Joe Biden just wiped out $1.3 billion of debt for about 36,000 farmers. Thank his Inflation Reduction Act.

The U.S. Department of Agriculture announced the farm loan relief program funded from $3.1 billion set aside in the Inflation Reduction Act allocated toward assisting distressed borrowers of direct or guaranteed loans administered by USDA. The law was passed by Congress and signed by President Joe Biden in August.

The USDA provides loans to about 115,000 farmers and livestock producers who cannot obtain commercial credit. Those who have missed payments, are in foreclosure or are heading toward default will get help from the USDA. Financial difficulties for farmers may be caused by a variety of issues including drought and transportation bottlenecks.

“Through no fault of their own, our nation’s farmers and ranchers have faced incredibly tough circumstances over the last few years,” said Agriculture Secretary Tom Vilsack. “The funding included in today’s announcement helps keep our farmers farming and provides a fresh start for producers in challenging positions.”

About 11,000 farm borrowers delinquent on direct or guaranteed loan payments for 60 days or longer are receiving automatic electronic payments to get them current on their loans. Each farmer with a direct loan received about $52,000 and those with guaranteed loans received about $172,000. The total cost for this group is nearly $600 million. Farmers who received this help will get a letter informing them that their payments have been made and they will remain current until their next annual payment is due in 2023, Vilsack said.

Another $200 million has been used to immediately help 2,100 farm borrowers after their loans had been foreclosed but who still owed money and had their tax refunds and other resources taken by the U.S. Treasury. The money will be used to pay the money these farmers owe to give them a fresh start, Vilsack said. The USDA said farmers in this category received an average of $101,000.

Another $571 million will be used help several additional groups including:

—7,000 farmers who during the COVID pandemic delayed loan payments to the end of their loans. This will cost $66 million.

—1,600 farmers that face bankruptcy or foreclosure will get help on a case-by-case basis with individual meetings to assess their problem and find solutions at a cost of $330 million.

—14,000 financially distressed farm borrowers facing cash flow problems who ask for help to avoid missing a loan payment will receive additional assistance. Vilsack said these issues could be brought on by drought or by low levels on the Mississippi River that is slowing barge traffic causing grain transportation issues. Up to $175 million will be available for this program.

The money announced Tuesday is the first round of payments designed to help insure the farmers stay in business or re-enter farming.

The remainder of the $3.1 billion will be used to help relax unnecessary loan restrictions and provide further assistance to be announced later, the USDA said.

Farmers assisted by the program have been found by the USDA to be distressed borrowers hard hit by pandemic-induced market disruptions exacerbated by more frequent, more intense, climate-driven natural disasters, the USDA said.

President Joe Biden and his administration continue to endure criticism for enacting a program to forgive some college loans but some of the Republican politicians who have criticized that program did not respond to questions about whether they support the farm loan help.

The USDA also provided $31 billion to help nearly a million farmers offset lower sales, prices and other losses due to the coronavirus pandemic in 2021 and 2022, the U.S. Government Accountability Office has said.

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