Rural Services of Indiana, Inc.

Mediation Scenarios

Farm Service Agency

The Basics:

FSA makes direct and guaranteed farm ownership (FO) and operating loans (OL) to
family-size farmers and ranchers who cannot obtain commercial credit from a bank, 
Farm Credit System institution, or other lender.  FSA loans can be used to purchase land,
livestock, equipment, feed, seed, and supplies.  The loans can also be used to construct
buildings or make farm improvements.  FSA loans are often provided to beginning farmers 
who cannot qualify for conventional loans because they have insufficient financial resources.  
FSA also helps established farmers who have suffered financial setbacks from natural 
disasters, or whose resources are too limited to maintain profitable farming operations.

Another responsibility for FSA is the Conservation Reserve Program (CRP) which is a
voluntary program for agricultural landowners.  Through CRP, you can receive annual rental payments

and cost-share assistance to establish long-term, resource conserving covers on
eligible farmland.  The Commodity Credit Corporation (CCC) makes annual rental payments
based on the agriculture rental value of the land, and it provides cost-share assistance for up
to 50 percent of the participant's costs in establishing approved conservation practices. 
Participants enroll in CRP contacts for 10 to 15 years. 

Example 1: A hog farmer's request for a loan was denied due to his inability to develop
a feasible plan of operation.  He was told that his feasible plan must be based on his proven
record of production and financial management.  He has three issues that needed resolved
before his loan could be approved.  The projected family living expenses were too low for a
family of his size, his projected fat hog sales and sow inventory did not seem to match and his
debt to the local feed mill was all being shown on his Schedule K as being due immediately. 
Through the mediation process he went through 3 months of family living receipts and
recalculated the family living costs to reflect a more accurate figure.  Updated information
with the regard to the number of sows and the farrowing cycles was provided to FSA. 
He was given the opportunity to provide the Agency a written agreement between himself
and the feed mill showing the he had a payment plan with a lower interest rate with them.

Example 2: A farmer was denied his request to have 5.8 acres of CRP accepted for an
extension through the Re-Enrollment Extension Program.  He stated that he didn't remember
anyone explaining what he needed to have completed before the program deadline. 
Through the mediation session the Agency agreed to work with him to get the acreage into
compliance.  He agreed to plant the trees that were necessary for the state to allow relief.

Rural Housing Assistance

The Basics:
Low income individuals or families may need assistance in order to purchase a home,
or to renovate, or repair their current residence.

Example 1: The owner of a small business is denied a loan to purchase a home because
of little or no credit history in her name.  She has owned the business for five years and has
always paid her rent and utilities on time however; they are in the business name rather
than her name.  She currently lives rent free with her mother and has no debt other than
her car insurance, cell phone and the utilities and lease on the business.  With the help of
a mediator the agency has agreed to accept payment history for the car insurance, cell
phone, lease and utilities.  Since she owns the business she is responsible for the lease
and utilities at the business which increases her credit record.  She was able to receive the
loan needed to purchase the house that she dreamed of.

Example 2: A single woman would like to renovate the dilapidated home next to her
mom's where she currently resides so she can care for her sickly mom without being in
the same residence.  She was laid off from a job two years ago and wasn't able to collect unemployment for four months.  As a result some of her debts were turned over to collection
and she lost her apartment which forced her to move in with her mom.  She has since
returned to work and has been able to keep up with her bills and has paid off the debts that
were in collection.  She has been using cash to pay for everything.  She was denied
assistance from the agency due to lack of favorable traditional and non-traditional credit. 
With the assistance of a mediator she knows what steps she will need to take in order for
her to improve her credit.  She also understands the condition that the home she would
like to purchase needs to be in before Rural Housing will approve a loan for it.

Risk Management
The Basics:
The Risk Management Agency (RMA) promotes, supports, and regulates sound risk 
management solutions to preserve and strengthen the economic stability of America's
agricultural producers by providing crop insurance to American producers, determining the
premium rate, administering premium and expense subsidies, approving and supporting
products, and reinsuring companies.

Buying a crop insurance policy is one risk management option.  Producers should always
carefully consider how a policy will work in conjunction with their other risk management
strategies to insure the best possible outcome each crop year.  Insurance plans provide
different types of insurance coverage to specific commodities.  Producers who purchase
crop insurance are covered for all natural causes of loss listed in their policies.  

Example: A producer has requested an Actuarial Change asking that acreage be assigned
lower insurance premium rates for corn and soybeans.  The request was denied based
on the county soil survey, the county flood map, and the topographical map which indicates
the land is subject to above average loss frequency and severity and should remain in high risk. 
The producer claims that the land has never flooded and if any insurance payments were
made it was due to preventative planting.  Some of his ground is elevated and it would never
flood.  He asks during a mediation session if the agency would be willing to visit his farm so they
can see in person what he is talking about.  The agency agrees to a farm visit during which
they are able to obtain soil samples and review contour images.  As a result of the visit one
field will have a new written agreement issued with standard rate while the other will remain
as high risk.  It was explained to the producer that the rate may be lowered if significant
land improvements are done and documentation including pictures and measurements are
provided to Risk Management Agency.  The producer was satisfied with the decisions made
by the Agency.