Congress urged to boost farm-loan funding during credit crunch

By Daniel Enoch

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, June 2, 2016 - Citing “an emerging farm lending crisis,” eight national farm and financial organizations are urging Congress to increase funding for federally assisted farm operating loans in the fiscal year 2017 agricultural appropriations bill. Lawmakers are expected to debate and vote on that bill later this month.

In a letter to the leaders of the House and Senate Agriculture Appropriations subcommittees, the organizations, including the National Sustainable Agriculture Coalition (NSAC), National Farmer Union, and the American Banking Association - note that in the current climate of low crop and livestock prices, farmer demand for operating loans is especially high, especially for young and beginning farmers.

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“Right now, demand for such assistance is so strong that the U.S. Department of Agriculture's Farm Service Agency (FSA) expects to completely run out of operating loan funds in the next few weeks,” the groups say in a release calling attention to the letter. “If this happens, farmers applying this year will still be able to have their applications approved by FSA, but they will not actually receive loan funds until Congress acts on the next agricultural spending bill.”

The groups are asking Congress to add $16.5 million to the FY 2017 spending bill, which they say is needed to make available an additional $300 million in direct FSA operating loans and $350 million in FSA guarantees of private sector commercial loans. These amounts would allow USDA to cover the estimated shortfall of available loan dollars. The legislation currently includes the USDA-requested program level of $1.46 billion for direct operating loans, and $1.432 billion for guaranteed operating loans.

Also signing the letter were the National Young Farmers Coalition, the Farm Credit Council, Independent Community Bankers of America, National Association of Credit Specialists, and the Opportunity Finance Network. It was addressed to Sens. Jerry Moran of Kansas and Jeff Merkley of Oregon, the chairman and ranking member, respectively, of the Senate Agriculture Appropriations Subcommittee, and to Reps. Robert Aderholt of Alabama and Sam Farr of California, their counterparts in the House.

“We hope that the need underscored by the united voices of the farm sector will persuade Congress to find the necessary funds to fill this shortfall and prevent thousands of farmers from losing access to operating loans that are vital to their ability to do business.” Ferd Hoefner, policy director for NSAC, said in the groups' release.

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The groups describe FSA as both the “lender of last resort” for farm businesses that cannot secure commercial loans, and the “lender of first opportunity” for young and beginning farmers. The majority of operating loans made or guaranteed by FSA are typically set-aside for beginning farmers, but the groups note that competition for these loans is growing as more established, commercial farmers - who are facing decreased commodity prices - increasingly need to rely on FSA support.

“As you well know,” the groups say in their letter, “access to annual operating credit is a make-or-break issue for many farmers, especially those just starting out. Access to credit can largely determine whether or not farmers can continue working on their lands, and for beginning farmers it can determine whether or not they decide to pursue a career in agriculture in the first place.”

“We realize there are many demands to juggle as you put together the final FY 2017 bill. “We urge you to take these escalating operating credit needs into account and make the necessary adjustments.”

 

 

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