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As Farm Credit Associations Grow, Loans to Farmers Stay Stagnant
It’s no secret that rural America has seen tough times in recent years. Low commodity prices, tariffs and poor weather haven’t helped. In the words of Compeer Financial’s CEO Rod Hebrink, “There’s a bleeding going on.”
FCA Covers Up the Unfair Advantages of the Farm Credit System
Too often, the Farm Credit System’s (FCS) regulator, the Farm Credit Administration (FCA) defends the FCS when it should be rigorously regulating it. It doesn’t matter whether the FCS is under Congress’s, the news media’s or even taxpayers’ scope – the FCA always seems to have the System’s back and consistently covers for it.
ECORA Act Could Help Ensure American Farmers are Supported
One of the biggest benefits the Farm Credit System (FCS) has is its tax-advantaged status. The FCS is exempt from certain taxes: profits from non-real estate lending are exempt from state and local taxes, and income from real estate lending is exempt from corporate income taxes. Compared to other lenders, the FCS has massive advantages that tilt the playing field unfairly, meaning farmers and other producers can’t help but go to Farm Credit.
FCA Needs More Examiners to Crack Down on FCS
The Farm Credit System (FCS) operates under the Farm Credit Administration (FCA). As the FCS’s regulator, the FCA is supposed to keep an eye on the FCS’s various dealings. It’s a monumental task because the FCS is a colossus, with $335 billion in total assets.
The FCA needs resources to adequately monitor and examine all of the System’s institutions. On March 11, FCA Board Chairman and CEO Dallas Tonsager said as much when he presented testimony before the House and Senate Agriculture Appropriations Subcommittees. And to Tonsager’s credit, he has highlighted one of the FCA’s glaring deficits: it doesn’t have nearly enough examiners.
Bad Actor at Farm Credit Institution Sentenced to 10 Years in Prison
In 2017, Lone Star Ag Credit, a Farm Credit System (FCS) association in Texas, broke horrible news to its customers: Lone Star’s management was unable to issue its normal financial statements due to “appraisal and accounting irregularities affecting a segment of the Association’s lending portfolio.”
Farm Credit Administration on the Right Track
The Farm Credit Administration (FCA) is the Farm Credit System’s (FCS) regulator. But more often than it should, the FCA acts as Farm Credit’s facilitator. Under the FCA’s “regulation,” the FCS has gotten away with making loans to huge telecoms, letting a co-op go bankrupt due to lack of oversight, and merging its institutions to an intolerable degree. It has done all of this while failing to provide sufficient credit for young, beginning and small farmers.
American Banker: Expanding the Farm Credit System Won’t Help Rural America
As a veteran banker with a large agricultural portfolio in Kansas, I worked diligently with my colleagues from across rural America to convince Congress to stay the course and prevent granting the Farm Credit System additional lending authority in the recently enacted five-year farm bill. The ideas presented in the recent BankThink column by Lee Reiners to pursue the opposite path fundamentally ignore the reality on the ground in agricultural lending today. While rural America needs investment and support to thrive, any plan for long-term success should have commonsense proposals informed by full consideration of the facts. Simply put, the U.S. needs to let ag banks be ag banks, subject to the stringent regulations that protect consumers and taxpayers and ensure that the FCS adheres to its statutory mission. Continue Reading
Farm Credit Administration Ignores Farmers’ Concerns During Government Shutdown
On Friday, January 25, an agreement was reached to reopen the federal government after it had been shut down for the longest stretch in history. Federal workers went without pay, and even though many still worked during this time, essential services lapsed. Farmers across the country struggled, and many are still struggling, as crop insurance checks and operating loans normally issued by the US Department of Agriculture (USDA) were not available. Farmers need certainty, and barring that, they need reassurance.
Congressional Black Caucus Celebrates Holding Farm Credit Accountable
The 2018 Farm Bill is now law, and with it come assurances for farmers, ranchers and producers across the country.
One assurance has been a long time coming.
The Congressional Black Caucus (CBC), the voice for the policy priorities of black members of Congress, touted one of its Farm Bill successes, now enacted into law: requiring the Government Accountability Office (GAO) to conduct a report on the loans the Farm Credit System (FCS) extends to socially disadvantaged farmers, including black farmers.