Independent Banker - May 2018 - 39

with rural America facing low commodity prices
and rising production expenses, net farm income
is forecast to drop to its lowest inflation-adjusted
level since 2002 and is expected to decline for the
fifth straight year.
rural businesses, the federal government can
avoid crowding out the private sector from
extending credit in rural communities.
Thus, the new farm bill will need to maintain
robust price supports for ag commodities and
crop insurance. Cash flows are tight, and a robust
crop insurance program is necessary to ensure
producers can repay their loans when weather
disasters cause widespread production losses.
Further, regulators view crop insurance as necessary
for farm loans, but maintaining current
funding will be difficult once the farm bill reaches
the House and Senate floors. Community bankers
should communicate with lawmakers about
maintaining current funding without allowing
harmful amendments during floor consideration.
Enhancing USDA Farm Loan Programs
The USDA Farm Service Agency's Farm Loan
Programs help producers and lenders through
a combination of direct and guaranteed loan
programs. Together, they provided more than
$7.7 billion in loans for producers in 2017,
supporting 42,000 farmers and ranchers. By
reducing regulator concerns and allowing banks
to provide continued credit in times of extreme
financial distress, these programs play a significant
role in helping American agriculture
withstand a major farm credit crisis. But the loan
limits need to be raised to $2.5 million or more
to meet the credit needs of today's family farmers.
Further, allowing banks to work with more
than one county office, and ensuring consistency
of loan approvals across state lines while reducing
paperwork, would speed up loan approvals
and allow greater use of these programs. ICBA's
white paper outlines the rationale for enhancing
these programs.
Sustaining rural development programs
The farm bill authorizes a variety of important
rural development programs. However, ICBA is
concerned that recent budget proposals would
eliminate and shift funding from guaranteed to
direct loans. By maintaining the USDA's focus
on guaranteed loan programs and preserving
funding for programs such as the Business and
Industry Guaranteed Loan Program for small
Reforming the Farm Credit System
The Farm Credit System has experienced dramatic
growth while sharply reducing service to
family farmers. Chartered by Congress to primarily
serve bona fide farmers and ranchers, it
has become the only government-sponsored
enterprise competing directly against the private
sector at the retail level. With lavish federal
benefits, FCS lenders underprice loans offered by
tax-paying community banks, siphoning off their
best customers.
Meanwhile, the FCS increasingly ignores family
farms while directing loans to some of the
world's largest corporations, such as Verizon
and AT&T. Their complicit regulator, the Farm
Credit Administration, is promoting the FCS's
expansion by mislabeling loans as " investments. "
ICBA's white paper is clear: Congress should
require the FCS to focus on serving farmers, and
bar it from venturing into non-farm lending
beyond the limited scope of the law.
Quick stat
$7.7
billion
Loans approved
for farmers
and ranchers in
2017 through
USDA Farm Loan
Programs
The bottom line
ICBA's white paper explains to non-farm critics
how farm policy benefits all Americans through
an inexpensive and abundant supply of healthy
food for our citizens. It also provides five guiding
principles for a new farm bill: providing ample
funding, making needed changes, reducing regulatory
burdens, requiring fair implementation
and ensuring that government programs complement
private-sector lenders.
The farm bill can be daunting, complex and a
grinding legislative effort. But these principles
are simple. ICBA will continue working to ensure
lawmakers remember these farm bill principles
as they take up this important legislation over the
coming months.
Read the white paper and act now
To access ICBA's Focus on Farm Policy
white paper and send a message to
lawmakers in support of it, visit
icba.org/advocacy
independentbanker.org Q 39
http://www.icba.org/advocacy http://www.independentbanker.org
Independent Banker - May 2018

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