Racial disparities in farm loan application processing: Are Black farmers disadvantaged?

Black farmers have historically been discriminated against in services from the federal government, including access to credit. Discrimination can take the form of delayed loan processing requests, which can affect timely planting, harvesting, feeding of livestock, and farm performance. This study u...

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Bibliographic Details
Published in:Applied economic perspectives and policy 2024-03, Vol.46 (1), p.111-136
Main Authors: Mishra, Ashok K., Short, Gianna, Dodson, Charles B.
Format: Article
Language:English
Subjects:
beginning farmers
Black farmers
census of agriculture
collateral
direct farm loan program
Farm loans
Farm Service Agency
Farmers
Farms
Federal government
Harvesting
Livestock
Loans
OLS approach
Race factors
Racial discrimination
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Summary:Black farmers have historically been discriminated against in services from the federal government, including access to credit. Discrimination can take the form of delayed loan processing requests, which can affect timely planting, harvesting, feeding of livestock, and farm performance. This study uses nationwide, farm‐level data from 2009 to 2021 from the Farm Service Agency's direct farm loan program to investigate racial discrimination in the farm loan program. Findings reveal loan processing times average longer for Black borrowers on operating loans, though with a substantial state‐level variation. Specifically, it takes an average of more than two additional days for Black farmers' operating loan applications to be completed and another two additional days to be processed. However, there was no significant difference in time for farm ownership loans suggesting a more nuanced cause than outright racial discrimination. Other factors that increased loan processing time for borrowers included larger loan amounts, more complex loan types, a mix of collateral, and being a new borrower.
ISSN:2040-5790
2040-5804
DOI:10.1002/aepp.13389