Ernst Works to Expand Opportunities for Future Farmers and Manufacturers
WASHINGTON – Today, U.S. Senator Joni Ernst (R-Iowa) announced a bipartisan effort to expand opportunities for first-time farmers and small to mid-size manufacturers. The Modernizing Agricultural and Manufacturing Bonds Act (MAMBA) will modernize the Internal Revenue Service’s (IRS) rules for Industrial Development Bonds (IDBs) and First-Time Farmer Bonds (Aggie Bonds), providing new financing opportunities for first-time farmers and small to mid-sized manufacturers. The rules for IDBs and Aggie Bonds have not been updated in nearly 30 years.
“Farming and manufacturing are critical to the success of Iowa’s economy,” said Senator Ernst. “By modernizing and clarifying the rules for Aggie Bonds and Industrial Development Bonds for the first time in over 30 years, we can ensure that first-time farmers and entrepreneurs can access the capital they need to get started, create jobs, and fuel our communities.”
“We're thrilled that MAMBA has been introduced in the U.S. Senate with bipartisan support. In the wake of the COVID-19 pandemic and amid increased global economic competition, it has become clear that investments in farmers and manufacturers are necessary to shore up the United States’ supply chains. By updating the 40-year-old rules around agricultural and manufacturing bonds, MAMBA allows for the innovative financing tools necessary to invest in local communities and provide a bulwark against future food and supply chain disruptions,” said Council of Development Finance Agencies President and CEO Toby Rittner. "Senators Brown and Ernst have been great champions of farmers and manufacturers and the development finance industry as a whole, and I'm thankful for their commitment to those key pillars of the U.S. economy.”
“The Iowa Finance Authority is proud to join the National Council of State Agricultural Finance Programs in supporting the MAMBA legislation. The enhancements to Aggie Bonds in the MAMBA legislation will allow more beginning farmers to qualify for the program as well as allow more bond dollars to be utilized when purchasing or constructing facilities. With historically high land prices and increasing interest rates beginning farmers need as many financing opportunities as possible. Aggie bonds provide low interest rate financing opportunities to help beginning farmers realize their dreams of farm ownership.“
MAMBA will:
- Improve the ability of Aggie Bonds to support the next generation of farmers by increasing the limit on small-issue bonds for first-time farmers from a current $450,000 to $1 million;
- Triple the bond size limitation from $10 million to $30 million, indexed to inflation, for IDBs to qualify for small-issue bonds;
- Remove loan restrictions for first-time farmers when purchasing land, farm equipment, or additional agricultural facilities;
- Allow up to a quarter of bond proceeds to be used for facilities that are located on the same site or ancillary to a manufacturing facility;
- Align Aggie Bond definitions with the U.S. Department of Agriculture Farm Service Agency definitions by calculating substantial farmland with the county median rather than the average—making it easier for lenders to provide affordable capital to first-time farmers. In Iowa, this means a beginning farmer could own more acres and still qualify for the program; and
- Expand the definition of manufacturing to reflect today’s advanced manufacturing environment, allowing more businesses to qualify for these financing opportunities.
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