Texas farmers could have greater access to low-interest loans under a bill the Senate is considering

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LUFKIN — Texas farmers and ranchers may get a new lifeline from state lawmakers.

The Texas House has approved a bill that expands one of the state’s most successful loan programs for the agriculture industry. That legislation, House Bill 43, is now up for debate in the Senate.

The relief can’t come quickly enough, said state Rep. Stan Kitzman, a Pattison Republican and the bill’s author.

“What House Bill 43 does is it makes funds available to help these producers hang on,” Kitzman said. “It's not subsidies like the federal program. It takes an existing program that's already at the Texas Department of Agriculture — the Young Farmer program — and expands that.”

If approved, the legislation expands options available through the Young Farmer Grant Program and Young Farmer Interest Rate Reduction Program. These programs were created to provide grants or low-interest loans to new farmers between the ages of 18 and 46.

Changes to the interest rate reduction program would be to permit anyone in agriculture, of any age, to apply for loans up to $1 million at an interest rate of 2%. Currently, 18 to 46 year olds can only apply for $500,000 loans at a 5% interest rate.

The age restrictions are also eliminated from the grant program. Under the bill, grantees could receive up to $500,000 while paying a 10% match. Currently, grantees can only receive $20,000 and have to match it 100%. Businesses essential to agriculture, like a cotton gin, would also now be eligible to apply.

The state’s agricultural industry has faced numerous hardships in recent years, and more uncertainty is on the horizon.

Farmers and ranchers, among the largest economic drivers of the state, lost more than $14 billion to extreme weather events alone during the last three years, according to the Texas Farm Bureau.

The federal government also has not upheld its end as far as support for agriculture as farmers have come to expect, Kitzman said. For instance, Congress has failed to update the nation’s farming laws, which were set to expire last year. Only in a last-minute deal did they extend the status quo. Now there is worry about the lasting impact of President Donald Trump’s trade war.

In a state that took the reins on border security and water, Kitzman doesn’t see why Texas can’t do the same for farmers.

“If the feds can't take care of their business then maybe the state is going to have to show a little more initiative,” he said.

While the bill expands the program to service more than just younger farmers, Kitzman doesn’t want it to completely hedge them out, he said. An entire generation of farmers is preparing to retire without anyone to take their place and the Young Farmers program was originally designed to address that.

But the problem is much larger than just succession planning. Between 2017 and 2022, nearly every state in the union lost farms, but Texas led the way with nearly 18,000 farm operations going under, according to the American Farm Bureau Federation. Dozens of East Texas counties, for example, watched as thousands of farms disappeared.

Kitzman is worried about what will happen to the country if the U.S. has to import more of its food from other countries.

“Food security is national security. These people are protecting America by growing our food,” he said. “When other people control your food supply, you're in a perilous place. History just shows that, over and over and over.”

Rodney Schronk is a fifth-generation farmer whose son is getting ready to step up to the plate after graduating from Texas A&M University. Their family has grown cotton, corn, wheat, grain, sorghum and even the occasional sunflower on their land. But this has grown more and more difficult as time has passed and the agricultural environment changes.

“Agriculture in Texas is under direct attack,” Schronk said. “Solar farms, commercial development and housing projects are destroying agriculture in Texas in a very large way.”

Rather than helpful, he sees most moves by the Texas government as harmful to agriculture and worries about how that will impact his son as he prepares to take the helm. But HB 43 was refreshing to see, he said.

The Young Farmers program was good to begin with, but Schronk sees nothing but good to come from expanding eligibility to include their partners in business.

“We need cotton gins,” Schronk said. “We need warehouses to store our cotton. We need exporters that will ship our cotton and get it overseas to the markets. If we don't keep those in business, I can't grow cotton.”

Several agriculture-based organizations and lobbyists have signaled support for the legislation. The Texas Farm Bureau, for example, considers HB 43 as a way to significantly improve the Young Farmer programs, according to spokesperson Gary Joiner.

However, a House Research Organization bill analysis listed some concerns with the bill. It said unnamed critics believe the bill could:

* Compromise business competition in the state

* Require the state to provide significant funds to farmers who haven’t adjusted their business models

* Potentially harm the young farmers the program was originally designed to help

HB 43 passed the House 132-16 on April 23. It was sent to the Senate where it was referred to the Water, Agriculture & Rural Affairs committee, chaired by Sen. Charles Perry, on April 24. The committee met on Monday, but did not discuss it.

Disclosure: Texas A&M University and Texas Farm Bureau have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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