Senator Welch Reintroduces Bill as USDA Confirms Scale of Vermont Flood Impact
The legislation comes as Vermont agriculture faces devastating floods, decades of consolidation, rising operational costs, and a farm debt load that has reached unprecedented levels nationally.
Senator Peter Welch has reintroduced federal legislation aimed at overhauling agricultural lending to help Vermont’s struggling dairy farmers and other agricultural producers facing record debt levels and climate disasters.
The Fair Credit for Farmers Act (H.R. 6169), co-sponsored by Senators Kirsten Gillibrand (D-N.Y.) and John Fetterman (D-Pa.), along with Representative Alma Adams (D-NC), targets changes to the Farm Service Agency that could fundamentally alter how Vermont farmers access credit.
The legislation comes as Vermont agriculture faces what many describe as a perfect storm: three years of devastating floods, decades of dairy farm consolidation, rising operational costs, and a farm debt load that has reached unprecedented levels nationally.
Record Debt Meets Vermont’s Dairy Crisis
American farmers are carrying more debt than ever before. The U.S. Department of Agriculture estimates that farm sector debt will exceed $591 billion in 2025, according to the USDA Economic Research Service’s latest forecast. This represents a $28.3 billion increase from 2024, with real estate debt reaching $386.4 billion and non-real estate debt (money borrowed for seeds, feed, and fuel) hitting $205.4 billion.
For Vermont, these national statistics translate into an acute local crisis. The state has lost 313 dairy farms—a 37% decline—between 2017 and 2022 alone, according to UVM Extension analysis of Census of Agriculture data. This continues a decades-long trend: Vermont had 11,206 dairy farms in 1947, but only 868 remained by 2015, according to a Middlebury College study of Vermont’s dairy industry.
Despite losing nearly half its dairy farms over the past decade, Vermont still produces 63% of all milk in New England. This apparent contradiction reveals the consolidation taking place: surviving farms are dramatically increasing their herd sizes while smaller operations disappear. Addison County alone now accounts for over 26% of the state’s milk sales.
The human cost of this consolidation is what drives Welch’s legislation. “Vermont farmers are facing hardships caused by shifting markets and rising costs,” Welch stated in announcing the bill’s reintroduction. The senator specifically cited Vermont’s experience with “brutal back-to-back floods in 2023, 2024, and 2025.”
When Federal Disaster Relief Fails
The flooding reference is not rhetorical. Vermont experienced the “Great Vermont Flood” in July 2023, followed by severe flooding in July 2024, and another localized flash flood event on July 10, 2025, according to the National Weather Service.
Critically, Governor Phil Scott’s request for a federal Major Disaster Declaration for the July 2025 storm was denied by FEMA and the Trump Administration in October 2025. The denial, based on damages not meeting federal thresholds despite three consecutive years of disasters, left many Vermont farmers without access to emergency relief programs.
This denial provides crucial context for the Fair Credit for Farmers Act. Currently, many emergency loan programs are triggered only by Presidential Disaster Declarations. When that declaration is denied, farmers are left without a federal safety net. Welch’s bill would allow the Farm Service Agency to offer payment deferments based on “economic distress” independent of FEMA declarations.
What the Bill Would Actually Do
The Fair Credit for Farmers Act proposes five major changes to how the federal government lends money to farmers:
Two-Year Payment Deferment
The bill would allow “economically distressed” borrowers to defer payments on direct Farm Service Agency loans for two years at low interest rates. For Vermont dairy farmers facing consecutive years of climate disasters or market volatility, this provision functions as a liquidity bridge—allowing them to retain cash flow for daily operations like feed and veterinary care rather than loan payments.
The legislation would also waive guaranteed loan fees for certain borrowers. These are loans made by private banks but backed by federal guarantees.
Protection of Farmers’ Homes
Current FSA lending practices often allow lenders to secure loans with collateral worth up to 150% of the loan value, frequently placing liens on farmers’ personal residences even for smaller operating loans. The bill would limit collateral to a maximum of the full loan value and protect farmers’ homes as a “last resort” option for seizure.
This provision addresses what advocates call the “collateral trap.” If a farmer borrows $100,000 but has $500,000 in land and home equity, a blanket lien prevents them from using that extra equity to secure other credit for repairs or expansion.
Elimination of Seven-Year Term Limits
Perhaps the most philosophically significant change, the bill would eliminate the current seven-year eligibility limit for direct FSA operating loans. Since its inception, the FSA has been designed as a “lender of last resort”—farmers are expected to improve their creditworthiness and “graduate” to commercial banking within seven years.
By removing this requirement, the legislation implicitly acknowledges that many Vermont family farms will never become attractive to private lenders given current market conditions and consolidation pressures. This transforms FSA direct loans from a temporary bridge into what amounts to a permanent public credit utility for small-scale agriculture.
For Vermont dairy farmers operating on margins too thin to interest commercial banks, this change could mean the difference between survival and closure.
Shifting the Burden of Proof in Appeals
When farmers appeal adverse FSA decisions—such as loan denials—to the USDA’s National Appeals Division, they currently bear the burden of proving the agency made an error. For farmers without legal representation navigating complex federal regulations, this creates a significant disadvantage.
The bill would shift this burden to the FSA for farmers with annual farm income of $300,000 or lower. The agency would have to affirmatively prove its decision was correct and consistent with regulations.
This change addresses documented inequities in loan processing. A Government Accountability Office report found that minority farmers continue to experience lower approval rates and longer processing times compared to white farmers. In 2000-2001, the FSA took an average of four days longer to process loans for Hispanic farmers, according to GAO testimony.
Loosening Restrictions on Beginning Farmers
The bill would reduce experience requirements for beginning farmers. Current regulations require three years of farm management experience before qualifying for certain FSA programs. The legislation aims to lower barriers to entry for new farmers trying to start operations.
The Economic Context: Why Now?
The timing of Welch’s legislation reflects several converging economic pressures on Vermont farmers.
While USDA forecasts show that net farm income nationally will increase by 40.7% in 2025 to reach $179.8 billion, this recovery is heavily dependent on government disaster assistance payments rather than market-driven profitability. Direct government payments to farmers are forecast to reach $40.5 billion in 2025—more than triple the 2024 amount—largely due to disaster aid, according to the USDA Farm Sector Income Forecast.
Cash receipts for crop sales are actually forecast to decrease by $6.1 billion (2.5%) in 2025, with corn and soybean receipts falling significantly. This decline reflects both market volatility and the impact of trade policies.
The Trump Administration’s “reciprocal tariffs” policy, announced in April 2025, has created uncertainty in agricultural export markets. Historical data from previous trade disputes shows that such tariffs trigger retaliatory measures from trading partners that disproportionately target U.S. agriculture. During the 2018-2019 trade war, U.S. soybean exports to China fell by 77%, according to research cited by the Washington International Trade Association.
For Vermont farmers, the combination of unstable export markets, three years of flood damage, consolidation pressure, and the denial of disaster relief creates what Welch describes as a crisis requiring structural reform of agricultural credit.
Who Qualifies as “Economically Distressed”?
The bill’s key provisions apply to “economically distressed” borrowers, but the legislation would leave the specific definition to USDA rulemaking. Generally, this category has included farmers experiencing significant income loss due to natural disasters, market downturns, or other circumstances beyond their control.
For Vermont, this would likely encompass dairy farmers affected by the 2023-2025 flooding who were denied federal disaster declarations, as well as operators facing margin compression from consolidation and volatile milk prices.
Potential Trade-offs and Concerns
While the bill’s sponsors frame the legislation as correcting systemic unfairness in agricultural lending, the proposed changes carry potential complications.
Private lenders participating in the FSA Guaranteed Loan program rely on robust collateral requirements to offset risk. By limiting collateral seizure and protecting farmers’ homes, the bill increases risk for these lenders. In response, private banks may reduce participation in FSA-guaranteed programs, raise interest rates, or tighten credit standards for marginal borrowers. This could paradoxically force more farmers onto direct FSA loans funded entirely by taxpayers, or reduce total credit availability.
The shift in appeals burden, while addressing documented discrimination, may also slow loan processing. FSA offices, already facing staffing challenges, may become more cautious in decision-making to ensure every file can withstand appeal scrutiny.
Removing term limits represents a fundamental philosophical shift—from viewing federal agricultural lending as temporary assistance to accepting it as permanent infrastructure for small farm survival. Whether this constitutes sound policy depends on one’s view of the strategic value of preserving small-scale agriculture against consolidation pressures.
The legislation’s sponsors have not released cost estimates, but extending loan terms, deferring payments, and waiving fees would reduce federal revenue and increase the subsidy rate for the FSA loan portfolio.
Vermont’s Specific Vulnerability
The legislation is heavily tailored to Vermont’s agricultural reality. While farm numbers have plummeted, milk production has remained relatively stable, creating what economists describe as a “survival of the biggest” dynamic. The consolidation benefits large operations with economies of scale while squeezing out the family dairy farms that have defined Vermont’s rural landscape and economy for generations.
Vermont’s dairy farms are capital intensive—cows must be fed and milked daily regardless of milk prices or available cash. When prices drop or feed costs spike, dairy farmers burn through cash reserves immediately. The two-year payment deferment proposed in the bill is specifically designed for this dairy cycle, allowing farmers to survive a 24-month price dip without liquidating their herds.
The flooding adds another layer of vulnerability. Farm infrastructure damage from three consecutive years of major flood events has stressed operations already running on thin margins. With federal disaster relief denied for the 2025 flooding, many Vermont farmers have exhausted their financial buffers.
Historical Context: The Discrimination Legacy
Welch’s press release notes that the FSA “has also been criticized for discriminatory lending practices.” This understates a well-documented systemic failure spanning decades.
The USDA faced massive class-action lawsuits, most notably Pigford v. Glickman in 1997, regarding discrimination against Black farmers. Black farmers lost 80% of their land between 1910 and 2007, a decline largely attributed to credit denial by local USDA committees, according to the Center for American Progress.
The Biden Administration attempted to address this legacy through the American Rescue Plan Act, which included provisions for debt relief specifically for “socially disadvantaged” minority farmers. However, federal courts blocked this program following lawsuits from conservative legal groups arguing it constituted unconstitutional reverse discrimination.
The Fair Credit for Farmers Act appears strategically designed to achieve similar equity goals through race-neutral language. By focusing on “economically distressed” borrowers and setting income thresholds ($300,000 for the appeals burden shift) rather than using explicit racial categories, the bill attempts to channel assistance to underserved populations without triggering the Equal Protection Clause challenges that paralyzed previous efforts.
What Happens Next
The Fair Credit for Farmers Act faces significant hurdles despite bipartisan concern about agricultural stress.
The legislation was introduced in the 119th Congress, which convened in January 2025. With Republicans controlling the House of Representatives and Democrats holding a narrow Senate majority, the bill’s prospects depend on whether it can attract Republican co-sponsors.
Agricultural legislation typically moves through the House and Senate Agriculture Committees. These committees would hold hearings, potentially modify the bill, and vote on whether to advance it to the full chambers.
The bill’s cost—which has not yet been estimated by the Congressional Budget Office—will likely prove controversial. In an environment where conservative policy organizations like the Heritage Foundation are pushing for cuts to agricultural subsidies, expanding FSA lending authority and removing fiscal guardrails faces skepticism from fiscal hawks.
However, agricultural distress crosses party lines. Republican representatives from farming states may support provisions that help their constituents, even if they oppose other aspects of the bill. The legislation could potentially be incorporated into a larger farm bill reauthorization, which would provide more leverage for passage.
For Vermont farmers watching this legislation, the timeline remains uncertain. Even if the bill advances quickly through committee, floor votes in both chambers, potential amendments, and reconciliation between House and Senate versions could extend into late 2026 or beyond.
In the meantime, Vermont farmers facing the challenges the bill aims to address—flood recovery without federal disaster relief, debt service on thin margins, and consolidation pressure—continue to make day-to-day decisions about whether to stay in farming or sell out to larger operations.
The fundamental question underlying Welch’s legislation is whether American agricultural policy should evolve to accept that many family farms require permanent federal credit support to survive in a consolidated market, or whether the current “graduation” model remains viable. For Vermont’s remaining dairy farmers, that question is not academic—it is existential.