Every five years Congress revisits agricultural policy and passes a Farm Bill to make sure that the federal government does right by America’s farmers, ranchers and producers.
It’s been a long year, and the road to passage was bumpy, but today Congress completed passage of the Farm Bill for 2018! A big thanks to Congress for coming together to pass this gargantuan, monumental piece of legislation.
Reform Farm Credit has been watching this process closely, and is proud to support the House and Senate conference report, which cracks down on the Farm Credit System (FCS) and its regulator the Farm Credit Administration (FCA) to make sure they’re both working for America’s farmers, ranchers and producers.
But let’s get the bad news out of the way first: this bill gives Farm Credit some liberties it shouldn’t have. For one, it retains a provision from the House version of the Farm Bill which repeals a cap on how much Farm Credit bank directors are allowed to be paid. But is also repeals the FCA’s discretionary authority to determine whether that level of compensation may “adversely affect[s] the safety and soundness of the bank.” This provision strips away the FCA’s power make sure taxpayers aren’t footing the bill for Farm Credit’s screw-ups.
In contrast to the Senate’s version of the Farm Bill, this Farm Bill does not require Farm Credit to help socially disadvantaged farmers. But in its place, it requires the Government Accountability Office (GAO) to produce reports on whether Farm Credit is appropriately serving socially disadvantaged farmers, including farms operated and owned by Indian tribes and their members. A report is better than nothing, but socially disadvantaged farmers and members of Indian tribes deserve better access to credit, and Farm Credit should be there to provide it.
But there’s far more good news than bad news. This Farm Bill does a lot to protect America’s farmers and taxpayers. It empowers the Farm Credit System Insurance Corporation (FCSIC), Farm Credit’s insurer, to act as conservator or receiver of a Farm Credit bank or association. So if a Farm Credit institution fails, and cannot pay its debts, the FCSIC will step in to assume control of the institution and see it through its crisis. This is an important power, and it’s crucial to prevent a systemic collapse in the event that a Farm Credit institution fails.
It institutes an industry-wide prohibition on hiring FCS employees that have “been removed or suspended from office.” So, any FCS employee that commits wrongdoing (perhaps authorizing an improper loan or attempting to defraud the government) would be prevented from working for a whole slew of other financial institutions.
And finally, it requires the FCA to carry out a study that analyzes and compares the risks faced by all constituent parts of the FCS (its banks and associations) and what capital is necessary to weather those risks. This is a huge leap forward in protecting America’s farmers and taxpayers. The report is due to Congress 180 days after the Farm Bill is enacted. The Senate and House Committees on Agriculture must review it carefully and examine whether Farm Credit and the FCA are prepared to help farmers in case of an economic headwind.
This Farm Bill holds Farm Credit accountable. But more importantly, it helps America’s farmers. Congress deserves huge credit for enacting this legislation, and special regard should be given to the House and Senate Committees on Agriculture. They have put together a monumental piece of legislation to preserve and strengthen America’s bedrock – its farmers, ranchers and producers.