Finally, YBS farmers have a shot at getting a better deal from Farm Credit.
Congress created the Farm Credit System (FCS) in 1916 to support farmers, especially small farmers, that needed credit. Since then, Congress has expanded the FCS’s mandate, requiring it to provide credit to young, beginning and small farmers (YBS farmers). And the FCS’s regulator, the Farm Credit Administration (FCA), has a duty to make sure the System is supporting YBS farmers.
This month, the FCA took a major step to hold Farm Credit accountable for supporting YBS farmers. At its May meeting, the FCA’s Board approved a proposed rule, the purpose of which is to “increase direct lender associations’ Young, Beginning, and Small farmer and rancher (YBS) activity and reinforce the supervisory responsibilities of the funding banks.”
According to the FCA, the rule “is designed to achieve the following objectives:
· Reinforce the supervisory responsibilities of the four funding banks
· Require each direct-lender association to adopt an independent strategic plan for its YBS program
· Provide elements that will be evaluated as part of a rating system to measure year-over‐year YBS progress, allowing FCA to compare the success of each direct-lender association to its peers with regard to extension of credit and services to the YBS borrowing population.”
Each of these objectives should have been sought decades ago, but any improvement is better than none. Each direct-lender association should have independent plans to improve and expand YBS lending in its jurisdiction. Farm Credit’s funding banks (CoBank, AgFirst, AgriBank and Farm Credit Bank of Texas) should subject their affiliated associations’ plans for review, and should be able to share best practices in their jurisdiction so that no YBS farmer is left behind. And there’s no reason that there shouldn’t be a rating system to evaluate the success of each association’s YBS program. These requirements are hardly best practices – they are fundamental practices that should have existed as soon as Congress required Farm Credit to lend to YBS farmers. Any oversight, no matter how late, is better than none.
This proposed rule, once published in the Federal Register, will remain open for public comment for likely 60 days. During that time, Farm Credit associations will undoubtedly publish comments asserting that this proposed rule is unnecessary and burdensome.
They can exercise their right to inform the government about the effectiveness of proposed policies and to advocate for or against them. Have at it. But those who have been tracking Farm Credit’s record on YBS lending know that it must do more to help YBS farmers.
Bravo to the FCA for this much-needed development. While it solicits comments, policymakers at the FCA and in Congress should keep watch to see who supports more data on YBS lending, and who really stands ready to help YBS farmers.