S1879

An Act establishing a “Value-added Agriculture Loan Program,” and supplementing Title 34 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Authority” means the New Jersey Economic Development Authority, established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

“Department” means the Department of Agriculture.

“Farming” means the cultivation of land for the production of agricultural crops, the raising of poultry, the production of eggs, the production of milk, the production of fruit or other horticultural crops, grazing, the production of livestock, aquaculture, or hydroponics, the production of forest products, or other activities designated by the department pursuant to rules and regulations.

“Value-added product” means a change in the physical state or form of the food or other agricultural product; the production of food or other agricultural product in a manner that enhances its value; or the physical segregation of an agricultural commodity, food, or other agricultural product in a manner that results in the enhancement of the value of that commodity, food, or agricultural product.

2. a. The New Jersey Economic Development Authority, in consultation with the Department of Agriculture, shall develop and administer a value-added agricultural product loan program, to be called the “Value-added Agriculture Loan Program,” to help farmers, cooperatives, and farmer-owned corporations or partnerships enter into activities related to the processing or marketing of value-added products. Each loan shall be in an amount between $5,000 and $10,000. The goal of the program shall be to generate new products, create and expand marketing opportunities, and increase producer income.

b. (1) A farmer seeking a loan pursuant to this section shall apply to the authority, in a form and manner as determined by the authority, and shall include such information as the authority determines is necessary, in consideration of the provisions of this act.

(2) In order to receive a loan from the authority, pursuant to this act, the farmer shall:

(a) be a resident of the State;

(b) use the loan for a farm located within the State;

(c) use the loan for planning activities or for working capital expenses related to producing and marketing a value-added agricultural product. "Planning activities" shall include, but not be limited to: conducting feasibility studies and developing business plans for processing and marketing the proposed value-added product. "Working capital expenses" shall include, but not be limited to: processing costs, marketing and advertising expenses, and some inventory and salary expenses;

(d) materially and substantially participate in farming; and

(e) satisfy any other criteria established in the rules and regulations adopted pursuant to section 3 of this act.

(3) The authority shall review completed applications and approve applications that meet the requirements of this section and the rules and regulations adopted pursuant to section 3 of this act.

c. A loan to a farmer under this section shall be made pursuant to a loan agreement with the authority, shall bear interest at rates and terms deemed appropriate by the authority, and shall contain other terms and conditions considered appropriate by the authority that are consistent with the purposes of this act and with the rules and regulations adopted by the authority pursuant to section 3 of this act.

d. The authority may, in its discretion, require a farmer that receives a loan pursuant to this act to submit an audited financial statement to the authority in order to ensure the farmer’s continued viability.

e. The authority may, either through the adoption of rules and regulations, or through the terms of the loan agreement made pursuant to subsection c. of this section, establish terms governing the incidence of default by a farmer that receives a loan under the program administered pursuant to this act.

f. The authority may participate in, and cooperate with, programs of the Consolidated Farm Service Agency in the United States Department of Agriculture, Federal Land Bank, or any other agency or instrumentality of the federal government, or with any program of any other State agency in the administration of the loan program.

3. The New Jersey Economic Development Authority, in consultation with the Department of Agriculture, shall adopt, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to effectuate the purposes of this act.

4. This act shall take effect immediately.

STATEMENT

This bill would require the New Jersey Economic Development Authority (“EDA”), in consultation with the Department of Agriculture, to develop and administer a value-added agricultural product loan program, which would be called the “Value-added Agriculture Loan Program,” to help farmers enter into activities directly related to the processing or marketing of value-added products. Each loan would be in an amount between $5,000 and $10,000. The goal of the program would be to generate new products, create and expand marketing opportunities, and increase producer income.

Under the bill, a “value-added product” means a change in the physical state or form of the food or other agricultural product; the production of food or other agricultural product in a manner that enhances its value; or the physical segregation of an agricultural commodity, food, or other agricultural product in a manner that results in the enhancement of the value of that commodity, food, or agricultural product.

To qualify for a loan under the program, a farmer would need to:

1) be a resident of the State;

2) use the loan for a farm located within the state of New Jersey;

3) use the loan for planning activities or for working capital expenses related to the production and marketing of a value-added agricultural product, which planning activities may include the conducting of feasibility studies and the development of business plans, and which working capital expenses may include processing costs, marketing and advertising expenses, and some inventory and salary expenses;

4) materially and substantially participate in farming; and

5) satisfy any other criteria established in the EDA’s rules and regulations.

The bill would require an EDA-approved loan to a farmer to be made pursuant to a loan agreement with the authority, to bear interest at rates and terms deemed appropriate by the EDA, and to contain other terms and conditions considered appropriate by the EDA that are consistent with the purposes of the bill and the EDA’s regulations. The EDA may require a farmer who receives a loan under the program to submit an audited financial statement to the EDA in order to ensure the farmer’s continued viability, and may, either by regulation or through the terms of the loan agreement, establish terms governing the incidence of default by a farmer who receives a loan under the program. The EDA would have the authority to participate in programs of the United States Department of Agriculture Consolidated Farm Service Agency, the Federal Land Bank, or any other federal or State agency in the administration of this program.

The purpose of this bill is to develop and administer a farmer loan program to facilitate the economic sustainability of commercial farming. Direct marketing and value-added products are two of the best strategies farmers can employ to improve net profitability. Value-added products can open new markets, enhance the public's appreciation for the farm, and extend the marketing season.