The end of 2020 and the beginning of 2021 brings us a time-honored tradition – New Year’s resolutions! Reform Farm Credit has a few to share with the Farm Credit System (FCS) and its regulator, the Farm Credit Administration (FCA).
First, and this shouldn’t come as any surprise, the FCS needs to stop any sort of “lending for nonagricultural purchases.” Farmers need credit for more than just farming, but Farm Credit shouldn’t be extending loans for any purpose other than to sustain agriculture. This is on the FCA too: enforce the spirit of the Farm Credit Act, and stop FCS lenders from lending outside of their mission.
Second, Farm Credit needs to stop abusing the similar entity rule. The similar entity rule enables Farm Credit’s loans to solar plants supporting Facebook, or to for-profit broadband companies or to private telecoms. Just because these entities’ operations are “similar” to cooperatives or other eligible borrowers doesn’t mean that they should be granted financing. There must be other cooperatives out there that are more worthy, even if they may yield less profit for the System. The FCA can easily resolve this problem by issuing a new regulation calling for revision to the similar entity rule.
Third, Farm Credit needs to start prioritizing farmers. That means not dropping the ball during a crisis, and it means lending to YBS farmers instead of failing them. For the FCA, this is a matter of enforcement and regulation. It must hire more examiners and conduct more audits, and it must promulgate regulations which push the FCS closer to its mission. The FCA is well within its power to undertake both projects.
Congress must also make a New Year’s resolution: push the FCA and the FCS to make these changes. Hold annual oversight hearings, and press the FCA and the FCS to enact meaningful reforms that hew to the spirit of the Farm Credit Act. A new year will soon be upon us, and it’s a new chance to better serve America’s farmers.