Since 2016, new loans to young farmers fell nearly 24 percent, new loans to beginning farmers fell nearly 18 percent, and new loans to small farmers fell more than 20 percent. That’s a staggering drop.
Farm Credit is again stretching its lending authority and this time the financing deal is especially egregious: Farm Credit lender CoBank is serving as the “sole lead arranger” for a loan to a multinational energy company building solar panels slated to power Facebook servers. Yes, you read that correctly: a Farm Credit lender, tasked with supporting farmers and ranchers, is instead financing a construction project that will ultimately benefit one of the largest tech companies in the world.
According to Renewables Now, CoBank is providing the “financing, comprising a construction loan, letter of credit facility and back-leverage term loan” for solar energy centers in Oregon. As Renewables Now explains, once operational, another company named PacifiCorp, “will buy the output of the solar plants under a long-term contract to supply Facebook’s data centre in Prineville, Oregon.”
When NORPAC Foods filed for bankruptcy in August 2019, NORPAC’s CEO assured its farmer-members that financing from Farm Credit lender CoBank meant that they would receive payment for produce delivered that fall. Now, a year and several legal filings later, it’s clear that those farmers whose crops were sold as NORPAC assets will likely only receive a fraction of what they are owed.
The Farm Credit System’s (FCS) record of loans to huge telecommunications companies leaves most observers confused, and for good reason. Why is a government-sponsored enterprise (GSE), which was established to furnish sound credit to farmers, extending enormous loans to Verizon ($725 million), US Cellular and AT&T ($425 million) and Frontier Communications ($350 million)?
The Farm Credit System (FCS) has the distinction of being the original government-sponsored enterprise (GSE) – defined as a quasi-governmental entity established to enhance the flow of credit to specific sectors of the American economy. Like other GSEs including Fannie Mae and Freddie Mac, the FCS has benefited immensely from the federal government’s largesse. It raises the question of whether the FCS can stand on its own two feet.
The COVID-19 pandemic has upended American agriculture, and farmers across the country are feeling the pressure. In these difficult times, Farm Credit should be focused on helping farmers and supporting U.S. agriculture. Instead, Farm Credit seems to care more about expanding the scope of its mission than meeting the needs of the producers it is already mandated to serve.
The past three months posed unprecedented challenges for farmers across America as the country responded to the COVID-19 coronavirus. The most significant relief came from the federal government: on March 27, President Trump signed the CARES Act into law, establishing, among many other provisions, the Paycheck Protection Program (PPP). Administered by the Small Business Administration (SBA), Congress designed the PPP to help small businesses, including farms, ranches and other agricultural producers, keep employees on payrolls.
NORPAC Foods Inc. is a cooperative and the “‘largest processor’ of frozen vegetables and fruits in the Pacific Northwest.” In August 2019, it filed for bankruptcy, with CoBank providing a $124 million credit facility.
Good government groups in civil society often take on the task of making sure government fulfills its mission, and does so efficiently. Each has its niche, and examines different parts of the government. One important group, founded by the late U.S. Senator Richard Lugar (R-IN), focuses on many of the Senator’s signature achievements in his career – nonproliferation of weapons of mass destruction, global food security, foreign assistance effectiveness and global development, energy security, and enhancing bipartisan governance. The Senator’s eponymous Lugar Center brings together expert sources and sponsors research to improve the quality of debate and bridge ideological divides around these important issues.
The Farm Credit System (FCS) has a duty to support America’s farmers, ranchers and producers, with a specific mandate to help young, beginning and small farmers. Though it has failed to follow through on this mission, it hasn’t been inactive.