The Farm Credit System’s (FCS) constituent associations are no strangers to funding luxury purchases extraneous to its mission to support American agriculture. Loans for mansions in the Denver suburbs, purchasing the naming rights for a golf tournament and loans for luxury properties in Hawaii find their place on Farm Credit associations’ ledgers.
Those entries won’t be lonely any time soon.
Farm Credit Florida has risen to the occasion. South Florida Business Journal reports that Farm Credit Florida has “provided an $8.5 million mortgage” for an equestrian site with “18,018 square feet of space, including a 24-stall barn, two horse washing stations, a staff apartment and a small office.”
Now at first glance, it’s reasonable for a large farm which raises horses to have certain buildings and services necessary for that task. But this is no ordinary horse farm, nor is it an ordinary sale. According to the article, “the land includes a riding track and a full-sized polo field,” and the seller is “Stephen A. Van Andel, the co-chairman of Amway Global and member of a billionaire family.” To make the matter only slightly better, the buyer – famed professional show jumper and national competitor Brianne Goutal-Marteau – appears to be a young and beginning “farmer”.
Brianne Goutal-Marteau’s acquisition is listed by Wellington Equestrian Realty, the “Luxury Home & Farm Experts.” In addition to selling horse farms, Wellington sells large luxury homes with price tags in the tens of millions. But Wellington isn’t just selling its customers a home or a farm – it’s selling the“Wellington Lifestyle.”
To be clear, providing financing for a horse farm is a legitimate function of a Farm Credit association. But should it be financing this deal in particular? Is a professional show jumper what policymakers had in mind when they imagined a farmer? Did policymakers imagine that Farm Credit would provide funding for something similar to this?
Farm Credit associations benefit from an enormous tax break every year. The effective tax rate of the System in 2018 was only 2.3 percent, which is an increase from 2017’s 0.7 percent. Farm Credit associations benefit from this enormous tax break so that they can fulfill a vital function: keep America’s farmers solvent so that they can feed the country.
Farm Credit Florida’s deal is not in line with that purpose. But let’s not beat up on Farm Credit Florida too much – it’s hardly the only Farm Credit Association that blurs the lines on appropriate lending. Farm Credit East has maintained a decades-long relationship with Saratoga Casino and Raceway. And the System’s regulator, the Farm Credit Administration (FCA), seems to have not said a word about this dubious deal.
When Congress passed the Farm Credit Act which included Farm Credit’s tax breaks, did it envision that Farm Credit associations would be involved with a billionaire trying to sell a recreational horse farm? What’s more likely is that Congress imagined that those tax breaks would help the System stay stable so that it could increase lending to vulnerable farmers like young, beginning and small farmers.
The evidence is mounting, bit by bit. Farm Credit associations are making questionable loans, and the FCA’s oversight has so far proved insufficient. Congress needs to take the reins and set the FCA and the FCS on track.