The Farm Credit System (FCS) has a legal obligation to furnish sound and constructive credit to young, beginning and small (YBS) farmers and producers. And after a number of questions were raised about many loans the system has made to these farmers, the FCS’s regulator, the Farm Credit Administration (FCA), has decided that after twenty long years, it needs to reform its regulations on YBS farmers.
But not if Farm Credit Council (the FCS’s lobbying arm) has its way.
The Farm Credit Council has staked its position on the major policy question offered by the FCA: how should FCS institutions count their loans to YBS farmers?
Currently, a loan to a farmer who is under 35, has fewer than ten years experience, and sells less than $250,000 in product per year would be considered three loans – a loan to a young farmer, a loan to a beginning farmer and a loan to a small farmer. One individual can satisfy all three categories, and Farm Credit institutions are allowed to report the loan as three separate loans. This obviously inflates the numbers and makes the system appear to be fulfilling its mission.
The FCA, to its credit, has offered a different method so that there’s a more accurate picture of which YBS farmers are receiving loans. Loans could be categorized as going to a Y, B, S, YB, YS, BS, and YBS farmer — seven categories which neatly capture the data and present it in an easy-to-understand way.
But the Farm Credit Council doesn’t like this solution. In its comment on the regulation, the Council flat-out stated, “We recognize the FCA’s preference to identify YBS customers/loans without the double counting in the current system, but we are not convinced the added complexity in the proposal would improve understanding of the programs designed to serve young, beginning or small farmers.”
Never mind that the current system triple-counts, rather than double-counts, loans to YBS customers, the Council’s position doesn’t make sense. Is this new method of counting YBS loans that much more complex? The Council doesn’t think that having more refined and particular data would improve understanding of FCS institutions’ YBS programs?
These claims are baseless under the slightest scrutiny. Adding a few more categories will not substantively burden FCS institutions when the reporting infrastructure already exists. And contrary to what the Council says, these new categories would improve the public’s and policymakers’ understanding of YBS programs – more specifically, how FCS institutions are not fulfilling their potential in serving YBS farmers.
The Farm Credit Council wants to maintain the status quo. But farmers across the country, especially young, beginning and small farmers, know that the status quo isn’t good enough. The FCA needs to carefully consider how Farm Credit can best serve YBS farmers, and not just itself.
