinger & Bridget Terry Long & Philip Oreopoulos & Lisa Sanbonmatsu, 2012. "The Role of Application Assistance and Information in College Decisions: Results from the H&R Block Fafsa Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1205-1242.
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    Cited by:

    1. Becca B. R. Jablonski & Nigel Key & Joleen Hadrich & Allie Bauman & Sarah Campbell & Dawn Thilmany & Martha Sullins, 2022. "Opportunities to support beginning farmers and ranchers in the 2023 Farm Bill," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1177-1194, September.
    2. Schmidt, Claudia & Goetz, Stephan J. & Tian, Zheng, 2021. "Female farmers in the United States: Research needs and policy questions," Food Policy, Elsevier, vol. 101(C).
    3. Key, Nigel, . "Direct-to-Consumer Marketing and the Survival and Growth of Beginning Farms," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(1).

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    Keywords

    Agricultural Finance; Institutional and Behavioral Economics;

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