OMAHA (DTN) -- More than one-third of USDA farm-loan dollars to farmers -- at least $1.7 billion, based on recent data -- now will need approval not only from the Farm Service Agency but also the Department of Government Efficiency (DOGE), according to a Reuters report.

Reuters on Wednesday first reported a memo from Houston Bruck, FSA's deputy administrator for farm loan programs. The memo, Reuters reported, details a new policy that all direct and guaranteed loans over $500,000 will require clearance from the Office of the Secretary and DOGE to ensure lending complies with an executive order from President Trump on government cost efficiency.

Along with the approval for loans of $500,000 or higher, other loans to "formal entities" such as corporations will also need approval from the Secretary's office and DOGE, Reuters reported.

"We recognize the potential impact that this effort may have on our customers, lending partners, and FSA staff, and are committed to ensuring minimal disruption to service delivery," Bill Beam, USDA's Farm Service Agency administrator, stated in a note that went along with the memo, according to Reuters. Beam is a Pennsylvania farmer who was appointed to lead FSA in late March.

It's unclear how DOGE would determine if a farm loan application meets the president's rules for cost efficiency.

USDA's communications team, in response to DTN, stated to fulfill Executive Order 14222 from the White House, "The USDA Efficiency Team reviews many loans, guarantees, and payments. While most direct aid to individuals is exempt from the process, the team does assess payments over $500k for fraud and national security concerns. These reviews are currently prompt and without undue delay to the program recipient."

A USDA report to Congress by the Biden administration detailed farm loans in Fiscal Year 2023. FSA that year provided 22,600 direct and guaranteed loans to producers totaling $4.7 billion.

A review of that report by DTN showed more than $1.7 billion in loans to nearly 2,200 producers would have been forced to undergo added reviews by the Office of the Secretary and DOGE.

Nearly two-thirds of direct loans to producers are operating loans, according to FSA. Direct loans are capped at $600,000.

In FY 2023, FSA approved 997 direct loans to producers for $500,000 or larger, or about 5.4% of all direct loans to producers. In terms of dollar figures, the larger loans take up a bigger slice of FSA's loan portfolio. Direct loans over $500,000 amounted to $572 million, or more than 20% of all direct loan dollars issued by FSA that year.

An FSA spreadsheet breaking down direct loans by state shows Iowa, Oklahoma, Nebraska, Kansas and Arkansas, in that order, had the most direct loans in FY 2023 that topped $500,000.

Guaranteed loans are backed by USDA but are issued by banks or Farm Credit institutions. The majority of guaranteed loans are used to buy a farm property, but they can also be used for operating loans. Guaranteed loans have a $2.2 million cap.

FSA approved 1,190 guaranteed loans to producers over $500,000 in FY 2023. Guaranteed loans over $500,000 totaled $1.17 billion, or nearly 59% of all loan guarantees approved by FSA.

Corn and soybean producers are the biggest sector for guaranteed loans, though USDA statistics show the guaranteed loan volumes are more balanced by sector than direct loans. Established farmers also take up a larger share of guaranteed loans instead of beginning farmers, according to FSA data.

FSA data shows producers in Arkansas, Missouri, Ohio, Louisiana and Minnesota, in that order, were the largest users of guaranteed loans over $500,000 in FY 2023.

A spokeswoman for Sen. John Boozman, R-Ark., chairman of the Senate Agriculture Committee, responded to DTN on Thursday that committee staff were still trying to get information from USDA about the change in loan approvals.

Sen. Amy Klobuchar, D-Minn., ranking member of the Senate Agriculture Committee, issued a statement questioning why the Trump administration would make it more complicated for farmers to get USDA loans. "With rising input costs and trade chaos already creating uncertainty for farmers, making it more difficult to access federal loans could mean the difference between survival and being forced to shut down. These producers often have no other options for credit, and delays in approving operating loans could prevent farmers from getting crops in the ground or animals fed. I urge the administration to ensure the personal information of farmers is protected and that this doesn't lead to unnecessary delays or denials for our farmers."

Congress has been looking to increase FSA loan limits because of higher land values and input costs. Under the House farm bill last year, guaranteed loan limits for farm ownership would increase to $3.5 million and limits for FSA direct operating loans would increase to $750,000.

Repayment terms for direct operating loans are scheduled from one to seven years. Financing for direct farm ownership loans cannot exceed 40 years. Interest rates for direct loans are set periodically according to the government's cost of borrowing. Guaranteed loan terms and interest rates are set by the lender, USDA stated in a recent news release reminding producers that the department offers loans.

USDA this week has been touting its first 100 days in office with multiple news releases. On Thursday, a news release stated Agriculture Secretary Brooke Rollins "has worked to put Farmers First and reverse the woke Diversity, Equity, and Inclusion (DEI) agenda of the Biden administration." Rollins touted canceling 3,000 contracts and grants totaling $5.5 billion.

"I look forward to finishing our work of cleaning out Biden's bureaucratic basement and moving forward with this Administration's priorities that put American farmers first," Rollins said in the release.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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