Midsize farms are declining – is Farm Credit helping?

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Avid readers of Reform Farm Credit are well acquainted with the Farm Credit System’s (FCS) and the Farm Credit Administration’s (FCA) neglect of young, beginning and small farmers. Despite a statutory responsibility to actively provide credit for small farmers, the FCS just hasn’t been doing its job. Over the past 12 years the total percentage of new loan volume going to small farmers has dropped from 30 percent to a paltry 14 percent.

Has the same thing been happening to midsize farms?

Last month Politico reported that the United States Department of Agriculture’s (USDA) Economic Research Service (ERS) issued a report finding that midsize farms, those with a gross annual income between $350,000 and $1 million, have declined in number.  “A significant share” have become more profitable and are now considered large farms. But from 1992 to 2012, the number of midsize farms has decreased “partly due to exits from the business, but also was attributable to these operations having volatile income and a tendency to downsize.”

And to be clear, the FCS does not have a statutory requirement to lend to midsize farms. But all the same, it appears as though more midsize farms are becoming small farms. And that means that the FCS has an obligation to provide reliable access to credit for these small farmers, whose farms “represent 90 percent of farms.” That’s a whole lot of farms and a whole lot of farmers, and the FCS hasn’t been reaching them.

Instead, loans have been going to large farms, which “account for only 4 percent of farms.” That 4 percent includes big players in the agricultural industry, producing vast amounts of food, but it also means that a large volume of loans are going to large farmers who might not need the same access to capital because their operations are already so successful. Small farmers don’t have that luxury – they need support.

The FCS has a duty, outlined in statute, to provide reliable access to credit for small farmers. So far, it hasn’t done its best to provide that access. And when government agencies don’t follow their mission, it’s time for Congress to take them to task.