The USDA Grant opportunity known as 2501 Program page suggests that for a recipient organization to be considered for grant funding, the Program defines a veteran farmer or rancher (known as VFR) as a person who served in any of the military branches, was discharged honorably and meets one of the following definitions: a) have not operated a farm or ranch, or b) have not operated a farm or ranch for more than 10 consecutive years. Presumably, that might mean has not "operated a profitable farm or ranch" for ten consecutive years. For IRS rules it is necessary that the presumption of profit motive is met 3 of 5 years on farm or ranch activities. Otherwise, it is possible the farm or ranch will be considered to be a hobby by the IRS, not a trade or business. The inputs needed for a farm or ranch to make a profit, or to conduct business like a profit-driven enterprise can be heavily determined by the availability of grants, NOT LOANS to help a farm or ranch get a productive start. To learn more, check out the IRS publication that discusses the Section 183 of the IRS code
It turns out, new or recently started farms and ranches are the intended beneficiaries of these grant funds and should be distributed as a grant to the end-recipient who are underserved persons who are farmers and ranchers that will assist with START UP inputs that support the for-profit making goals of any new farm or ranch. For a legal entity or joint operation to apply and be eligible to distribute the grant funds as a VFR, ALL members must meet the definition of VFR (see prior paragraph). I see some serious problems with the 2501 Program that will complicate the 2501 Program in meeting its stated goals. The problems are related to the lack of clear Program guidelines to assist the third-party organizations in the proper distribution of the grant funds that will both protect the government and ensure the INTENDED beneficiaries actually get the service and funds needed. Underserved people are people who are less likely to have access to cash capital and access to low interest loans.
First, a community-based organization is more localized and focused on underserved American Indian and Black American veterans, for example whose members want to "arm to farm" for myriad of reasons, including for therapy and as a source of income. Unless the grant funds are allocated to the end-recipient as a grant (to pass through) the 2501 program fails to define sufficiently how the public grant funds are to be distributed by the CBO, and leaves open the possibility of underserved communities being excluded, or getting less from the grant program than intended and these underserved persons deserve.
Secondly, a specific CBO may not meet the VFR definition because it most likely doesn't have all members who are beginning farmer or ranchers and are ineligible under the Program's definition of VFR, and this should render the CBO ineligible to apply. This requires the CBO to create a sub-private tax exempt Foundation and declare the exempt status within its charter and apply for tax-exempt status using Form 1023 or 1023 EZ (see more https://www.irs.gov/forms-pubs/about-form-1023) or "spin off "a supporting organization" under the IRS rules Section 509 (a). A supporting organization is closely knit with the CBO and relies at least initially on the CBO's recognized tax exempt status. It is the supporting organization of the CBO that will apply for these grant funds, since all its members in the spin off are particularly screened and meet the definition of beginning farmer or rancher (activities of less than ten consecutive years).
Thirdly, the 2501 Program does not address what of the primary obstacles most faced by new or recent farmers and ranchers, particularly underserved persons are likely to experience. That is, 1) having a lack of access to land, if heirship land title correction isn't a factor to correct prior discriminatory practices (to reassert who is the true legal owners and legal heir)
and 2) the cost of equipment. Equipment and maintenance of the equipment can be pricey. It is important to have a tax-exempt arm of any organization to ensure that at the least, a low-interest loan or grant program (combination) is available to secure necessary equipment for new or beginning underserved farmers and ranchers. This can take into consideration the current size of the operation, possibility of expansion at the current location and/or facts within the farm plan if the goals are reasonably obtainable in two to five years. New or recent farmers and ranchers often do not have access to land, so it is necessary to connect older/close to-retiring farmers and ranchers to these newer farmers and ranchers who aspire to maintain the business (through the possible use of environmental easements and private trusts). Learn more about private trusts here:
Finally, there are enough "farmer education" and networking opportunities already available that have benefited from grants but what about the end-user and access to land and/or equipment for those who actually need working capital, preferably in the form of a grant, not a loan? If America wants to maintain food security and eliminate the increasing occurrence of fresh whole food deserts, then the $45 million in the form of grants had better pass through and help those who are willing and deserve a fair shake to help produce our food. Smaller producers can densely produce fruit and vegetables, often nearer to urban centers and can more easily tailor what they grow for particular high-end crops used for medicinal and food such as herbs, flowers and roots e.g. Calendula, Licorice root or Arnica. It is going to take all "hands on deck" with the enormous obstacles we face because of climate change, overt/covert preferences for corporations and non-dealt with generational exclusions that shouldn't have applied. Start the discussion now.
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