Bipartisan bill aims to expand capital access for new farmers

Legislation has been introduced to help beginning farmers and small-scale manufacturers by “modernizing outdated rules” that the bill’s sponsors say are hindering access to affordable capital.

U.S. Sen. Cindy Hyde-Smith (R-Miss.) was an original co-sponsor of the Modernizing Agricultural and Manufacturing Bonds Act (MAMBA or S.2100), which has been reintroduced by U.S. Sen. Joni Ernst (R-Iowa). The measure would update the Internal Revenue Code rules for Industrial Development Bonds (IDBs) and First-Time Farmer Bonds (Aggie Bonds), tax-exempt financing tools to make affordable capital available to small- to mid-sized manufacturers and first-time farmers.

“Amid all the challenges facing American agriculture, we can’t downplay just how hard it is for new farmers to get started. It’s important to our future that these young producers, as well as small-scale manufacturers, have access to vital and necessary capital,” Hyde-Smith said. “It’s time to update these IRS rules so they fit today’s business and financing realities.”

“It’s time to cut the red tape and give our farmers, small manufacturers, and rural lenders room to grow. My bipartisan MAMBA legislation’s commonsense updates will do that by driving new investment and making it easier for beginning farmers and manufacturers to access capital and grow their businesses,” Ernst added.

MAMBA would update the private activity bond provisions pertaining to IDBs and Aggie Bonds by raising the maximum bond size and modernizing rules that will allow more manufacturers and farmers to become eligible. These rules and regulations have not been updated in more than 30 years, which has led to a substantial decline in IDB and Aggie Bond issuances over the last decade.

S.2100 is also cosponsored by Sen. Mark Warner (D-Va.) and is supported by groups like the National Young Farmers Coalition, Independent Community Banks of America, Council of Development Finance Agencies, and Bond Dealers of America.

In an effort to improve the future prospects for family farms and ranches, Hyde-Smith earlier this month also introduced the Helping Ensure Rural Inheritance Transfers Are Generationally Enduring Act (HERITAGE Act) to preserve family-owned agricultural land by adjusting the Internal Revenue Code that now forces families to sell their farmland to pay federal estate tax liabilities. She has also cosponsored Senate Majority Leader John Thune’s permanent death tax repeal bill.