This week, Farm Credit of the Virginias, serving Virginia and West Virginia, engaged in Farm Credit’s time-honored tradition of grossly expanding its mission. Farm Credit of the Virginias proudly shared this graphic with the public, letting everyone know that for full time farmers, “non-agricultural purchases can be considered.” In case there were any lingering doubts about whether Farm Credit was going to adhere to its mission, Farm Credit of the Virginias has made it clear that it doesn’t care about that.
What exactly, then, does it mean when it references “non-agricultural purchases”? If the track records of other Farm Credit institutions are anything to go by, it will consider student loans, loans for boats and airplanes, and even a loan for “that mountain retreat you’ve always wanted.” But don’t worry, Farm Credit of the Virginias exercises some accountability: for less than full time farmers, “loans for nonagricultural purposes are restricted to a percentage of the gross agricultural assets and income.”
The Farm Credit System’s (FCS) footprint stretches across the country, with on-the-ground retail operations from Maine to Alaska and Hawaii and everywhere in between. Congress created this government-sponsored enterprise (GSE) to serve American farmers, especially small farmers, who exist in every state and need financial support to keep feeding the country. Farm Credit’s mission is to provide credit to farmers so they can continue to produce agricultural products.
Now, no one expects farmers to just farm all day. Farmers have lives and credit needs that extend beyond their business operations. No one denies that. But Farm Credit, a GSE with a defined mission to sustain agriculture, should not be lending for non-agricultural purposes. It especially shouldn’t be lending for non-agricultural purposes if it retains its massive tax break.
In 2019, Farm Credit had a net income of $5.45 billion but only paid $108 million in combined federal, state and local taxes. That’s a tax rate of just 2 percent. There’s an argument to be made that American taxpayers have an interest in subsidizing domestic farmers to maintain a stable food supply. But there’s absolutely no argument to be made that American taxpayers should subsidize an entity for boat loans.
Farm Credit of the Virginias’ advertisement is just one of many. Farm Credit’s regulator, the Farm Credit Administration (FCA), needs to crack down on this type of lending. It shamelessly flouts Farm Credit’s mission statement, and it disregards the sense of Congress. FCA is empowered to crack down on this, but if it won’t, then Congress should.