By Neil Thapar, Food and Farmland Attorney //

Photo Credit: Piro Patton

How can we secure food justice in the United States when 98% of all farmland is owned by White people? When Black farmers own less than 3 million acres of rural land today, compared to over 15 million acres just a century ago? When 180 million acres were stolen from Native communities in the 19th and 20th centuries? Developing a just food system requires (1) confronting the reality of racial disparity in farmland ownership and its negative impacts on wealth distribution, health outcomes, and cultural vitality, and (2) replacing the current reality with an equitable distribution of farmland that prioritizes communal stewardship, local control, and diversified ownership.

Successfully developing this future will rely on expanding access to capital for farmers of color beyond the conventional financing institutions that have, so far, failed to meet their needs.

The history of financial services provided to people of color in the United States is checkered with racism -- exclusionary practices like redlining and sharecropping are two well documented examples. More recently, racial discrimination against farmers has been brought to light with a series of class action lawsuits, beginning with an action brought by Black farmers in the late 90s that proved racial discrimination by the United States Department of Agriculture in offering financial resources, including loans and subsidies. Not long after, Native farmers, women farmers, and Latino farmers also filed similar lawsuits against USDA. The legacy of these practices is directly linked to the racial disparities in farmland ownership that exist today.

The conventional format for providing a loan involves securing that loan against some form of property. For farmland purchases, this usually means that the land itself is the security, or collateral, for the loan that the farmer receives. So, if the farmer defaults, the land can be taken by the lender as a substitute for the money owed on the loan. Collateralizing land commodifies it as a financial asset, something that can be traded as casually as money. Historically, for many farmers of color, this process was also often a means to be dispossessed of their land by unscrupulous lenders and racist neighbors. The legacy of these experiences has created a culture of suspicion within many farming communities of color towards the financial services sector. A 2015 report indicated that even Community Development Financial Institutions (CDFIs) had faced challenges reaching farmers of color because communities of color just don’t trust financial institutions, including CDFIs.

If we are going to confront the legacy of institutional racism and create a future of farmland ownership that more accurately reflects the diversity of our agricultural communities, then we need to reevaluate the very foundations of our financing systems.

So these are the questions we're asking at Sustainable Economies Law Center: What would it look like if we integrated principles of trust and non-extraction into the financial services provided to farmers to acquire land? Instead of loans secured by property, what other legal tools do we have to create fair, accountable, affordable relationships between farmers and various sources of capital?

One example is the Financial Cooperative, a revolving loan fund administered by The Working World and implemented by regional networks to support the development of cooperatives throughout the United States. Not only are the lending decisions made locally by a network of peers, but the loans are paired with various forms of technical assistance to support the borrower in achieving success. Additionally, the loans are non-extractive, which means that payments are made only when the borrower becomes profitable, allowing the borrower to focus on developing a successful business instead of worrying about defaulting on their loan.

Another example is the Harvest To Market program, operated as a partnership between Mandela Marketplace and California Farmlink to provide operating capital to farmers they work with, primarily people of color. This innovative loan program relies on shared risk and a relationship of trust that has developed between all three parties. At the beginning of the season, when farmers are most in need of capital, Mandela Marketplace enters into an agreement with the farmer to accept a certain amount of their product at a fixed price. Based on that agreement, California Farmlink makes an interest-free operating loan to the farmer (because Mandela pays the 5% loan fee). As Mandela Marketplace sells the product they get from the farmer, Mandela repays the loan to California Farmlink.

While these examples do not involve land purchases, they embody principles of financial services that center the needs of communities that have been and continue to be, unjustly marginalized from the conventional financial system. Cultivating true food justice requires access to trust-based, non-extractive capital so communities of color can reclaim their land.

------------------------

Read more about our work to build up access to community capital for farmers on our Grassroots Finance page. For more on farmland, read Part 1 and Part 2 of The Future of Farmland blog series.

Like what you read?! Sign up for our monthly newsletter and get next economy news, analysis, events, and more right to your inbox!