Turning Up The Heat: FCA Takes Major Step to Address Farm Credit’s Failure to Serve Native American Communities

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The Farm Credit System (FCS) is a huge government-sponsored enterprise (GSE) with almost $436 billion in total assets. Because it’s a GSE, it’s subject to congressional oversight. Farm Credit has come under fire from Congress before for underserving the vulnerable farmers, ranchers and producers that it was created to sustain and serve.

And now its regulator, the Farm Credit Administration (FCA), is turning up the heat.

This week, the FCA announced that Farm Credit will now “work in collaboration with the Native American Agriculture Fund (NAAF) to address issues surrounding access to capital for Native American farmers and ranchers.” This development is welcome, necessary, and hard-fought.

Congress had recognized that Farm Credit’s record of lending to Native American farmers and producers was in need of review and much improvement. That’s why it included a provision in the 2018 Farm Bill to require the Government Accountability Office (GAO), Congress’ watchdog, to investigate barriers to lending on tribal lands. 

In May 2019, the GAO published its report, finding that there were significant barriers to Farm Credit lending on tribal lands, including: “difficulty in using tribal lands as collateral, lender concerns over legal matters such as tribal immunity from lawsuits and tribal laws and procedures that vary among the nation’s 573 federally recognized tribes, and poor or no credit histories.”

Underserved farmers – including Native American farmers, socially-disadvantaged farmers, and young, beginning, and small farmers – all deserve Farm Credit’s attention and service. And while the barriers to lending on tribal lands make sense at a certain level, they don’t make sense in the context of the entire System. The FCS receives special tax benefits, presumably to extend credit to these same underserved farmers. In 2021, the FCS only paid $161 million in income taxes, while bringing in $6.95 billion in income. That’s a tax rate of around 2.3%. Surely the System as a whole would have a greater risk tolerance in extending credit on tribal lands if it has this multi-billion dollar cushion, right? With that context, shouldn’t Farm Credit still be doing more to help?

It’s good that the FCA is holding Farm Credit’s feet to the fire to make sure it serves underserved farmers and producers. This is proof positive that, when given the right tools and information, the FCA can hold Farm Credit accountable. As Congress begins to consider a new Farm Bill, it must look for ways to empower the FCA to make sure that Farm Credit stays true to its mission.