Increasing farmer microloan applications
A new letter increases farmers' access to credit by 22%
Microloans for farmers
What was the challenge?
Many farms in the United States, including smaller and newer enterprises, do not have access to credit needed to build and sustain operations. The Farm Service Agency (FSA) at USDA provides small amounts of credit (microloans) to qualified borrowers who have been unable to obtain commercial lender credit.
What was the program change?
We designed a letter that provided information on the benefits of the microloan program, a shortened URL for accessing more information online, and customized contact information directing each farmer to the loan officer in his or her home county.
How did the evaluation work?
FSA mailed the new letter to a sampling of farmers in randomly- selected zip codes, including individuals who had not previously participated in USDA programs or been a customer of FSA.
What was the impact?
The letters more than doubled the amount of microloan-related activity in FSA county offices, and increased the number of successful applicant from approximately .09% percent to .11% percent.
Related publications:
- U.S. Department of Agriculture. Economic Research Service. USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, by Sarah Tulman, Nathaniel Higgins, Robert Williams, Michael Gerling, Charles Dodson, and Bruce McWilliams. Economic Research Report No. (ERR-222). Washington DC: USDA, 2016. ers.usda.gov/publications/pub-details/?pubid=81870.
- Jake Bowers, Nathaniel Higgins, Dean Karlan, Sarah Tulman, and Jonathan Zinman. Challenges to replication and iteration in field experiments: evidence from two direct mail shots, American Economic Review 107, no. 5: (2017): 462-465.
