Increased agricultural water quality loan funding proposed

With demand outpacing available monies, an infusion of $15 million is sought to bolster the state loan program funding rural water quality projects implementing agricultural best management practices.

Sponsored by Rep. Jeff Brand (DFL-St. Peter), HF2572 seeks to add $8 million in Fiscal Year 2020 and $7 million in Fiscal Year 2021 to the program. The House Agriculture and Food Finance and Policy Division laid it over Tuesday for possible omnibus bill inclusion.

With credit resources tightening under pressure from a poor agricultural economy and rising interest rates, the AgBMP Loan Program is increasingly being turned to as a funding source for water quality projects, according to Diane Mitchell, assistant director and water plan coordinator for Renville County Environmental Services.

Rep. Jeff Brand

Brand said current demand is $14 million more than available funds. He is unaware of additional funding being sought through other agency budget bills.

“We know that farmers widely want to do good things for their soil and water,” Brand said.

Renville County has utilized the loan program to acquire easement acquisitions and buffer implementation for seven of its 151 public drainage systems. Repayment of the loans are made by all landowners adjacent to the easements through county assessments.

“We’ve seen an even greater need from the ag community to utilize program funding for … feedlot improvements, manure handling equipment, and conservation tillage equipment,” Mitchell said.

Administered by the Department of Agriculture and managed by local units of government, Brand said the program offers five-year, low-interest loans to farmers, rural landowners, and agricultural supply businesses.

Projects can include establishing buffer strips and other structural erosion control measures, improving waste management systems, helping farmers reduce fertilizer and pesticide use through improved application efficiency and use of alternate practices, and replacing aging septic systems.

The program was initially funded through the federal government, with a state appropriation of $5.5 million from the Clean Water Fund approved in 2009, according to the nonpartisan House Research Department.

Sponsored by Sen. Andrew Lang (R-Olivia), the companion, SF2558, awaits action by the Senate Agriculture, Rural Development, and Housing Finance Committee.