It’s campaign season! Even though the 2020 elections are more than a year away, presidential candidates have hit the campaign trail to discuss policy and share their vision with voters.
Reform Farm Credit is pleased to announce that reforming Farm Credit is now a 2020 campaign issue!
Earlier this month, Senator Elizabeth Warren (D-MA) released her proposal for “A New Farm Economy.” Detailed and thorough, it outlines her many ideas on how to reinvigorate rural America, including how to expand farmers’ access to credit by reforming the Farm Credit System (FCS).
“The Farm Credit System was founded a century ago as a government-sponsored enterprise to provide credit for farmers — but it has strayed from its central mission and instead is pocketing big profits. I will require FCS to allocate 10% of its $5 billion in annual profits towards supporting new and diverse farmers through regional lending mechanisms.”
Sen. Warren’s proposal for Farm Credit to allocate 10 percent of its profits for supporting new and diverse farmers is well warranted. In May, the Government Accountability Office (GAO) – Congress’s investigative arm – reported that Farm Credit was underserving Indian tribes. In July, GAO reported that Farm Credit was leaving behind socially-disadvantaged farmers and ranchers. And in 2017, Farm Credit’s new loans to young and beginning farmers fell approximately 10 percent.
Strengthening rural America and expanding farmers’ access to credit means reforming Farm Credit. And Sen. Warren’s broader critique of the System is absolutely correct: the System was created more than 100 years ago to help vulnerable small farmers protect their family farms and their communities.
Now, the System indulges in activities far outside of its scope, like extending loans for suburban mansions, for a real estate investment trust’s “server farms,” and for a company to bolster its foreign subsidiary. And while it does all of this, it profitsimmensely. In 2018, the System made $5.45 billion dollars in income, and paid $126 million in income taxes. That’s a paltry 2.3 percent.
Sen. Warren’s proposals are a good start, but more candidates need to be discussing how they intend to reform the Farm Credit System. Without reform, the System will continue down the same path, leaving America’s farmers, ranchers and producers with uncertainty and hard times ahead.