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What Happened to Farm Credit Services of Hawaii?

Six months ago, on July 1, 2019, Farm Credit Services of Hawaii disappeared.

What could have happened? In the immediate term, FCA corrections to the FCS of Hawaii profile tell us that it was absorbed by American AgCredit, based out of Santa Rosa, California. American AgCredit’s area of service includes Oklahoma, Kansas, Colorado, Nevada, California, and now Hawaii. But the American farmer and the public have the right to know the whole story. Continue Reading

The ECORA Act would be a Huge Win for Farmers

The House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit’s December hearing to review agricultural credit conditions didn’t put observers at ease about Farm Credit’s ability to serve farmers and producers. But it wasn’t all negative – lawmakers have begun to call for meaningful reform of agricultural credit.

In 2019, Rep. Steve Watkins (R-KS) introduced HR 1872, the Enhancing Credit Opportunities in Rural America (ECORA) Act. And during the hearing, Rep. Roger Marshall (R-KS) called for one of the witnesses, Shan Hanes, to describe its benefits:

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Farm Credit’s Congressional Testimony Should Raise Serious Concerns

On the heels of November’s hearing to review agricultural credit conditions, in December 2019 the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit held another hearing to receive information from lenders directly, including from the Farm Credit System (FCS), about this important issue.

Farm Credit’s responses did not inspire confidence.

Two lines of inquiry, in particular, should leave observers concerned about Farm Credit’s record of serving underserved groups and its stability in a tough agricultural economy. Rep. Ann Kirkpatrick (D-AZ) , hailing from a region with significant Native American presence, asked: “Have any of you worked with Native American farmers or Native-owned lenders?”

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Farm Credit Institutions Protect Profits at Expense of Farmers

There are few things more important in agriculture than making sure that farmers have enough credit to operate their farms. Kansas recognizes this: it gives farmers easy access to credit by providing lenders with some helpful but limited tax incentives for lending to farmers. And the federal government recognizes this to an extent by granting the Farm Credit System (FCS) – and only the Farm Credit System – an exemption from federal income taxes on profits earned on real estate lending.

Some Farm Credit institutions are jealously guarding this tax advantage at the expense of farmers. Continue Reading

What the FCA Chairman told Congress about Farm Credit

Last month the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit held a hearing to review agricultural credit conditions and the Farm Credit System’s (FCS) role in creating those conditions. Testifying before the subcommittee was Glen Smith, the Chairman of the Farm Credit Administration (FCA), the FCS’s regulator.

The question: should we be worried about agricultural credit conditions?

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Key Topics for Farm Credit Oversight Hearing

Last week the House Agriculture Committee announced that it would hold an oversight hearing on the Farm Credit System (FCS) and its regulator, the Farm Credit Administration (FCA). It’s been four years since this committee has held a formal oversight hearing – in the meantime, it held a (scathing) “review” in 2017 following the Senate Agriculture Committee’s oversight hearing in 2016 and the House Appropriations Agriculture Subcommittee’s oversight hearing in 2017.

It’s safe to say that Farm Credit is due for another oversight hearing.

In the past two years, Farm Credit has earned its reputation for mission creep and inadequate service to the farmers who need the most support. In the past two years, Farm Credit has extended loans to health care and senior living facilities, to home-buyers of dubious qualification, and to professional show-jumpers purchasing equestrian property from a billionaire. These are noteworthy and illustrative, but not exhaustive. While Farm Credit has strayed far from its mission, it has become a massive entity, with more than $352 billion in total assets.

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Troubling Questions for Farm Credit Oversight in CoBank Co-op Scandal

The sad and shocking story of multimillion dollar embezzlement at the Ashby Farmers Cooperative Elevator (AFCE) in Minnesota keeps getting worse. CoBank and its regulators didn’t perform their due diligence, and now CoBank’s farmer-owners are set to receive only a small fraction of their investment in restitution.

CoBank is the largest financial institution in the Farm Credit System (FCS) with more than $138 billion in total assets. It alone has the authority to lend to cooperatives which provide services related to agriculture, and AFCE is one of those cooperatives.

Last year, AFCE closed its doors because its manager, Jerry Hennessey, embezzled money from the cooperative for years, “with much of the money spent on big-game hunting trips around the globe.” During all of this time, CoBank had maintained a financial relationship with AFCE, lending it millions of dollars. Continue Reading

Amid Farm Economy Troubles, Farm Credit Administration Releases 2020 National Oversight Plan

This week at a press briefing in Washington, DC, three CEOs of Farm Credit System (FCS) institutions – AgriBank, Carolina Farm Credit and American AgCredit – announced that the System’s portfolio of “stressed” agricultural loans nearly doubled, from four percent to seven percent. Not long after, the System’s regulator, the Farm Credit Administration (FCA), released its 2020 National Oversight Plan.

It could not come at a better time. The FCA’s record on enforcing the Farm Credit Act and keeping the System in line is spotty at best. American agriculture is at risk, and the FCA needs to increase its oversight of the System so that it doesn’t leave farmers – especially young, beginning and small farmers – out to dry like it has in 2018.

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Farm Credit Invests in Nursing and Rehabilitation Facility

The Farm Credit Administration (FCA) is the Farm Credit System’s (FCS) ostensible regulator. Occasionally, it does its job and enforces the letter and the spirit of the Farm Credit Act. But usually, it falls woefully short of holding the FCS accountable, such as allowing it to extend loans to a publicly-traded real estate investment trust (REIT) for “server farms.” At the very least, its inefficacy is public.

But last week the FCA unveiled a nasty surprise. On September 12, the FCA issued a news release providing a recap of the FCA’s monthly board meeting. Buried at the bottom of the release is a list of “notational votes,” which are “actions taken by the FCA board between board meetings.” On August 9, the FCA board “approved a request by AgCredit, ACA, to purchase bonds to be issued by a skilled nursing and rehabilitation facility in rural Wyoming.”

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