Imagine a sprawling, nationwide network of businesses with $365 billion in assets, paying only a minuscule amount of taxes, undercutting its competition, and not receiving the congressional oversight it deserves.
Imagine no more – this is the Farm Credit System’s reality (FCS).
Farm Credit’s mission is to support American agriculture and young, beginning and small farmers (YBS). To carry out this mission, Congress included in the Farm Credit Act certain provisions which exempt Farm Credit institutions from taxation. And year after year, Farm Credit has raked in cash while paying minimal taxes.
These tax rates are extraordinarily low. They’re certainly lower than the taxes paid by farmers, even those with less income like YBS farmers. And tax rates this low could make sense, but only if the funds that are recouped from taxes are used to the benefit of the farmers and producers who need it most – YBS farmers. Their success is integral for American agriculture and for ensuring that our country has a stable, internal supply of food and other agricultural resources.
The problem is that these funds aren’t being used to buoy YBS farmers. They’re used to extend loans to a solar company powering Facebook, a publicly-traded real estate investment trust (REIT), and a huge packaging producer, to name a few. That’s unacceptable.
The server farms, REITs and firms with international reach are doing well, but YBS farmers aren’t. Farm Credit has failed them year after year, most recently in 2017, 2018, and 2019. Shameful only begins to describe it. Farm Credit has evaded its responsibility to support those most in need so that it can chase easy money.
Make no mistake, that easy money has led to the FCS substantial growth. Just 10 years ago, it held $229 billion in total assets. Now it has increased to more than $365 billion. That’s a nearly 63 percent increase. Profitable lending ventures, ignoring the farmers who need the most help and a low tax rate works wonders on Farm Credit’s bottom line.
Farm Credit has reaped these tax benefits while foregoing its own mission, and that’s unacceptable. Congress needs to seriously reconsider whether the FCS should be receiving tax exemptions if it is not adequately fulfilling its primary mission – supporting American agriculture by supporting YBS farmers. Doing anything less would let Farm Credit get away with betraying the public’s trust and cashing in while doing it.