[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
FINANCING FARM OPERATIONS: THE
IMPORTANCE OF CREDIT AND RISK
MANAGEMENT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON GENERAL FARM COMMODITIES,
RISK MANAGEMENT, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JULY 16, 2025
__________
Serial No. 119-10
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
61-434 PDF WASHINGTON : 2025
COMMITTEE ON AGRICULTURE
GLENN THOMPSON, Pennsylvania, Chairman
FRANK D. LUCAS, Oklahoma ANGIE CRAIG, Minnesota, Ranking
AUSTIN SCOTT, Georgia, Vice Minority Member
Chairman DAVID SCOTT, Georgia
ERIC A. ``RICK'' CRAWFORD, Arkansas JIM COSTA, California
SCOTT DesJARLAIS, Tennessee JAMES P. McGOVERN, Massachusetts
DOUG LaMALFA, California ALMA S. ADAMS, North Carolina
DAVID ROUZER, North Carolina JAHANA HAYES, Connecticut
TRENT KELLY, Mississippi SHONTEL M. BROWN, Ohio, Vice
DON BACON, Nebraska Ranking Minority Member
MIKE BOST, Illinois SHARICE DAVIDS, Kansas
DUSTY JOHNSON, South Dakota ANDREA SALINAS, Oregon
JAMES R. BAIRD, Indiana DONALD G. DAVIS, North Carolina
TRACEY MANN, Kansas JILL N. TOKUDA, Hawaii
RANDY FEENSTRA, Iowa NIKKI BUDZINSKI, Illinois
MARY E. MILLER, Illinois ERIC SORENSEN, Illinois
BARRY MOORE, Alabama GABE VASQUEZ, New Mexico
KAT CAMMACK, Florida JONATHAN L. JACKSON, Illinois
BRAD FINSTAD, Minnesota SHRI THANEDAR, Michigan
JOHN W. ROSE, Tennessee ADAM GRAY, California
RONNY JACKSON, Texas KRISTEN McDONALD RIVET, Michigan
MONICA De La CRUZ, Texas SHOMARI FIGURES, Alabama
ZACHARY NUNN, Iowa EUGENE SIMON VINDMAN, Virginia
DERRICK VAN ORDEN, Wisconsin JOSH RILEY, New York
DAN NEWHOUSE, Washington JOHN W. MANNION, New York
TONY WIED, Wisconsin APRIL McCLAIN DELANEY, Maryland
ROBERT P. BRESNAHAN, Jr., CHELLIE PINGREE, Maine
Pennsylvania SALUD O. CARBAJAL, California
MARK B. MESSMER, Indiana
MARK HARRIS, North Carolina
DAVID J. TAYLOR, Ohio
______
Parish Braden, Staff Director
Brian Sowyrda, Minority Staff Director
______
Subcommittee on General Farm Commodities, Risk Management, and Credit
AUSTIN SCOTT, Georgia, Chairman
DAVID ROUZER, North Carolina, Vice SHARICE DAVIDS, Kansas, Ranking
Chair Minority Member
ERIC A. ``RICK'' CRAWFORD, Arkansas DAVID SCOTT, Georgia
DOUG LaMALFA, California SHONTEL M. BROWN, Ohio
MIKE BOST, Illinois DONALD G. DAVIS, North Carolina
DUSTY JOHNSON, South Dakota NIKKI BUDZINSKI, Illinois, Vice
MARY E. MILLER, Illinois Ranking Minority Member
BARRY MOORE, Alabama ERIC SORENSEN, Illinois
BRAD FINSTAD, Minnesota KRISTEN McDONALD RIVET, Michigan
JOHN W. ROSE, Tennessee ------
MONICA De La CRUZ, Texas ------
ZACHARY NUNN, Iowa ------
MARK HARRIS, North Carolina ------
DAVID J. TAYLOR, Ohio
(ii)
C O N T E N T S
----------
Page
Davids, Hon. Sharice, a Representative in Congress from Kansas,
opening statement.............................................. 3
Prepared statement........................................... 4
Scott, Hon. Austin, a Representative in Congress from Georgia,
opening statement.............................................. 1
Prepared statement........................................... 2
Witnesses
Hood, J. Clint, Senior Vice President and Head, Agriculture and
Timber Division, Synovus Bank, Dublin, GA; on behalf of
American Bankers Association................................... 5
Prepared statement........................................... 6
Minick, Mandy, Senior Vice President, Stakeholder Relations,
AgWest Farm Credit, Rockford, WA; on behalf of Farm Credit
Council........................................................ 13
Prepared statement........................................... 14
Submitted questions.......................................... 49
Gilbert, Brian, Senior Vice President, Ag Banking Manager, First
National Bank in Sioux Falls; Member, Rural America and
Agriculture Committee, Independent Community Bankers of
America, Sioux Falls, SD....................................... 19
Prepared statement........................................... 20
Submitted question........................................... 52
Wicks, John R., Owner/Operator, Tiber Ridge Inc.; President,
Liberty/Toole Local Farmers Union, Ledger, MT; on behalf of
National Farmers Union......................................... 27
Prepared statement........................................... 28
FINANCING FARM OPERATIONS: THE
IMPORTANCE OF CREDIT AND RISK
MANAGEMENT
----------
WEDNESDAY, JULY 16, 2025
House of Representatives,
Subcommittee on General Farm Commodities, Risk Management,
and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:02 p.m., in
Room 1300, Longworth House Office Building, Hon. Austin Scott
of Georgia, [Chairman of the Subcommittee] presiding.
Present: Representatives Austin Scott of Georgia, Rouzer,
Crawford, Bost, Finstad, Harris, Taylor, Davids of Kansas,
Brown, Budzinski, Sorensen, and McDonald Rivet.
Staff Present: Laurel Lee Chatham, John Hendrix, Harlea
Hoelscher, Sofia Jones, Joshua Maxwell, Thomas Newberry, Sam
Rogers, John Konya, Suzie Cavalier, Joshua Lobert, Clark
Ogilvie, and Jackson Blodgett.
OPENING STATEMENT OF HON. AUSTIN SCOTT, A
REPRESENTATIVE IN CONGRESS FROM GEORGIA
The Chairman. All right. The Committee will come to order.
Welcome, and thank you for joining today's hearing entitled,
Financing Farm Operations: The Importance of Credit and Risk
Management. After brief opening remarks, Members will receive
testimony from our witnesses today, and then the hearing will
be open to questions.
In consultation with the Ranking Member and pursuant to
Rule XI(e), I want to make Members of the Subcommittee aware
that other Members of the full Committee may join us today.
Today, we will hear from lenders representing diverse
regions across the country, along with a producer, all of whom
bring firsthand insight into the challenges farmers face when
seeking the capital necessary for success.
The reality is that farming is getting tougher every year.
Input costs are up, and market prices are down. If we don't
support today's farmers, there won't be a next generation ready
to step in. We must ensure the resources available to those who
provide capital to our producers can meet the moment.
This is why farm bill programs matter. They form the
foundation of affordable, reliable credit for our producers.
Lending tools and risk management programs like crop insurance
and commodity programs work hand in hand to help farmers
withstand downturns and sustain their operations. From loan
programs to the safety net, it is critical that producers and
their lenders have as many tools in the toolbox as possible to
ensure dependable access to capital. It is essential to
maintain the safest, most abundant food supply in the world.
Over the past 6 years, we have seen nearly $130 billion in
ad hoc assistance flow to producers, many of that in my
district. While that support was necessary in times of crisis,
it is no substitute for a durable, predictable safety net. We
owe it to farmers and lenders alike to build a system that
doesn't rely on ad hoc assistance every time a disaster
strikes. And I might add, the ad hoc assistance in many cases
takes well over a year to get to the producers.
That is exactly what the One Big Beautiful Bill (Pub. L.
119-21, To provide for reconciliation pursuant to title II of
H. Con. Res. 14.) does. We have strengthened the farm safety
net, increased reference prices, expanded access to crop
insurance, and the opportunity to add additional base acres are
just a few of the real improvements that will bring more
certainty to producers and reduce risk for lenders.
Additionally, the bill significantly raises the Federal estate
tax exemptions and makes it permanent in the Tax Code, allowing
farmers more clarity to plan for their future.
We know our work cannot stop there. Today, our loan
programs don't reflect the realities of the modern family farm.
Loan limits are outdated, and the lending process is often slow
and burdensome. We must ensure that the credit programs at the
Farm Service Agency are improved to serve both producers and
lenders. That is why today's hearing is so important. The
discussion today will help guide the next steps in our farm
bill reauthorization process and ensure that the credit title
complements the changes we made in the One Big Beautiful Bill.
It will also underscore the need to support our producers who
take the risk to grow the food, fiber, and fuel our country
depends on.
I want to thank our witnesses for being here and for all of
the work that you do every day. Your insight is critical to
helping this Committee get it right.
[The prepared statement of Mr. Austin Scott follows:]
Prepared Statement of Hon. Austin Scott, a Representative in Congress
from Georgia
This hearing of the General Farm Commodities, Risk Management, and
Credit Subcommittee will now come to order. Today, we will hear from
lenders representing diverse regions across the country, along with a
producer, all of whom bring firsthand insight into the challenges
farmers face when seeking the capital necessary for success.
The reality is that farming is getting tougher every year. Input
costs are up and market prices are down. If we don't support today's
farmers, there won't be a next generation ready to step in. We must
ensure the resources available to those who provide capital to our
producers can meet the moment.
This is why farm bill programs matter. They form the foundation of
affordable, reliable credit for producers.
Lending tools and risk management programs--like crop insurance and
commodity programs--work hand in hand to help farmers withstand
downturns and sustain their operations.
From loan programs to the farm safety net, it is critical that
producers and their lenders have as many tools in the toolbox as
possible to ensure dependable access to capital. This is essential to
maintaining the safest, most abundant food supply in the world.
Over the past six years, we've seen nearly $130 billion in ad hoc
assistance flow to producers. While that support was necessary in times
of crisis, it's no substitute for a durable, predictable safety net. We
owe it to farmers and lenders alike to build a system that doesn't rely
on ad hoc assistance every time disaster strikes.
That is exactly what the One Big Beautiful Bill does. We've
strengthened the farm safety net--increased references prices, expanded
access to crop insurance, and the opportunity to add additional base
acres are just a few of the real improvements that will bring more
certainty to producers and reduce risk for lenders. Additionally, the
bill significantly raises the Federal estate tax exemptions and creates
permanence in tax codes, allowing farmers more clarity to plan for
their future.
But we know the work cannot stop there. Today, our loan programs
don't reflect the realities of the modern family farm. Loan limits are
outdated, and the lending process is often slow and burdensome. We must
ensure that the credit programs at the Farm Service Agency are improved
to serve both producers and lenders.
That is why today's hearing is so important. The discussion today
will help guide the next steps in our farm bill reauthorization process
and ensure that the credit title complements the changes we made in the
One Big Beautiful Bill. It will also underscore the need to support our
producers who take the risk to grow the food, fiber, and fuel our
country depends on.
I want to thank our witnesses for being here and for all the work
you do every day. Your insight is critical to helping this Committee
get it right.
With that, I yield to Ranking Member Davids, for any opening
remarks she would like to make.
The Chairman. With that, I would like to welcome the
distinguished Ranking Member, the gentlelady from Kansas, Ms.
Davids, for any opening remarks she would like to give.
OPENING STATEMENT OF HON. SHARICE DAVIDS, A
REPRESENTATIVE IN CONGRESS FROM KANSAS
Ms. Davids of Kansas. Thank you, Chairman Scott, for
convening this important hearing.
Kansas is home to more than 55,000 farms, and agriculture
remains the number one economic driver in our state. When I
speak to Kansas producers, one issue consistently rises to the
top, and that is the importance of the farm safety net.
Since Congress last passed a full bipartisan farm bill in
2018, the landscape for producers has changed dramatically.
Farmers and ranchers are facing high input costs, rising
interest rates, supply chain disruptions, and market volatility
driven by global uncertainty, including tariffs. These
pressures make programs like crop insurance and access to
affordable credit, especially through USDA's credit programs,
that much more critical. That is particularly true for
beginning farmers and those in under-served communities who are
trying to break into agriculture at a time when the average age
of a Kansas producer is nearly 60 years old.
Kansas producers have always been resilient, adapting to
challenges that are immense, the Dust Bowl, droughts, climate
change. But resilience is in the DNA of Kansans, but it does
take partnership. And it is our job on this Committee and in
the Congress to be that partner, to ensure that the risk
management tools that farmers rely on are strong, that they are
accessible, and that they are responsive to the needs of the
folks making use of them.
And I want to thank you, our panel today, for being here,
for sharing your insights and expertise. Your experiences are
certainly critical to this Committee, to our ability to ensure
that Federal agricultural policy works for all farmers, and
that includes new ones, inexperienced, experienced farmers,
large and small, and folks in every corner of our country. So I
look forward to hearing your testimony, and I appreciate the
time.
Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Ms. Davids of Kansas follows:]
Prepared Statement of Hon. Sharice Davids, a Representative in Congress
from Kansas
Good afternoon, and thank you, Chairman Scott, for convening this
important hearing.
Kansas is home to more than 55,000 farms, and agriculture remains
the number one economic driver in our state.
When I speak with Kansas producers, one issue consistently rises to
the top: the importance of the farm safety net.
Since Congress last passed a full, bipartisan farm bill in 2018,
the landscape for producers has changed dramatically.
Farmers and ranchers are facing high input costs, rising interest
rates, supply chain disruptions, and market volatility driven by
tariffs and global uncertainty.
These pressures make programs like crop insurance and access to
affordable credit--especially through USDA's credit programs--more
critical than ever.
That's particularly true for beginning farmers and those in under-
served communities who are trying to break into agriculture at a time
when the average age of a Kansas producer is nearly 60 years old.
Kansas producers have always been resilient--adapting through
challenges like the Dust Bowl, droughts, and now climate change.
But resilience requires partnership.
It's our job to be that partner and ensure the risk management
tools farmers rely on are strong, accessible, and responsive to their
needs.
I want to thank today's panel of witnesses for being here and
sharing your insight.
Your experiences are critical to helping this Committee ensure that
Federal agriculture policy works for all farmers--new and experienced,
large and small, in every corner of the country.
With that, I look forward to your testimony. Thank you again,
Chairman Scott, and I yield back.
The Chairman. Thank you, Ranking Member Davids.
The chair would request that other Members submit their
opening statements for the record so the witnesses may begin
their testimony and ensure that there is ample time for
questions.
Please limit your statements to approximately 5 minutes.
You have a marker in front of you, red, yellow, green. Green is
good, yellow is getting close, and red means blue light is
coming.
Our first witness today, Mr. Clint Hood, is from my home
State of Georgia. With almost 4 decades of experience, Clint
has an extensive background in banking. He currently serves as
Senior Vice President and the Director of the Ag and Timber
Group at Synovus Banking Company.
Our next witness is Ms. Mandy Minick, the Senior Vice
President of Stakeholder Relations at AgWest Farm Credit.
Our third witness, and let me say this, my fellow
Subcommittee Chairman, Mr. Johnson, Justice Johnson, is on the
Floor of the House of Representatives right now. Our next
witness is Brian Gilbert of South Dakota from his home state.
Mr. Gilbert is Senior Vice President and the Ag Banking Manager
at First National Bank in Sioux Falls, South Dakota.
And our final witness is Mr. John Russel Wicks, the owner
and operator of Timber Ridge Organics in Ledger, Montana.
Thank you all to all of our witnesses for joining us today.
We will now proceed to your testimony. As I said, you each have
5 minutes. I am sure you understand the timer.
Mr. Hood, please begin when you are ready.
STATEMENT OF J. CLINT HOOD, SENIOR VICE PRESIDENT AND
HEAD, AGRICULTURE AND TIMBER DIVISION, SYNOVUS
BANK, DUBLIN, GA; ON BEHALF OF AMERICAN BANKERS
ASSOCIATION
Mr. Hood. Thank you, Chairman Scott, Ranking Member Davids,
and Members of the Subcommittee. My name is Clint Hood, and,
yes, I am a Senior Vice President with Synovus Bank down in
Dublin, Georgia. I am the Head of our Ag and Timber Division,
where we finance production agriculture, agribusiness, and
forest industries.
I have worked in agricultural finance for over 37 years for
banks of all sizes. Prior to banking, I farmed with my father
in east central Georgia on a very diverse row crop and
livestock family farm. My wife and I now live on our farm in
Dublin, and I have enjoyed instilling farm values in our
children and our growing number of grandchildren. I am a proud
Georgia Bulldog, Go Dawgs, and I have always been lucky, felt
lucky, to be around agriculture my entire life.
I believe my story is somewhat similar to other
agricultural bankers. I have passion for agriculture that
extends well beyond the bank. All my career, I have been
involved with many agricultural organizations, including
Georgia Farm Bureau, Georgia Agribusiness Council, Georgia FFA
Foundation, and the Georgia Cattlemen's Association. My
favorite organization of those is the FFA, and this is the
reason. It strives, the FFA strives, to teach kids values and
disciplines of agriculture through its youth programs.
As an agricultural banker, I believe it is vital that we
are working closely with our agriculture producers and
agricultural groups. I appreciate this opportunity to present
the views of agricultural banking at this hearing.
Banks continue to be one of the first places that farmers
and ranchers look for when they are trying to find agricultural
loans, and over 80 percent of the banks in the United States
have agriculture in their portfolio. Bankers finance all types
of agriculture in every part of the country. Agricultural
lending is noble, but it is a tough profession. We work with
our customers to improve their businesses, their livelihoods,
both in the long- and the short-term.
The current state of the agricultural economy is not
healthy right now. However, the Emergency Commodity Assistance
Program payments, better known as ECAP, have been very helpful
not only to the farmers and ranchers but to the ag bankers as
well, and we thank Congress and the USDA for getting those
payments out quickly.
But ECAP payments are a short-term solution to a long-term
problem. All the farmers in my area continue to struggle
financially due to low commodity prices and high input costs. I
recently had to have a discussion with a farmer who does not
borrow any working capital. He and his brother needed to cash
out a long-term CD, a CD that had been in their family for
years, but they had to cash it out in order to pay their
shortfall in their operating costs because their margins
continue to be upside down. Farmers are trying to find
solutions to keep their operations going as working capital
lines dry up and without taking any unnecessary extra debt.
Congress took the first steps to provide new economic
relief to our farmers and ranchers by increasing reference
prices for commodities and by increasing the cost-share for
crop insurance in the recent tax legislation. Our farmers and
ranchers have badly needed those provisions to be modernized to
reflect where agriculture is now, not where it was 12 to 15
years ago.
I still believe we need a long-term farm bill to help our
rural communities. To me, the farm bill is really a food bill,
as it supports the financial stability of our nation's food
producers, but it also guarantees the consumer's access to that
food. We need to get a farm bill done now, or we are going to
see the demise of American farmers and ranchers, the
agricultural lenders that support them, and the rural
communities where they live.
ABA has a list of priorities that bankers would like to see
in the next farm bill that I have highlighted in my written
testimony. This includes increasing FSA-guaranteed and direct
loan programs. Additionally, changes to eligibility for
beginning farmers and ranchers is vital to bringing the next
generation of farmers and ranchers. Last, Farmer Mac is a
tremendous partner, and we support efforts to modernize Farmer
Mac to meet the needs of rural America.
Beyond the farm bill, bankers continue to work on
additional solutions to help our customers during these tough
times. I would like to thank Congressman Randy Feenstra,
Congressman Don Davis, and the additional cosponsors of the
Access to Credit for our Rural Economy Act of 2025 (H.R.
1822),\1\ better known as the ACRE Act, which recently passed
into law. In rural communities across this country, and
especially the five-state footprint of my employer, Synovus
Bank, farmers and ranchers will see real benefit from the ACRE
Act, and lowering costs for farmers and ranchers is vital at
this time.
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\1\ Editor's note: the bill was included in Pub. L. 119-21 under
Title VII--Subtitle A--Part V--Chapter 4--Subchapter D--Sec. 70435.
Exclusion of interest on loans secured by rural or agricultural real
property.
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Bankers are proud of the work that we do to support our
nation's farmers and ranchers. The agriculture community is a
critical part of our economy, and America's banks remain
committed to serve it through good times and bad.
Thank you, and I will be happy to answer any questions.
[The prepared statement of Mr. Hood follows:]
Prepared Statement of J. Clint Hood, Senior Vice President and Head,
Agriculture and Timber Division, Synovus Bank, Dublin, GA; on Behalf of
American Bankers Association
Chairman Scott, Ranking Member Davids, and Members of the
Subcommittee, my name is Clint Hood. I am a Senior Vice President for
Synovus Bank in Dublin, Georgia and I currently lead our multi-state
Agriculture and Timber Division. I have over 37 years of experience in
financial services, and I have been in many different positions with
banks of all sizes. Prior to my career in banking, I farmed with my
father on our family farm in east central Georgia, and I continue to
live on a farm in central Georgia. At Synovus Bank, the Agriculture and
Timber Division provides lending to a wide variety of commodities from
row crops, including cotton and peanuts, to fruits, vegetables and
nuts, to livestock including cattle and poultry. Additionally, our
portfolio includes timber and sod operations. I am proud of the team of
bankers in our Agriculture and Timber Division and our scope of lending
in our rural communities.
Agricultural bankers have a deep appreciation for the important
role producers play in our economy and the unique challenges they face.
I appreciate the opportunity to present the views of the ABA for the
hearing titled ``Financing Farm Operations: The Importance of Credit
and Risk Management''.
The American Bankers Association (ABA) is the voice of the nation's
$24.5 trillion banking industry, which is composed of small, regional
and large banks that together employ approximately 2.1 million people,
safeguard $19.5 trillion in deposits and extend $12.8 trillion in
loans. ABA is uniquely qualified to comment on agricultural credit
issues as banks have provided credit to the agriculture industry since
the founding of our country. At year-end 2024, 3,725 banks--82 percent
of all banks nationwide--reported agricultural loans on their books
with a total outstanding portfolio of more than $205 billion.
Over the past year, ABA has strongly supported the passage of a
long-term farm bill. Bankers were in constant conversation with both
the House Committee on Agriculture and the Senate Committee on
Agriculture during the development of a 2024 Farm Bill. In addition to
the 2024 Farm Bill, bankers worked with Members of Congress to provide
market data highlighting he need for economic assistance for our
farmers and ranchers. Bankers continue to monitor the agricultural
economy, and we are very cognizant of how economic headwinds affect our
customers. Congress has several tools to help the farm economy--
starting with the passage of a strong and durable farm bill.
Additionally, outside this Committee's jurisdiction, would like to
thank Congress for including a partial version of the Access to Credit
for our Rural Economy (ACRE) Act of 2025 in H.R. 1, the One Big
Beautiful Bill Act. ACRE is a solution that will provide another form
of economic relief for farmers and ranchers by lowering the cost of
credit and making credit more widely available for these customers.
To ABA, fostering the next generation of producers goes further
than a program--it's part of what drives our bankers in our rural
communities every day.
Introduction
In May of 2024, the House Committee on Agriculture held a full
Committee markup of the Farm, Food, and National Security Act of 2024
(H.R. 8467), commonly known as the ``2024 Farm Bill.'' This legislation
included comprehensive risk management tools for farmers and ranchers,
loan guarantees for agricultural loans, rural development programs,
nutrition support and investments in conservation. Banks play a
critical role in rural America, and this legislation provided a vehicle
for the banking industry to help meet the financial needs of farmers,
ranchers, and agricultural communities across the country. The
meaningful changes proposed in the 2024 Farm Bill would allow bankers
to better serve their customers and ensure they have high levels of
credit availability in the years to come.
ABA commends the House Committee on Agriculture for including many
of our priorities in the 2024 Farm Bill,\1\ * including modernizing the
USDA's Farm Service Agency (FSA) loan guarantee limits, clarifying bona
fide operator rules for beginning farmer programs, modernizing and
raising limits for the down payment assistance program, and providing
robust risk management tools that allow our customers to have greater
stability and predictability for each growing season. We look forward
to working with the House Committee on Agriculture developing farm bill
this year that will potentially include many of the same banker-
supported provisions as the 2024 House Farm Bill.
---------------------------------------------------------------------------
* Editor's note: Mr. Hood's prepared statement contains footnote
references, but does not contain footnotes or endnotes. The statement
has been reproduced herein as submitted.
---------------------------------------------------------------------------
In addition to the farm bill, bankers were supportive of the
economic assistance measures enacted for farmers and ranchers. Bankers
joined commodity groups to have meetings on Capitol Hill with
Congressional offices to push for the Emergency Commodity Assistance
Program (ECAP) payments that became part of Congressional
appropriations legislation. Farmers and Ranchers are still struggling
throughout the country, and bankers work with these customers every day
to create solutions to ease economic challenges. Even with ECAP
payments, farmers and ranchers continue to have cash-flow issues that
have adversely affected their operations. As the agricultural economy
continues to struggle, bankers stand ready to work with their customers
through this economic downturn.
Banks continue to be one of the first places that farmers and
ranchers turn when looking for agricultural loans. Agricultural credit
portfolios among banks of all types are very diverse--banks finance
large and small farms, urban farmers, beginning farmers, women farmers
and minority farmers. To bankers, agricultural lending is a productive
way to serve our communities the right way: we make credit available to
all who can demonstrate they have a sound business plan and the ability
to repay. With our deep connection to farmers and ranchers, banks are
often the first to see changes within balance sheets and cash flows on
farm operations, often due to changing economic conditions--and to help
them manage those changes.
In 2024, farm banks--banks with more than 14.27 percent of their
loans made to farmers or ranchers--increased lending by 6.4 percent to
meet the rising needs of farmers and ranchers and now provide $115
billion in total farm loans. Farm banks are an essential resource for
small farmers, holding more than $45.3 billion in small farm loans,
with $9.1 billion in micro-small farm loans (loans with origination
values less than $100,000). Farm banks are healthy, well-capitalized,
and stand ready to meet the credit demands of our nation's farmers,
large and small.
In addition to our commitment to farmers and ranchers, thousands of
farm-dependent businesses--food processors, retailers, transportation
companies, storage facilities, manufacturers, etc.--receive financing
from the banking industry as well. Agriculture is a vital industry to
our country, and financing our agricultural economy is an essential
business for many banks.
Banks work closely with the FSA to make additional credit available
by utilizing the Guaranteed Farm Loan Programs. The increased loan
limits on FSA guaranteed loans is the right policy to ensure more
credit availability to farmers and ranchers. Additionally, entities
like Farmer Mac provide another avenue for banks to increase credit
availability. By purchasing guaranteed loans from banks, Farmer Mac
allows banks to lower interest rates for their customers and provide
better loan products.
Our nation's farmers and ranchers are a critical resource to our
broader economy. Ensuring that they continue to have access to adequate
credit to thrive is essential for the well-being of our whole nation.
America's banks remain well equipped to serve the borrowing needs of
farmers of all sizes.
In my testimony today, I will elaborate on the following points:
Banks are a primary source of credit to farmers and ranchers
in the United States.
The agricultural economy is experiencing headwinds and
economic assistance will provide some relief.
Agricultural provisions in H.R. 1, the One Big Beautiful
Bill Act provide a strong backstop for agricultural producers,
but a long-term farm bill is still needed
The 2025 Farm Bill provides an opportunity to make needed
changes to the Credit Title including increased limits for the
FSA Guaranteed Loan Programs, changes to the bona fide operator
definitions, and modifications to Farmer Mac eligibility.
The passage of the Access to Credit for our Rural Economy
(ACRE) Act as part of H.R. 1, the One Big Beautiful Bill Act
will provide more competition for agricultural lending and
lower the costs for producers.
I. Banks Are a Primary Source of Credit to Farmers and Ranchers in the
U.S.
For many of ABA's members, agricultural lending is a significant
component of their business activities. ABA has studied and reported on
the performance of farm banks for decades and, we are pleased to report
that the performance of these highly specialized agricultural lending
banks continue to be strong. ABA defines a farm bank as one with more
than 14.27 percent farm or ranch loans (to all loans).
At the end of 2024, there were 1,398 banks that met this
definition. Farm lending posted solid growth over the year. Total farm
loans at farm banks increased by 6.4 percent to $115 billion in 2024 up
from $110 billion for these banks in 2023. Approximately one in every
three dollars lent by a farm bank is an agricultural loan.
Farm Banks Exhibit Continued Farm Loan Growth
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Federal Deposit Insurance Corporation & American
Bankers Association analysis.
Farm production loans grew at a faster rate than farm real estate
loans. Outstanding farm production loans rose by 8.9 percent to $49.3
billion, whereas farm real estate loans grew at a pace of 4.7 percent
to a total of $62.9 billion. Farm banks are a major source of credit to
small farmers--holding more than $45.3 billion in small farm loans
(origination value less than $500,000) with $9.1 billion in micro-small
farm loans (origination value less than $100,000) at the end of 2024.
The number of outstanding small farm loans at farm banks totaled
676,181, and over \1/2\--406,698 loans--have origination values less
than $100,000. Farm banks are healthy, well capitalized, and stand
ready to meet the credit demands of our nation's farmers large and
small.
Equity Capital Continues To Increase at Farm Banks
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Federal Deposit Insurance Corporation & American
Bankers Association analysis.
Equity capital at farm banks increased 8.1%, or $3.7 billion, to
$49.6 billion in 2024. Meanwhile, tier 1 capital increased by 6.7%, or
$3.5 billion, to $55.7 billion.\2\
Aggregate tier 1 leverage ratios \3\ increased 6 basis points (bps)
in 2024 to 10.7%. Aggregate tier 1 capital ratios (assessed on risk-
based assets) increased slightly to 14.3%, down 1 bps from 2023
indicating that farm banks are still well capitalized.\4\ Farm banks'
median tier-1 leverage ratio remained 71 bps above where it was before
the start of the Great Recession (2007).
In 2020-2021, banks experienced an unprecedented influx of
deposits, alongside a pullback in loan demand. This led many banks to
increase their holdings of long-term assets such as Treasury
securities. When the Federal Reserve began rapidly raising the Federal
funds rate over the course of 2022, the market value of those bonds
fell in the rising interest rate environment. Under tangible capital
calculations, unrealized gains and losses are recorded as though the
bank intends to sell those securities immediately at market value. This
volatility in market valuations can distort assessment of a bank's
financial health; post Dodd-Frank, regulatory capital has replaced
equity capital as a reliable measure of the capital available at banks
to absorb shocks.
Farm banks have built strong, high-quality capital reserves and
remain liquid and prepared to manage potential economic headwinds.
II. The Agricultural Economy is Experiencing Headwinds
The agricultural economy is in a position it has not been in for
many years. There is a return to the cyclical agricultural conditions
that were present before the surge of government support during the
COVID-19 pandemic. Despite ever rising input prices, the USDA Economic
Research Service has forecasted a 29.5 percent increase in farm income
in 2025 that will be mostly driven by ECAP payments.
U.S. Net Farm Income and Net Cash Farm Income, Inflation Adjusted,
2004-25F
Billion 2025 Dollars
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Note: F = forecast; data for 2024 and 2025 are forecasts.
Values are adjusted for inflation using the U.S. Department of
Commerce, Bureau of Economic Analysis, Gross Domestic Product
Price Index (BEA API series code: A191RG) re-based to 2025 by
USDA, Economic Research Service.
Source: USDA, Economic Research Service, Farm Income and
Wealth Statistics.
Data as of February 6, 2025.
[https://www.ers.usda.gov/data-products/chart-gallery/chart-
detail?
chartId=82240]
[Net farm income, a broad measure of profits, is forecast to
increase in 2025 after declining in 2023 and 2024 from a record
high in 2022. Forecast at $180.1 billion for 2025, net farm
income would be $41.0 billion (29.5 percent) higher than in
2024. Net cash farm income is forecast at $193.7 billion for
2025, an increase of $34.5 billion (21.7 percent) relative to
2024 (not adjusted for inflation).]
With rising input costs and lower commodity prices, farmers and
ranchers have worked through the liquidity and working capital they
built over the past few years at a more rapid pace than anticipated. As
a result, farmers and ranchers are naturally turning to credit to
finance their agricultural operations. This has resulted in increased
debt levels for agricultural producers across the country.
Agriculture Commodities Fall from 2022 High
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Key agricultural commodity prices are off their recent highs.
Fertilizer prices were a big concern after the invasion of
Ukraine; while prices have softened, reflecting weakness in the
agriculture sector, farmers' margins are under pressure from
lower crop prices and higher overall price inflation.
* Week ended Friday.
Source: Bloomberg.
[https://bankingjournal.aba.com/2024/07/aba-data-bank-
agriculture-commodities-fall-from-2022-high/]
The ECAP payments that were included in last year's continuing
resolution will help provide some relief for farmers and ranchers.
Bankers had many conversations with Members of Congress on the need to
push economic assistance out to agricultural producers. Bankers were
pleased with the work by USDA to push the ECAP payments to producers in
a timely fashion. These payments have provided some relief, but a long-
term farm bill is vital for rural America.
III. The One Big Beautiful Bill Act Provided Needed Agricultural
Provisions, but a 2025 Farm Bill is Vital to Rural America.
The farm bill provisions included in H.R. 1, the One Big Beautiful
Bill Act (OBBB) are a meaningful first step in providing an economic
backstop for agricultural producers. Bankers commend the inclusion of
increased reference prices and increased cost share for crop insurance
programs, among the many other positive provisions. However, changes
are still needed in the credit space to provide farmers and ranchers
with the credit they need to work through the current downturn in the
agricultural economy.
Bankers look forward to working with the House Committee on
Agriculture to develop a new farm bill in 2025. Many provisions in the
2024 House Farm Bill provided a blueprint for policy changes to the
credit title that will improve credit availability for rural America.
The most significant change bankers would like to see in the next farm
bill is an increase in the FSA Guaranteed Farm Ownership Loan Program
to $3.5 million and the FSA Guaranteed Farm Operating Loan Program to
$3 million. As the cost of agriculture continues to increase, it is
vital to have the FSA loan programs keep pace with modern agriculture.
These new limits will achieve that goal. We thank Representative Brad
Finstad (R-MN) and Ranking Member Craig (D-MN) for their work on H.R.
1991, the Producer and Agricultural Credit Enhancement (PACE) Act. We
believe this legislation is a step in the right direction for
modernizing FSA loan programs.
FSA loan programs, and the FSA employees that administer the
program, play a critical role in the agricultural economy particularly
during times of economic uncertainty. Bankers will continue to work
with FSA at all levels to ensure credit is available when it is needed
most. However, the need for technology to improve FSA programs
continues to be an issue. For too long, USDA has ignored the need for
new technology within the FSA loan programs. ABA has provided
information to the [] House Agriculture Committee and USDA on potential
changes in the technology space that would improve the loan making
process. The 2025 Farm Bill is a great opportunity to improve FSA loan
programs through technology and create greater efficiency for loan
origination.
For beginning farmers and ranchers, credit availability is vital to
their survival. For this reason, ABA supports re-examining the 10 year
eligibility limits for FSA Beginning Farmer and Rancher programs.
Beginning farmers and ranchers are often starting to get their footing
when their eligibility runs out. Collectively, we need to do everything
we can to help beginning farmers and ranchers succeed.
Bankers support a change to the down payment assistance program by
removing arbitrary cap on the size of the loan. Instead, we support a
cap on down payment loans at 45 percent of the lesser of acquired price
or appraised value. Senator Tuberville has legislation that provides a
revised definition of owner-operator that allows various business
structures to increase eligibility to beginning farmer guaranteed loan
programs to more producers and customers. This should be included in
the next farm bill.
Bankers endorse allowing Farmer Mac to support all USDA guaranteed
loan programs financing. Farmer Mac is a valuable tool for agricultural
bankers because it provides another avenue for banks to increase credit
availability. By purchasing guaranteed loans from banks, Farmer Mac
allows banks to lower interest rates for their customers and provide
better loan products. Further, ABA continues to recommend the removal
of the cooperative lender requirement for energy loans to be sold to
Farmer Mac. This requirement limits the ability of banks to participate
in rural energy projects, limiting available credit in rural America.
Additionally, the next farm bill must include provisions that will
speed up the USDA loan approval process while making it easier for
producers to use USDA loan programs. USDA loan programs are likely to
provide lifelines to agricultural producers through this economic
downtown. There are many innovative approaches that could be
implemented at USDA and all options should be on the table.
Crop, livestock, and dairy insurance continue to be extremely
important for bankers. Our customers know these programs well and
heavily use them. We appreciate the inclusion of insurance programs in
the One Big, Beautiful Bill Act to assist in the cost share for
insurance.
Finally, we note that the language to modify the Consumer Financial
Protection Bureau's 1071 Final Rule reporting requirements for the Farm
Credit System is problematic for the banking industry. ABA supports
efforts to provide relief from the 1071 Final Rule, but that relief
should be equal across all lenders.
IV. The Access to Credit for our Rural Economy Act
ABA is a proud supporter of H.R. 1822, the Access to Credit for our
Rural Economy Act (ACRE Act) of 2025 led by Rep. Randy Feenstra (R-IA)
and Rep. Don Davis (D-NC). Bankers across the country are thankful for
the inclusion of the ACRE Act in H.R. 1, the One Big Beautiful Bill
Act.
The ACRE Act will be beneficial to both new and existing farmers by
lowering interest rates on agricultural real estate. However, access to
credit can be much more difficult for ``Beginning Farmers and
Ranchers'' and ``Socially Disadvantaged Farmers and Ranchers'' due to a
lack of preexisting land ownership and access to other sources of
capital. 54 percent of young farmers say they need more land. ACRE will
help new farmers and ranchers by lowering their cost to acquire land,
which is the most capital intense portion of any farming operation and
a critical asset to achieve long-term, reliable access to credit.
Lastly, ACRE will reduce the need for farmers and ranchers to find off-
farm income by reducing interest payments, which increases the cash-
flow from their operation and reduces the need for off-farm income.
Conclusion
The banking industry is well positioned to meet the needs of U.S.
farmers and ranchers. Rising input prices and declining commodity
prices, however, have resulted in lower net farm income for
agricultural producers. Moreover, debt levels have been increasing, and
bankers are concerned that without changes to government policy,
agricultural producers may experience a tightening of credit
availability. The 2025 Farm Bill and the ACRE Act provide opportunities
to make the changes necessary to provide the credit needed for farmers
and ranchers to successfully navigate tougher economic times. Bankers
continue to see great opportunities in agriculture and will continue to
stand with farmers and all our partners in agriculture going forward.
We will also continue to work constructively with the Committee and
your colleagues in Congress on the 2025 Farm Bill and ACRE Act to help
ensure that farmers have the credit they need to be a successful and
strong part of the U.S. economy.
Thank you for the opportunity to express the views of the American
Bankers Association. I would be happy to answer any questions that you
may have.
The Chairman. Ms. Minick, please begin when you are ready.
STATEMENT OF MANDY MINICK, SENIOR VICE PRESIDENT,
STAKEHOLDER RELATIONS, AgWest FARM CREDIT,
ROCKFORD, WA; ON BEHALF OF FARM CREDIT COUNCIL
Ms. Minick. Chairman Scott, Ranking Member Davids, and
Members of the Committee, thank you for hosting this hearing
today to discuss the importance of the farm bill on lending and
credit. My name is Mandy Minick. I hold the position of Senior
Vice President, Stakeholder Relations with AgWest Farm Credit,
located in Spokane, Washington.
The Chairman. Could you bring your microphone a little
closer, please?
Ms. Minick. Is that better? Okay. AgWest Farm Credit offers
dependable credit, crop insurance, and business resources
supporting farmers, ranchers, fishermen, foresters, and rural
residents in Alaska, Arizona, Idaho, Montana, Oregon,
Washington, and parts of California. This includes support for
growers that produce traditional crops, as well as many crops
categorized as specialty by the USDA. We are a member-owned,
locally governed cooperative and a proud member of the Farm
Credit System. Along with 58 other farm credit institutions, we
share a critical mission to support rural communities and
agriculture with reliable, consistent credit and financial
services today and tomorrow.
As a cooperative, Farm Credit profits are used in only two
ways, either retained in the institution to build financial
strength and support more lending to our customers or returned
to our customers via patronage dividends. Annually, our board
approves the distribution of cash dividends to customers
through our patronage program. Representing 54 percent of our
total earnings in 2024, this equated to $414 million returned
to eligible customers last year.
While patronage benefits help to effectively reduce the
total borrowing costs for our customers, today's producers in
the western U.S. are facing down markets across most crops. It
is troubling when specialty crops, which are mainly influenced
by market demand at home and abroad, are incurring multiple
years of loss. The struggle in today's ag economy are serious,
and what makes this economic downturn unique is the widespread
impact across most commodities. Price declines, higher input
costs, shrinking margins, tariff volatility, ag labor,
environmental and regulatory pressures, and farm bill
uncertainty are impacting not only business viability but also
the mental health in rural communities. Farmers and ranchers
are managing today's problems under the 2018 Farm Bill
solutions, which served agricultural well then but no longer
adequately address current challenges. And the longer this
takes, the more problems elevate.
One thing that we can control in the current ag environment
is advocating for the certainty that a strong farm bill will
bring our customers. Important to AgWest producers is the
passage of a strong farm bill to advance multiple important
tools and programs. Federal crop insurance is a vital risk
mitigation tool for our customers. AgWest is committed to
serving all producers regardless of size, complexity, or
commodities that they grow. Whole Farm Revenue Protection and
micro farm policies are successful risk tools for traditional
crops like apples in Washington, grapes in California, and
nontraditional crops like wasabi and kiwi berries that they
grow in Oregon. We are grateful to Congress for their ongoing
investment and improvements in this program.
AgWest supports the Producer and Agricultural Credit
Enhancement of 2025 (H.R. 1991/S. 899), PACE Act that would
modernize FSA loan programs through increased loan limits that
reflect current costs of production agriculture. Full details
are included in my written testimony in which I share how
strong FSA-guaranteed loan programs assist agricultural lenders
in providing opportunities, particularly for young and
beginning farmers.
The Fishing Industry Credit Enhancement Act of 2025 (H.R.
2518/S. 1217) would allow farm credits to provide commercial
fishing-related businesses access to Farm Credit loans, just
like other farm businesses do. Reliable credit sources for
fishing-related businesses, such as tinder boats or diesel
mechanics, in the communities that count on fishing to survive
is a much-needed resource.
In my written testimony, I have included additional items
for the farm bill that would benefit agriculture and rural
communities.
AgWest Farm Credit appreciates the farm and farm-related
tax legislation included in the recent budget reconciliation
package. Passing a strong farm bill remains a top priority to
provide safety, certainty, and much-needed support to our
producer-owners in these very uncertain and challenging times.
Thank you for having us today, and I look forward to your
questions.
[The prepared statement of Ms. Minick follows:]
Prepared Statement of Mandy Minick, Senior Vice President, Stakeholder
Relations, AgWest Farm Credit, Rockford, WA; on Behalf of Farm Credit
Council
Chairman Scott, Ranking Member Davids, and Members of the
Committee, thank you for convening this hearing today to discuss the
importance of the farm bill on lending and credit. My name is Mandy
Minick. I hold the position of Senior Vice President--Stakeholder
Relations with AgWest Farm Credit, located in Spokane, Washington.
AgWest Farm Credit is a lending cooperative serving the agriculture
industry. We offer dependable credit, risk management tools, and
business resources to help farmers, ranchers, and rural residents
succeed. For more than a century, we have provided financing expertise
and support for rural communities located in Alaska, Arizona, Idaho,
Montana, Oregon, Washington, and parts of California. As of March 31,
2025, we have provided more than $31.35 billion in loans throughout
seven states, where we operate in 59 locations.
AgWest is part of the Farm Credit System, a nationwide network of
cooperative lending institutions. Our mission is to support rural
communities and agriculture with reliable, consistent credit and
financial services today and tomorrow. Together, Farm Credit
associations provide approximately 46 percent of commercial
agricultural credit.
The Farm Credit System
Farm Credit lenders were assigned a vital mission by Congress a
century ago.
Our mission is to ensure rural communities and agriculture have a
reliable, consistent source of financing irrespective of cycles in the
economy or vagaries of the financial markets. As this Committee has
heard, there are numerous challenges facing U.S. agriculture. However,
hundreds of thousands of farmers around the country developed a farm
operating plan this year knowing that Farm Credit has the financial
strength to finance that plan and the strong desire and ability to help
them succeed. As margins have tightened for farmers across the country,
our mission to serve all of agriculture in good times and bad is
especially important.
Although Congress created Farm Credit in 1916, we do not receive
any government funding or tax dollars. Instead, Farm Credit reverses
the traditional flow of funds by raising money on Wall Street and
bringing it back to rural communities.
Like AgWest Farm Credit, all Farm Credit institutions rely on the
availability of certain USDA programs to make credit decisions. A
customer's ability to purchase crop insurance and the strength of the
coverage available is a key factor in determining if and how much
credit to extend to a borrower. The Farm Service Agency guarantee and
direct lending programs help Farm Credit institutions to work with
customers that may have higher risk profiles, particularly young and
beginning producers. The availability of the many types of indemnity
programs is essential to the survival of farm operations who suffer
during natural or other disasters and ensure those borrowers can pay
down existing debt and access credit for future years. The many
commodity programs, such as ARC and PLC that are administered through
USDA provide a level of certainty for the producer and gives lenders
assurances that in difficult price environments customers have tools to
manage their risk.
Finally, Farm Credit member institution, CoBank, provides
significant financing to rural infrastructure providers. Their
customers provide water and waste services, electricity,
telecommunications, and broadband to rural communities across the
country. The USDA Rural [Utilities] Service is not only a partner to
CoBank in order to help make electricity costs more affordable for
people living in rural America, but their loan guarantee programs are
an essential tool for rural utility providers. Their programs help
CoBank address the unique credit needs in the hardest to reach places.
As a cooperative, Farm Credit is owned and governed by our
borrowers. Nationally, Farm Credit returned over $3 billion in
patronage (cash dividends) to our customers, representing 40% of total
earnings in 2024. Since 2012, Farm Credit has returned $24 billion in
patronage to our customers.
As a Farm Credit institution, the AgWest Farm Credit Board of
Directors consists of agriculture producers who are invested in
supporting local communities and agriculture. Annually, our board
approves the distribution of patronage (cash dividends) to customers
through our patronage program, representing 54.4% of our total earnings
in 2024. This equated to $414 million returned to borrowers.
The Farm Economy
Farmers operate in a cyclical, unpredictable, and sometimes risky
environment. AgWest is proud to be a trusted resource for producers by
sustaining and strengthening their operations through these dynamic
cycles and supporting a thriving future for agriculture.
AgWest serves a remarkably diverse portfolio, financing hundreds of
specialty crops and bulk commodities, with the most significant loan
volume last year concentrated in dairy, tree nuts, cattle and
livestock, diversified crops, tree fruit, grains, wine, and forest
products. We also serve fisheries and aquaculture markets in our
coastal regions.
AgWest offers tailored financial products based on the needs of our
customers. Our lending programs consist of real estate mortgages,
intermediate-term and revolving lines of credit, equipment leasing,
crop insurance and appraisal services. This range of products allows
AgWest to respond to borrowers' needs and market changes. A strong
capital base is critical in our ability to provide steady lending
capacity during this cyclical downturn.
The current agricultural economy is encountering substantial
challenges affecting numerous commodities. It is unusual to observe
such widespread economic pressures simultaneously influencing multiple
sectors within agriculture. In nearly all areas, farmers are grappling
with price declines, rising input costs, shrinking margins, and
financial strain.
Additionally, trade policy and tariff volatility, labor shortages,
environmental and climate pressures and uncertainty surrounding the
farm bill are exacerbating these issues.
Specialty Crops
USDA defines specialty crops as ``fruits and vegetables, tree nuts,
dried fruits, horticulture, and nursery crops (including
floriculture).'' This includes many items you might find on your dinner
table. Specialty crop growers encounter challenges not faced by bulk
commodity producers. These crops have shorter harvest periods, are
vulnerable to weather and pests, often require manual harvesting, and
must be quickly delivered to market due to their perishability. It is
not uncommon for tomatoes harvested in the morning to be canned in the
afternoon. Cherries are often harvested in the field, meticulously
washed, and sorted, then immediately cold packaged for export, and
shipped by air freight to foreign markets on the same day. Market
availability, trade restrictions, and shipping container access are
critical for fresh, perishable products. Labor shortages in any part of
the supply chain, delays in shipping, or issues with customs can
significantly reduce marketability.
The health of the specialty crop economy depends on product type
and is mainly influenced by market demand at home and abroad. Export
markets are crucial. Shifting trade dynamics have created uncertainty.
Drought and extreme weather continue to challenge growers in all the
states that we serve. Additionally, increased expenses related to
labor, energy, transportation, compliance with new regulations,
litigation and water are substantial factors. These numerous headwinds,
along with other barriers to entering agriculture, continue to
contribute to the increasing number of farm consolidations.
AgWest Commodity Overview
At the end of 2024, almond producers were slightly unprofitable yet
remained hopeful that conditions would improve during 2025. Recently,
pricing has increased as demand has improved. Pistachio producers ended
2024 slightly profitable. With minimal inventory carry-over from 2024
and strong demand, prices should continue to support profitability.
Pistachio trees are alternate bearing, suggesting that 2025 crop will
be larger than 2024, which may reduce pricing for the 2025-26 marketing
season.
Conventional apple prices are holding flat, while input costs and
water allocations are ongoing concerns. Organic apples (13% of the
total supply) are maintaining stronger pricing. California leads the
nation in citrus production, yet growers have reported escalating input
costs (fuel, fertilizer, labor), increased regulatory burden and rising
packaging and marketing expenses. Lemon markets remain weak, and
production capacity is likely to exceed demand over the next year.
According to a recent report by California Citrus Mutual, the average
cost to grow navel oranges in the state has risen by 28% over the past
five years. Reduction in tree fruit imports may help domestic prices;
however, the benefits may not be enough to offset the current
challenges.
Falling wine demand, excess inventory and production capacity are
pressuring prices and margin. Declining export demands may further
challenge this industry.
Ending in 2024, wood product mills were slightly profitable, a
trend expected to continue in 2025. The industry is reliant on the
growth of the housing market to increase demand for wood products.
Potential tariffs on imported lumber may also support prices.
Regional topography and unique climates across the states AgWest
serves makes the production of specialty crops possible--and nowhere is
that more evident than in California. The state produces more than 400
commodities and represents over a third of the country's vegetables and
over \3/4\ of the country's fruit and nut production. Like the rest of
the nation, California producers have experienced substantial increases
in expenses. Exacerbating these rising costs is continual
implementation of new regulations. In a recent study, California
Polytechnic University, San Luis Obispo professors Dr. Lynn Hamilton
and Dr. Michael McCullough report that growers have experienced a
1,366% increase in costs solely to comply with regulations in 2024 when
compared to 2006. This environment has produced extreme barriers to
entry and agricultural sustainability, impacting producers in the state
and potentially threatening our nation's food supply.
While not specialty crops, substantial volume of beef and dairy
products are produced in the western United States. The livestock
industry is navigating a complex but cautiously optimistic landscape
shaped by evolving market dynamics, regulatory pressures, and strategic
outreach efforts. According to USDA, beef production is projected to
rise in 2025, buoyed by heavier slaughter weights and increased cattle
placements. However, the overall cattle herd remains historically
tight, keeping prices firm.
Dairy margins have improved over the past year due to expanded
processing capacity, stronger milk prices and lower feed costs, but
Federal reforms to milk pricing formulas are likely to hurt prices
received by Western dairies. Challenges loom for producers as strong
beef prices have reduced availability of replacement dairy heifers.
Input Costs
Headwinds in this current environment for producers include input
costs. We are seeing crop input costs rise with ocean freight and
fertilizer pricing. Container rates started to accelerate in the first
week of June. Companies are once again front-loading goods to the U.S.
in anticipation of higher tariffs in July and August. A rapid increase
in import volumes could lead to temporary port congestion and trucking/
rail bottlenecks over the next month or two.
Fertilizer prices rose across the board over the last month due to
increased demand from spring applications and global supply
constraints. It remains unclear as to how much urea China plans to
export in 2025, though the consensus is that it will keep shipments
well below average.
Specialty Crop Challenges
Price declines, rising input costs and shrinking margins, credit
access and financial strain, trade policy and tariff volatility, labor
shortages, environmental and climate pressures and farm bill
uncertainty are impacting not only business viability but also mental
health in rural communities. Farmers and ranchers are managing today's
problems under the 2018 Farm Bill solutions, which served agriculture
well then, but no longer adequately addresses current challenges. We
need a new farm bill to help mitigate these rising challenges.
The struggles in today's agricultural economy are serious. Unique
to this downturn is the widespread impact across most commodities
AgWest serves. Agriculture Risk Coverage (ARC) and Price Loss Coverage
(PLC) programs offer price support for 22 covered commodities. The
recently enacted improvements to these programs will greatly help our
grain producers, but our specialty crop growers do not have access to
these programs.
Serving Young and Beginning Producers
Congress assigned Farm Credit a mission to serve all sectors of
agriculture, and we fulfill that mission every day. From the largest
producers to the more specialized local producers, Farm Credit offers a
wide range of loan products to support specific needs across all 50
states and Puerto Rico.
Congress also directs Farm Credit specifically to serve the needs
of young and beginning farmers and ranchers. In 2024, Farm Credit made
just over 129,000 loans to YBS producers which is about 57% of the
total of new Farm Credit loans made during the year. The chart below
details Farm Credit loans made last year to Young, Beginning, and Small
producers.
[Note: The numbers above cannot be combined. A single loan to
a 25 year old rancher in her third year of ranching with annual
sales of $100,000 could be counted in the young, beginning, and
small categories. We report this way for two reasons: our
regulator requires it and, more importantly, it is the most
accurate portrayal of who we serve.]
With this mission as our focus, AgWest has developed a unique and
robust program focused exclusively on serving young, beginning and
small producers grow and sustain their operation. With the average age
of U.S. farmers just over 58, there is a need to develop the next
generation of producers to ensure the sustainability and viability of
the agriculture industry for years to come.
The AgWest AgVision program offers qualified producers loan options
with modified underwriting guidelines, preferred interest rates, fee
waivers, FSA guarantee fee coverage and financial incentives for
producers to further their education and invest in their operation.
AgWest also supports these producers with in-depth financial and
business training opportunities to help them grow and refine their
business management skills.
Eligible participants in this program are 35 years old or younger,
have farmed for 10 years or less or generate under $350,000 in annual
gross agricultural income. AgWest has offered the AgVision loan
products and programs for over 25 years, during which time we have seen
many producers develop their farming, ranching, and aquatic production
operations into viable businesses. These operations have grown to be
both successful and sustainable, reflecting the effectiveness of the
program's approach.
Tighter financial conditions in the broader economy have impacted
businesses and consumers. Borrowing costs and stricter credit standards
may increase barriers to obtaining credit. This is especially
problematic for new producers.
FSA Lending Programs
AgWest supports and participates in Farm Service Agency lending
programs, including guaranteed loans and direct lending, to serve
producers. We use joint financing structures that combine FSA and
AgWest programs for greater support, particularly for our AgVision
customers.
We support the Producer and Agricultural Credit Enhancement (PACE)
Act to modernize Farm Service Agency loan programs, including increased
loan limits that reflect current costs of production agriculture. A
strong FSA Guaranteed Loan Program assist agriculture lenders in
working with farmers and ranchers dealing with these challenges and
provides opportunities for young and beginning farmers and ranchers.
Farmland values and input costs have soared in recent years, making
it more expensive for farmers and ranchers to finance land and their
agricultural operations. FSA-guaranteed loan limits must keep pace with
the increased costs of production agriculture.
Crop Insurance
Federal crop insurance is a vital tool in stabilizing access to
credit, sustaining farming communities and protecting the nation's food
supply, making it a sound investment for taxpayers. The Federal Crop
Insurance Program works as intended by Congress when coverage is
available and purchased. Crop insurance allows producers to customize
risk mitigation plans that protect our national food supply from
unforeseen disasters. Federal crop insurance is a cost-share investment
between taxpayers and producers, and as such, farmers and ranchers pay
premiums. In contrast, ad hoc disaster relief programs are 100% funded
by taxpayers, unpredictable and subject to political gridlock.
Recent ad hoc disaster programs have delivered billions in relief,
but their ad hoc nature creates uncertainty, distribution delays and
often gives very little consideration to specialty crops. Ad hoc
disaster relief programs are most effective when complementing
structured crop insurance plans and should not be used to substitute
for producers properly planning to mitigate impacts of a disaster. For
maximum success, ad hoc disaster programs must be anchored in crop
insurance and support program distribution to include specialty crop
producers.
America Needs a Strong Farm Bill
We appreciate the efforts in both chambers of Congress throughout
the Budget Reconciliation process that have led to key reforms in crop
insurance and agriculture policy. Further improvements need to address
coverage gaps for under-served and uninsurable commodities. Passing a
strong farm bill this year would give America's farmers and ranchers
much needed stability and prioritize farmers in the bill.
Farmers and ranchers need a new farm bill to help mitigate
unprecedented challenges in a difficult economic environment. Farm
Credit encourages Congress to pass a strong, five year farm bill, and
we have highlighted several of our priorities in this testimony.
In addition to the PACE Act, we also encourage Congress to support
rural communities and agriculture by:
Allowing U.S. commercial fishing related businesses to access
Farm Credit--just as related farm businesses do--to support the
industry, as proposed in the Fishing Industry Credit
Enhancement Act (S. 1217/H.R. 2518);
Authorizing Farm Credit institutions to voluntarily collect
customer demographic data with the Farm Credit Administration
as their primary regulator, as outlined in H.R. 1063, the Farm
Credit Administration Independent Authority Act;
Enhancing the development of essential rural community
facilities--including hospitals, rural clinics, and skilled
nursing facilities--by clarifying the authority of Farm Credit
institutions to finance such projects and promoting
collaborative partnerships with community banks, as
demonstrated by H.R. 1246, the Investing in Rural America Act;
Allowing more time between examinations for low-risk
institutions, like the 118th Congress's H.R. 6564, the Farm
Credit Adjustment Act;
Modestly increasing Farm Credit's rural home lending
population limit, like the 118th Congress's S. 3497, the FARM
Home Loans Act;
Expanding access for rural businesses to equity capital
investment by eliminating unnecessary restrictions on Rural
Business Investment Companies (RBIC) and allowing RBICs to
access Federal leverage funding, similar to how small business
investment companies operate;
Improving the transparency and safety and soundness of the
Federal Agricultural Mortgage Company (Farmer Mac) by requiring
the company to obtain and maintain public ratings on its debt
securities.
Thank you very much, Chairman Scott and Ranking Member Davids, for
allowing me to testify today. Farm Credit is committed to fulfilling
the mission Congress charged us with 109 years ago, and we look forward
to working with you as you reauthorize the farm bill.
The Chairman. Perfect. Mr. Gilbert, please begin when you
are ready. Thank you, ma'am.
STATEMENT OF BRIAN GILBERT, SENIOR VICE PRESIDENT, AG
BANKING MANAGER, FIRST NATIONAL BANK IN SIOUX
FALLS; MEMBER, RURAL AMERICA AND AGRICULTURE
COMMITTEE, INDEPENDENT COMMUNITY BANKERS OF
AMERICA, SIOUX FALLS, SD
Mr. Gilbert. Chairman Scott, Ranking Member Davids, and
Subcommittee Members, thank you for the opportunity to discuss
financing farms. I am Brian Gilbert, Senior VP and Ag Banking
Manager at the First National Bank in Sioux Falls, representing
Independent Community Bankers of America. I own and operate a
family farm that raises cow-calf pairs, finishes approximately
750 head of cattle each year, and I also raise corn and
soybeans.
Our nation's more than 4,000 community banks make nearly 80
percent of all ag loans made by commercial banks, or $151
billion. Community banks have deep roots in their communities.
More than 1,000 banks are more than 100 years old and have
survived the Great Depression, the Great Recession, and are
still standing by their customers through good times and bad.
Community banks are relationship lenders that fund local loans
with local deposits.
First National Bank in Sioux Falls started 140 years ago in
1885. We are a $2 billion bank heavily involved in ag lending
and risk management with a bank-owned crop insurance agency.
Several of our bank's one dozen ag lenders own family farms. We
want to help producers buy that next parcel of ground, add to
their herd, or figure out how to make their operations more
efficient and productive. As a farmer myself, I can attest that
agriculture can often be difficult and have great uncertainty
due to extreme fluctuations in prices, weather, markets,
diseases.
Our bank works with farmers to prepare them for a wide
variety of challenges. We look at whether producers can cash-
flow, and crop insurance is a very important tool. We have an
insurance agency called First Ag Risk Management, or FARM. Due
to the unpredictable weather, financial risks are always
present. Drought, hail, floods, and other weather events put
farmers and ranchers and their crops and livestock in danger.
Crop insurance enables producers to repay bank loans and
qualify for credit. Crop insurance fits into the bigger system
of inputs, marketing, risk mitigation. Our FARM agency
solutions help producers build a customized risk management
plan.
USDA's Livestock Risk Protection Program is also quite
important, and we have many producers that utilize that
program.
We offer education through our Farmers and Bankers Program.
Topics include farm financials, crop insurance, marketing,
trust and estate planning, and taxes. Having strong marketing
skills can generate profits.
USDA loan guarantees allow banks to work with borrowers who
cannot qualify for conventional credit or who are beginning
farmers. A USDA express loan program requiring USDA to approve
guaranteed loan applications within a couple days in exchange
for a lower guarantee amount for loans up to $1 million is
needed.
SBA's Express Loan program works well. To have real impact,
the USDA Express concept should apply to standard and certified
lenders.
We appreciate the Committee's higher USDA guaranteed farm
loan limits: $3.5 million for ag real estate loans, and $3
million for guaranteed operating loans are necessary given
today's land values and production costs. I purchased my first
farm ground, 240 acres, with USDA's down payment loan program.
It is a great program for a beginning farmer.
The Farm Credit System has major proposals that would fuel
tens of billions of dollars or more in new non-farm financing
for the FCS at the expense of taxpaying community banks. As a
government-sponsored enterprise, FCS' effective tax rate in
2024 was only 2 percent, far below what community banks pay.
The FCS' essential community facility proposal to finance
schools, fire stations, health clinics, et cetera, without
regulators' pre-approval considerably broadens their scope. FCS
should at most be a supplemental source of credit once the
private sector lenders have committed to providing the majority
of funds. FCS proposes expanding housing loans in towns of
10,000, a 300 percent increase. Seventy-five percent of all
towns are below or at 5,000 population. The Farm Credit Act
should be tightened to limit FCS deposit-taking activities,
which is draining community banks of deposits.
In conclusion, we appreciate the Committee's work, and we
thank Congress for the $10 billion in economic loss payments,
$20 billion in disaster aid, and higher reference prices and
continued crop insurance protections. We appreciate the
inclusion of the ACRE Act in H.R. 1 but encourage the 25
percent tax exemption to be raised to 100 percent. Thank you.
[The prepared statement of Mr. Gilbert follows:]
Prepared Statement of Brian Gilbert, Senior Vice President, Ag Banking
Manager, First National Bank in Sioux Falls; Member, Rural America and
Agriculture Committee, Independent Community Bankers of America,
Sioux Falls, SD
Introduction
Chairmen Scott, Vice Chair Rou[z]er, Ranking Member Davids and
Members of the Subcommittee:
Thank you for the opportunity to appear before you today and share
my views on Financing Farm Operations: The Importance of Credit and
Risk Management.
I am Brian Gilbert, Senior Vice President and Agriculture Banking
Manager of the first National Bank in Sioux Falls, S.D. I am here today
representing the Independent Community Bankers of America (ICBA) and I
serve on ICBA's Rural America and Agriculture Committee.
I also am an operator of a family farm. Our farm runs a significant
cow/calf operation. I finish about 500-750 head of cattle per year in
South Dakota and Nebraska. Additionally, I own 300 cows personally and
another 900 cows in a partnership. I am pleased to serve on the Board
of Directors of the South Dakota Cattlemen's Foundation. The South
Dakota Cattlemen's Foundation facilitates the generosity of the beef
industry to educate and build trust with the state's consumers,
ensuring the industry's long-term viability and provides educational
opportunities to develop future leaders in our industry. I also own
several hundred acres of crop land producing corn and soybeans.
In addition to operating a family farm, for the past 20 years I
have worked as an ag banker at the First National Bank in Sioux Falls.
First National is a $2 billion asset bank heavily involved in
agricultural lending and risk management with a bank-owned crop
insurance agency.
Commitment to Farmers and Ranchers
As SVP/Agriculture Banking Manager, I work with over a dozen ag
lending specialists. Several of our lenders are also involved in their
own family farms. Our Ag Bankers are ready to help producers buy that
next parcel of land, add to their herd, or figure out how to make their
operations smarter, more efficient, and more productive. When producers
grow with us, they have a partner who will weather the ups and downs
with them.
Our ag banking staff takes pride in helping farmers achieve their
financial goals and we understand the importance of keeping the family
farm's legacy strong through both calm times as well as challenging
times. Our ag lender team members are industry leaders and experts that
understand family farm ownership and the cyclical nature of
agriculture.
Before commenting further on the role that First National Bank
plays in meeting the needs of our farm and ranch customers, I'd like to
briefly mention the role that community banks serve in meeting the
needs of America's agricultural sector.
Community Banks Service to Farmers and Ranchers
Community Banks with under $10 billion in assets make approximately
78 percent of all agricultural loans made by commercial banks. This
amounts to $150.7 billion of the $193 billion in ag loans from the
commercial banking sector.\1\
---------------------------------------------------------------------------
\1\ How the Composition of U.S. Commercial Banks Participating in
Agricultural Lending has Changed Since 2007, farmdoc Daily, June 14,
2024, Table 2.
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There are over 4,000 community banks in this country with 45,000
locations. Community banks have deep roots in the communities they
serve, often for many generations. More than 1,000 community banks are
more than 100 years old and have survived the Great Depression, the
Great Recession, and numerous other systemic shocks, standing by their
customers in catastrophic times and good times. Others are de novo or
new bank charters, that are poised for growth. When Congress considers
adopting new legislation, it is important to ensure these policies do
not disadvantage community banks by granting non-bank competitors who
have favorable tax and regulatory policies competitive advantages over
community banks.
In community banks, local deposits are reinvested back into local
credit needs, not exported to distant markets. Community banks often
serve communities overlooked by larger, out-of-market lenders. In one
in three counties, community banks are the only on-the-ground banking
option.
These points have been affirmed by the Federal Reserve Bank of
Kansas City which stated, ``Community banks are often known as
`relationship bankers.' Community banks serve businesses and consumers
throughout the country, in both rural and urban areas, and are leading
providers of credit to small businesses, often with strong
relationships in their communities. At the core, community banks
primarily rely on relationship lending, funding local loans with local
deposits.'' \2\
---------------------------------------------------------------------------
\2\ The Critical Role of Community Banks, Federal Reserve Bank of
Kansas City. August 2024, https://www.kansascityfed.org/banking/
community-banking-bulletins/the-critical-role-of-community-banks/.
---------------------------------------------------------------------------
The Kansas City Fed added that community banks ``can offer
personalized service and maintain greater connection to their
customers. Community bankers are able to develop relationships,
understand the needs of customers, and maintain vast knowledge of their
local market. Community banks are typically locally owned and managed
and are staffed by individuals that live in the communities they serve.
This contributes to the health of the local economy through employment
and provides close connections and understanding of community needs. In
serving local markets, community banks have a heavily vested interest
in the success of their communities. Given a primary purpose of a
community bank is to serve the credit needs of the community, these
activities facilitate the growth and prosperity of local businesses.''
\3\
---------------------------------------------------------------------------
\3\ Ibid.
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Unlike other institutions, community banks take the time and care
to customize products and services based on the unique needs of our
customers. Commoditized products are poor fit for many rural
communities.
First National Bank in Sioux Falls Serves Farmers and Ranchers
The First National Bank in Sioux Falls began its long-term
commitment to the Sioux Falls area in 1885. The oldest bank founded in
Sioux Falls owes its longevity to a combination of service, stability,
innovation, and family involvement.
For 140 years, The First National Bank in Sioux Falls has worked
diligently to promote the growth and vitality of our city and the
surrounding area. The Bank strives to continually be recognized as a
community leader by reinvesting financial resources back into the
communities it serves and encouraging active employee involvement in
community volunteer organizations.
The First National Bank in Sioux Falls retains its 140 year
commitment to be the principal locally owned, independent community
bank in Sioux Falls and the communities it serves in the upper Midwest.
As a farmer myself, I can attest that agriculture can often be
difficult and have great uncertainty due to the extreme fluctuations in
prices, weather, domestic and foreign markets and disease outbreaks to
name a few challenges. Our bank works with our farm customers to
prepare them for a wide variety of challenges to ensure they will have
viable farming operations well into the future. We look at several
criteria to help farmers qualify as credit worthy.
Can the Producer Cash-Flow? First, we want to ensure that producers
can cash-flow to see if their income will cover their expenses. If not,
we may need to work with producers to restructure their operations or
their loan. This could include selling some assets, extending loan
terms and similar steps. We also want to see if the producer has
positive working capital.
Over the past several years many crop producers have faced lower
prices and higher production costs for items like seed, fuel, and
fertilizer. This has led to many producers losing money each year on
their operations. Community banks have tried to work with many of these
producers. Some producers have decided to retire as a way to maintain
their equity and prevent higher debt loads.
The $10 billion in economic loss payments Congress passed in
December was a lifeline for many farmers. The higher reference prices
ranging from 10-20 percent increases will also be beneficial to the
financial condition of many producers and will enhance their credit
worthiness. However, some lenders will tell you that producers could
use additional economic assistance this year.
If producers have very thin profit margins and do not qualify for
standard bank loans, we may turn to USDA's guaranteed loan programs.
First National Bank is a preferred lender, which allows us to get
quicker loan approvals. I have made several recommendations on USDA
guaranteed loans below.
Does the Producer Have Crop Insurance or Livestock Insurance? One
of the most important tools lenders use to help producers is crop
insurance. First National has an insurance agency to assist producers
called First Ag Risk Management or FARM.
Due to the unpredictable weather in the Midwest, financial risks
are always present in ag production. Drought, tornadoes, hail, and
everything in between put farmers and ranchers and their crops and
livestock in danger, often without advance notice. Having this
protection better enables producers to repay their bank loans and
enhances their ability to qualify for credit going forward.
Lenders across the nation and their farm and ranch customers
greatly appreciate Congress providing up to $20 billion as part of the
American Relief Act of 2025 to assist producers who suffered from
severe natural disasters in 2023 and 2024.
To keep farmers protected and prevent immense financial loss in
their operations due to circumstances beyond their control, First Ag
Risk Management offers a variety of crop insurance and risk management
services for producers.
One lesson we've learned is that crop insurance shouldn't be a one-
size-fits-all or nuisance expense. It should be a custom-tailored
solution that provides each producer with exactly what they need, and
it should come from specialists who are producers themselves, who
understand the coverage levels and who know the right questions to ask,
which is what our FARM agency is all about.
For livestock producers, the Livestock Risk Protection program
offered by USDA is quite important, although there'll be a number of
changes as we move from 2025 into 2026. Producers will need to keep up
with the evolution of the LRP program.
Now more than ever, a sound risk management plan will be key to
maintaining profitability should margins become compressed. There are
many ways to manage risk through futures, options, and the Livestock
Risk Protection program.
Our experts understand how crop insurance fits into a bigger system
of inputs, marketing, and risk mitigation for producers' bottom line.
Why? Because we're producers too. Our FARM solutions help producers
build a customized risk management plan that's optimized for their
operation's goals and needs.
Nationally, the Federal Crop Insurance Program (FCIP) covers
approximately 540,000 acres with producers holding 2.3 million
policies. Approximately \1/2\ of this total is for forage crops, which
have low indemnity rates. Keep in mind that farmers and ranchers pay
35-40 percent of the cost of premiums for their crop insurance
protection.
Farmers ['N] Bankers Education
As the ag industry continues to change and develop, it's important
for South Dakota family farms to grow and adapt their operations
accordingly. Through our Farmers 'N Bankers program, we bring together
area producers for interactive sessions, excursions, and leadership
experiences that will give them the additional tools they need to
succeed while preparing them to meet today's challenges while ensuring
they'll one day be able to pass their operation on to the next
generation.
This program offers producers sessions throughout the year. For
example, we all know that death and taxes are two guarantees in life,
and planning for these events can be easy to move down the ``To Do''
list. Because of this, we give participants the opportunity to hear
from industry professionals on why these topics are important and what
can be done to simplify the process.
During the ``Farmers 'N Bankers'' sessions throughout the year, we
discuss topics in key areas to strengthen producers financial and risk
management skills. These include:
Financials
Crop insurance
Marketing
Trust and estate settlement
Taxes
We also give producers the opportunity to tour local ag-related
businesses and learn more about how they operate.
I mentioned the importance of producers having sound financials and
enrolling in adequate crop insurance programs. In addition, having
strong marketing skills can enable a producer to have a profitable year
whereas their neighbors with similar operations but without good
marketing skills may encounter losses. The education and skills that
successful producers need in the current farm economy are multi-faceted
and a lifelong learning experience.
USDA Guaranteed Loan Programs
USDA loan guarantees allow banks to work with borrowers who cannot
qualify for conventional credit. As mentioned above, our bank is a
preferred lender, allowing us to get quicker loan approvals. However,
not all banks can qualify for this status due to insufficient demand or
other factors.
Express Loan Program. Lenders who do not have the preferred status
can face significant delays in their loan approval times. Some loan
applications face considerable delays of 30 to 60 days or more. This
can be a long time for producers to wait on their financing during
critical junctures of the production cycle.
ICBA has proposed a USDA Express loan program to require USDA to
approve guaranteed loan applications within a couple of days in
exchange for a lower guarantee of 50-75 percent for loans up to $1
million. The SBA's Express loan program has worked well as applicants
quickly obtaining financing. The language in the 2024 Farm Bill version
from the House Agriculture Committee is a good first step but only
applies to preferred lenders, which basically adopts current USDA
procedures. With banks taking much more risk due to the lower
guarantee, there is little risk in extending the Express program to
certified and standard lender categories.
USDA needs some accountability on this issue. The language could
have benchmarks that USDA should meet during the life of the farm bill
as they work to improve application approval timeframes. Under the
Express loan program, lenders are shouldering a much greater level of
risk due to the lower guarantee level. The program should also reduce
USDA staff hours since banks will determine eligibility and do the
underwriting on these loans, which they will need to do in order to
minimize the bank's losses. We can provide the Committee with
recommended legislative changes.
Increase Loan Limits. The House Agriculture Committee's farm bill
language setting higher guaranteed loan limits at $3.5 million for
agricultural real estate loans and $3.0 million for guaranteed
operating loans is quite necessary given the rise in land values in
recent years. Cropland values now average $4,000 per acre. However,
cropland in several states are three to five times that number.
Converting Guaranteed Loans to Direct Loans. This provision should
have tight limitations to ensure that the USDA doesn't end up competing
with private sector lenders on good quality loans. Limitations should
include only allowing conversions when the guaranteed loan is in
foreclosure or bankruptcy.
Streamlining USDA Guaranteed Loan Applications. USDA's guaranteed
loan applications should be streamlined similarly to how direct loan
applications were streamlined by USDA.
USDA guaranteed farm loans are an important backstop for many
producers especially when times are tough in agriculture. Guaranteed
loans can also be used to help beginning farmers get started. For
example, I used the USDA's Down Payment loan program in which producers
put down five percent of the loan, USDA provides up to 45 percent and a
commercial lender provides the remainder of the funding. Commercial
lenders can receive a 95 percent guarantee of the loan. I used the
program to purchase my first farm ground, buying 240 acres of farmland.
I subsequently purchased the adjacent 80 acres using a traditional
community bank loan. This was a great loan to have available when I was
getting my farm started.
We need to ensure the USDA guaranteed loan programs are efficient,
with streamlined applications and adequate USDA staff levels and
quicker approval times. We appreciate the work of the Committee and
Members of Congress in helping improve these programs and look forward
to working with you.
Farmer Mac Proposals
Farmer Mac, the secondary market for ag real estate loans, has
proposed four additional solutions for the farm bill which we support.
For example, allowing Farmer Mac to purchase all types of USDA
guaranteed loans, including loans from programs established outside of
the Consolidated Farm and Rural Development Act of 1971 (Con Act),
would provide additional liquidity to all lenders in rural America.
Allowing Farmer Mac to purchase infrastructure loans from lenders that
are not cooperatives would also be helpful in supplying more capital
and liquidity to the marketplace.
Block the FCS's Expanded Powers Push
The Farm Credit System (FCS) apparently intends to use the new farm
bill as their own Christmas tree arrayed in the ornaments of many new
powers for non-farm lending purposes. They have presented to Congress a
half dozen major expansion and regulatory proposals. As is the case
whenever the farm credit system proposes expansive new powers, they are
couched in the terminology of ``technical corrections or minor
adjustments,'' and ``ways to assist their borrowers.'' In reality,
these proposals if granted could provide the FCS with tens of billions
of dollars, or more, of new lending authority with the worst part being
almost all of it coming at the expense of tax paying community banks.
The FCS is a government sponsored enterprise or GSE and therefore
has tremendous tax and funding advantages, and other benefits not
afforded to the private-sector. Traditionally, the purpose of GSE's is
to fill gaps in specific credit markets or compliment private-sector
lending, as is the case with Fannie Mae and Freddie Mac. But the FCS
competes directly with private sector tax paying community banks which
is why Congress limited FCS's lending authorities.
The FCS pays no taxes on interest income from real estate loans.
FCS lenders also do not pay taxes on their retained earnings, which
they use to grow their business. The FCS utilizes their tax advantages
to under-price loans in local markets. This ultimately drives out
private sector lenders like community banks from many markets and
market segments. How can this be a good recipe for serving the credit
needs of rural America? It's not. These proposals are simply a way to
grant FCS more and more latitude to take away loans from the private
sector.
It is clear what happens when the FCS is allowed broad entry into
specific credit markets. The chart below shows that while the FCS and
banks had roughly the same amount of ag real estate loans as recently
as 2003, the FCS now has $40 billion more in ag real estate loans than
banks.
The FCS, quite frankly, raids the best customers of community banks
by offering below market pricing, pricing that is below any other
private-sector lender in the local area.
Real Estate Debt by Lender, 1960 to 2023
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Many Members of Congress recognized that offering banks a reduced
tax rate on their interest income on ag real estate loans would help
banks' farm and ranch customers. This is why the OBBB included the ACRE
legislation (S. 838/H.R. 1822), although the tax exemption was limited
to 25 percent. The 25 percent tax reduction on interest income will
help producers, particularly less credit worthy producers, qualify for
credit and thus remain viable in their operations. However, it is not a
full 100 percent exemption which the FCS enjoys, and we urge Congress
to further increase the exemption under ACRE for the benefit of
producers.
These FCS proposals, such as the `essential community facilities'
(ECF) proposals, or the proposal to allow FCS to own up to 75 percent
of a Rural Business Investment Corporation (RBIC) involved in FCS
ineligible activities for equity investments, are not tailored to
filling credit gaps. In the case of RBICs, what would prevent FCS from
using RBICs to engage in non-farm business lending all across rural
America? While the RBICs may have a few banks as partners, they would
be able to take away financing that is already being provided by
community banks and other lenders.
Key Question on FCS Expansion Proposals--A question that applies to
each of the expanded powers proposals the FCS seeks is what prevents
the FCS from using their tax advantages to take away loans that are
already being made by tax-paying, private-sector lenders? Such FCS
expansion would not be ``cost free.'' In addition to siphoning away the
best loans from community bank portfolios, these expansions will siphon
away enormous sums of revenue from states and local governments,
forcing them to increase taxes to maintain services.
Analyzing FCS's Essential Community Facilities (ECF) Proposal--For
example, we analyze the FCS proposal to finance ECFs.
1. Need for Blocking and Limiting FCS Authorities--FCS seeks non-
farm financing of ``essential community facilities''
without the current case-by-case approval of their
regulator, the Farm Credit Administration (FCA). The FCS's
proposal does not define ``essential community facilities''
other than referencing the Con Act. The Con Act allows
financing of essential community facilities that serve
rural businesses and other rural residents. This language
should prohibit FCS from financing rural businesses and the
general public.
2. FCS's description of these loans as being health care related is
misleading as the ``etc.'' and ``and more'' used in their
descriptions means many other types of loan could be made.
If `health care' facilities are the intended focus, limit
the authority to just health care facilities.
3. Questions that Need to be Asked--Would restaurants, grocery
stores, accounting firms, lawyers offices, funeral homes,
car dealers, ``etc.'' and ``and more'' be eligible?
4. The text in last year's farm bill requires FCS to offer the loan
as a participation with a community bank first, a step in
the right direction, although we have additional concerns.
Due to FCS's tax advantages, they can offer rates
significantly below community banks' rates and could forego
community bank involvement using the justification the
bank's loan rate, which would be higher than the FCS's loan
rate, is not ``at terms acceptable to the customer,'' since
the customer will only want the FCS's lower rate. To be
workable, any such proposal needs to be based on a blended
rate offered to the customer. Also, does ``an offer'' mean
the FCS loan officer quickly phones the bank loan officer
and before moving on to a large national lender?
5. As a GSE, FCS institutions should not be the driving force for
ECF financing. FCS should be restricted to being a
supplemental lender when additional credit is needed and
once private sector lenders have committed to a majority of
the financing. This would ensure private sector financing
to the maximum extent.
6. No Accounting for FCS's Minimal Tax Rate--Will FCS be required to
pay taxes on interest income from loans made under this
authority like all other lenders? If not, why not?
Community banks would not be able to compete on these deals
due to the tax-exempt lending status of the FCS, which had
only a 2.0 percent effective tax rate in 2024. FCS could
undercut community banks on these loans.
7. What Proof Exists that FCS Needs These Authorities? Community
banks, either individually or jointly through loan
participations, already finance essential community
facilities. FCS points to a `study' showing a need of $89
billion in rural America, but this `study' has no
substantive data disclosed. Did the FCS fund the study?
8. Removes the FCA from Close FCS Oversight, Increasing Risks--FCA's
pre-approval review of FCS investments for this broad
category of lending would be eliminated. FCA's pre-approval
was designed to ensure a modicum of rationale for an FCS
entity to engage in this type of non-farm financing. By
removing the regulator's oversight with case-by-case
approvals of such loans, this proposal raises FCS's safety
and soundness risks and opens the floodgates for non-farm
lending. FCS would grant themselves the ability, with no
regulatory pre-approval, to determine who qualifies for
these loans.
Congress should reject these proposals and have substantive
hearings to reform and refocus the FCS. We are happy to continue to
make available our full set of concerns on all of the FCS's proposals:
ECFs; RBICs; residential mortgages; businesses serving aquaculture;
etc.
FCS's Deposit Equivalent Accounts
While the FCS and their regulator, the Farm Credit Administration
(FCA), claims the FCS does not take deposits, this is a dubious line
given FCS's ongoing collection of uninsured deposits. FCS institutions,
for example, operate `Funds Held Account' programs (aka, ``advanced
payment accounts'' or ``future prepayment accounts'') which allow
deposits from customers equal to the amount of a loan a borrower has.
FCS promotes these accounts as:
Paying interest up to the amount of the loan rate.
Offering unlimited number of withdrawals.
Allowing disbursements to pay down the loan or ``for other
purposes.''
Providing gains that are not taxed at the state or local
level.
In essence, FCS institutions are operating like banks that collect
deposits that, although `uninsured,' are backed by a government
sponsored enterprise. These ``FCS banks'' offer cash management
services that compete with the cash management services offered by
community banks. My bank, for example, has lost over $25 million of
deposits to these programs.
If the FCS were to obtain the significantly expanded powers they
seek, we conclude that FCS institutions would offer ``funds held''
deposit-like accounts to essential community facilities, small
businesses financed by RBICs, businesses that serve aquaculture and
others. This could cause major damage to the deposit base of community
banks. The relevant section (Sec. 4.37. Application of Uninsured
Accounts) of the Farm Credit Act is loosely worded, allowing
inappropriately broad latitude to the FCA to write the regulations to
allow these accounts far beyond the use of farmers and ranchers. We
urge the Committee to limit the use of these accounts and to ensure
they apply only to farm and ranch accounts. Siphoning deposits out of
community banks was not ever the intention of Congress in creating the
FCS.
Scope and Eligibility Issues
The FCA allows loans for non-eligible purposes inconsistent with
the Farm Credit Act. For example, although the statute states that FCS
lenders may finance rural housing, this is required to be only in towns
of up to 2,500 population. Yet, the FCA will allow FCS to finance a
home anywhere, even in towns of 20,000 population or more, if the owner
of the home is a ``producer.'' Under FCA definitions, a producer is
anyone who is or is expecting to be involved in agriculture in the
future. Likewise, the FCA will allow FCS to finance a business in a
non-rural area if the FCS can claim that one of the owners of the
business is a `producer.'
It's easy to understand how such lax oversight of FCS activities
can lead to tremendous abuse of their authorities. Should community
banks and the public trust how any new powers will be administered by
the FCA? Not without reforms to the Farm Credit Act to prevent the FCS
from sidestepping the intent and purposes of the statute by playing
definitional games. The farm bill should tighten eligibility for
financing non-farm purposes.
Conclusion--Need for a New and Improved Farm Bill
We appreciate the Committee's work on a new farm bill. Let's be
sure we get the details in the ``skinny farm bill'' right. We urge the
Committee to adopt the recommendations regarding USDA loan programs and
Farmer Mac and we urge you to deny the FCS's expanded powers push or
provide limitations to ensure the FCS fulfills the traditional role of
a GSE as a supplemental source of credit to private sector lenders
while keeping their focus on their mission of serving farmers and
ranchers. To ensure adequate credit for rural America, it is important
to ensure the FCS not be allowed to muscle community banks off of main
street USA. Thank you.
The Chairman. Thank you, Mr. Gilbert.
Mr. Wicks, please begin.
STATEMENT OF JOHN R. WICKS, OWNER/OPERATOR, TIBER
RIDGE INC.; PRESIDENT, LIBERTY/TOOLE LOCAL FARMERS
UNION, LEDGER, MT; ON BEHALF OF NATIONAL FARMERS
UNION
Mr. Wicks. Thank you, Chairman Scott and Ranking Member
Davids, for your invitation to testify today. My name is John
Wicks, and I am a fourth-generation farmer in Montana. I am a
Farmers Union member, and I serve as President of the Liberty/
Toole Local Farmers Union.
I grew up on a dry land farm and have been running our
family farm since 2007. I was attending college when my father
passed, and I returned to the farm where I primarily raised
lentils, chickpeas, wheat, durum, rye, and barley. Farming is a
way of life, an important part of my identity, but it is also a
business, which demands significant investment in land,
equipment, and inputs to succeed. It also comes with
inescapable risks. That is why I need access to affordable and
reliable credit and risk management tools to build and sustain
a successful farm business. I will focus much of my testimony
today on how important USDA FSA loan programs have been for my
farm.
While FSA lending is a small percentage of the overall
agricultural lending portfolio, it has been critical for me and
many others. My first experience with FSA loan programs was
when I was 14 years old. I received a $5,000 youth loan to
purchase cattle, and I ran those cattle alongside my dad's herd
for 4 years. The proceeds helped fund my college education.
Many beginning farmers lack equity, credit history, and can
have difficulty accessing capital. USDA loan programs are
designed to provide a pathway for beginning farmers to access
credit, and this made a big difference for my farm. When I was
starting out, our farm's combine suffered a major breakdown
during harvest. Our bank wasn't able to provide another line of
credit, but through FSA, I quickly purchased a replacement
combine, which saved our harvest and helped me build equity in
an operation still paying dividends today.
FSA loan programs came in handy once again when I started
growing pulse crops like lentils and chickpeas, which are more
delicate to handle than grain crops. To make handling pulses
feasible, I needed to purchase hopper-bottom bins, which I
bought using FSA's farm storage facility loan. FSA loans also
helped us transition the farm to the next generation. An FSA
farm ownership loan helped me to take over land and the
generational debt that was tied to it through a relatively safe
loan option.
I ask the Committee to make important updates and
improvements to FSA loan programs this year, including
adjusting loan limits to reflect current economic environment,
making it more feasible for farmers to restructure debt when
needed and ensuring those programs meet the unique needs of all
types of producers.
My family is also a customer of AgWest Farm Credit. We
remain grateful for the time that AgWest helped us through a
period of major financial stress. They understood the value of
what we were trying to accomplish on our farm and more
accurately evaluated our risk compared to other lenders we
consulted. While access to affordable and reliable credit and
well-functioning risk management tools are important for family
farmers, we must have fair and competitive markets and a robust
farm safety net.
Farm bankruptcies are on the rise. Recent changes to
improve the farm safety net may help alleviate some challenges
with persistently high input costs and low commodity prices,
but farmers will face major economic stress as long as
corporate monopolies in agriculture remain unchecked the way
they are today.
Thankfully, lawmakers can take action to address these
challenges. For example, you can strengthen the connection
between the USDA and our chief Federal competition and
antitrust law enforcers, the DOJ and the FTC, by passing the
Meat and Poultry Special Investigator Act (H.R. 1380/S. 1312).
We can ensure that recently finalized Packers and Stockyard Act
rules are retained and forcefully implemented. You can
reestablish country-of-origin labeling for beef so consumers
know where their food is really coming from and so farmers and
ranchers are paid fairly. You can guarantee farmers the right
to repair their own farm equipment. You can expand local and
regional market opportunities for farmers such as by investing
in new local meat processing. And you can strengthen these
markets with more financial and technical support, local and
regional food procurement by food banks, schools, and other
institutions.
Thank you for the opportunity to testify today, and I look
forward to answering your questions.
[The prepared statement of Mr. Wicks follows:]
Prepared Statement of John R. Wicks, Owner/Operator, Tiber Ridge Inc.;
President, Liberty/Toole Local Farmers Union, Ledger, MT; on Behalf of
National Farmers Union
Thank you for the invitation and the opportunity to provide
testimony on behalf of National Farmers Union (NFU) and Montana Farmers
Union. NFU is made up of more than 200,000 family farmers and ranchers
across the country. Similarly, Montana Farmers Union is a grassroots,
nonprofit organization dedicated to preserving the agricultural way of
life, our rural communities, and family farms and ranches. We believe
that no farmer or rancher should stand alone, and we are fighting for
the issues that will preserve agriculture and our communities for the
next generation.
I am a fourth-generation farmer in Liberty County, Montana. I grew
up on a dryland wheat farm south of Chester, Montana, and I spent a lot
of time in Eastend, Saskatchewan, where my family also farmed until the
late 1990s. I have been running our family farm in north central
Montana since 2007. I primarily raise lentils, chickpeas, wheat, durum,
rye, and barley. I farmed both conventionally and organically for a
period of time, and the entire 4,000 acre farm became USDA certified
organic in 2021. I previously served on the Liberty County Farm Service
Agency (FSA) County Committee for nine years. I currently chair the
Montana Agriculture Development Council, I am President of the Liberty/
Toole Local of Montana Farmers Union, and I serve on the executive
board of the Montana Organic Association (MOA).
Credit
Farming is not just a way of life--it is a business that demands
significant investment. Land, equipment, and inputs like seeds,
fertilizer, and other materials are foundational for generating revenue
and profit. Access to affordable and reliable credit is a necessity for
building and sustaining a successful farm business.
NFU's grassroots, member-driven policy, stands for a lending system
that is fair and provides opportunities for all types of farmers to
thrive. We also believe that the USDA FSA farm loan programs are
foundational to providing credit for farmers when it cannot be obtained
elsewhere. Congress should ensure that the FSA farm loan system remains
adequately funded to meet producer demand as it fluctuates and ensures
fair, equitable, and supportive approaches to debt restructuring or
debt forgiveness when needed. These lending opportunities should be
made available to equitably assist all family farmers and ranchers,
including those who are beginning, socially disadvantaged, or
historically under-served.\1\
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\1\ NFU Policy Book, March 2025. https://nfu.org/policy/.
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Importance of FSA Loan Programs
I could not have built my farm to what it is today without USDA FSA
loan programs. Even though FSA lending as a percentage of the overall
agricultural lending portfolio is relatively small, it is critical, as
my own experience demonstrates.
My experience with FSA loan programs dates back to when I was 14
years old, and I received a $5,000 youth loan to purchase cattle. I ran
those cattle alongside my dad's herd for four years, and the proceeds
helped fund my college education.
Loan opportunities to help beginning farmers at FSA came in
especially handy for me when our farm's combine suffered a major
breakdown right at the start of harvest one year. At the time, our bank
was unable to extend another line of credit until we had post-harvest
financials in place. Thanks to FSA loans and the support of FSA staff,
I was able to quickly purchase a replacement combine. This not only
saved our harvest but also helped me build equity in our operation. The
special focus at USDA on supporting beginning farmers and understanding
the unique circumstances beginning farmers face can make a big
difference.
Of course, it is important that USDA is also helping farmers
receive the education and training we need to avoid defaulting. Our
local FSA hosts a ``Next Gen'' conference, of which attendance is
required for new borrowers. It covers a range of topics, from
agricultural lending to crop insurance.
FSA loans also helped my operation evolve when it needed to. I
started growing pulse crops like lentils, which can be more complicated
to manage than cereal/grain crops--including by requiring specialized
equipment. One thing I especially needed to make growing pulses
feasible was hopper bottom bins, which are specialized storage
containers for these crops. To acquire these, I used FSA's Farm Storage
Facility Loan Program, which had a lower interest rate than other
options at the time; I am not sure I would have been able to make this
transition work without that resource.
The investment in on-farm storage had long-term value beyond just
convenience. Those bins now serve multiple purposes like storing seed,
facilitating efficient crop load-out, and even saving truckers
significant time. It is an example of how a small, well-placed
investment can ripple across the entire operation.
Like many family farms, we faced challenges with succession
planning. Transitioning the operating line of credit and securing the
land required for collateral were major hurdles. An FSA Farm Ownership
Loan made it possible for me to take over land and the generational
debt tied to it through a safe loan option that helped stabilize our
operation and increase the likelihood of intergeneration success in
farming.
My experience with FSA loan programs is part of why I support the
Producer and Agricultural Credit Enhancement (PACE) Act (H.R. 1991),
led in the House by Rep. Brad Finstad (R-MN) and Ranking Member Angie
Craig (D-MN). This bill would update FSA loan limits to ensure they
make sense in the current economic environment. The bill also takes the
innovative step of helping distressed borrowers by allowing for the
refinancing of guaranteed loans into direct loans and drives home the
point that FSA loan programs must be fully funded to meet producer
demand.
The critical role played by FSA lending programs is also why we are
deeply disappointed by USDA's recent decision to remove the ``socially
disadvantaged'' \2\ definition from numerous USDA programs, including
USDA loan programs. NFU's grassroots, member-driven policy notes that
we support a ``Farm Credit policy that . . . provide(s) special
assistance to beginning and socially disadvantaged farmers.'' \3\ The
socially disadvantaged designation does not discriminate against
anyone; it simply provides a hand-up for people who have faced
historical discrimination in our society. According to reporting, the
rule could affect approximately 20 percent of USDA's farm loan
volume.\4\
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\2\ The 1990 Farm Bill defined ``socially disadvantaged'' farmers
and ranchers as members of a group subjected to racial or ethnic
discrimination. USDA's 1990 definition for socially disadvantaged
farmers lists farmers who identify as Black, or African American,
Native American or Native Alaskan, Hispanic, Asian and Native Hawaiian
or Pacific Islander. Women were also added to the definition in 1992
for loan programs.
\3\ NFU Policy Book, March 2025. https://nfu.org/policy/.
\4\ Chris Clayton, ``USDA Ends Programs, Policies Supporting
`Socially Disadvantaged' Farmers and Ranchers,'' DTN Progressive
Farmers, July 10, 2025. https://www.dtnpf.com/agriculture/web/ag/news/
article/2025/07/10/usda-ends-programs-policies-socially.
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Additionally, a memo issued by USDA on April 29, 2025, is
concerning because it stated that all direct and guaranteed loans over
$500,000 will require further clearance from the Office of the
Secretary and the Department of Government Efficiency (DOGE) to ensure
lending complies with an Executive Order from President Trump on
government cost efficiency.\5\ The integrity of all USDA programs is
very important, but access to credit also needs to be timely--whether
for operating loans to ensure farmers can get a crop in the ground at
the optimal time, or for ownership loans where there can be stiff
competition for land purchases. This move could impact thousands of
potential borrowers each year. Accessing credit is already challenging
and can be very stressful; we ask the Subcommittee to make sure the
Administration is not adding unreasonable or duplicative review steps
to FSA loan approvals and is transparent and fair in its review
processes.
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\5\ Chris Clayton, ``DOGE Will Now Approve Larger USDA Loans,'' DTN
Progressive Farmer, May 1, 2025.
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Importance of the Farm Credit System and Other Credit Options for
Farmers
My family is a customer of AgWest Farm Credit. Our experience has
been very positive, and they helped us through a very difficult patch
with our farm. After my father passed away and my mother and I began
operating the farm together, we ended up needing to find a new bank.
The good news is we found a lender, but the bad news was that at that
time, our profitability was very up and down year-to-year. Part of how
we improved our profitability was by shifting to organic production,
which provided us some important opportunities. But our banker lacked
experience with organic production systems, and at one point they cut
our operating line of credit before we reached our agreed loan limit.
This put us in a major bind and we faced a period of extreme financial
stress.
We ended up finding a path forward with AgWest, who both approved
our financing for that season and took on our long-term debt. They
understood the value of the price guarantees that we had received and
were able to more accurately evaluate our production risk. They also
helped us through some challenges in transitioning our debt to them. We
are thankful for the positive working relationship we have with AgWest,
and we are on very solid footing today in part thanks to our
partnership with them.
Risk Management and Disaster Programs
Market volatility and economic uncertainty are harmful to the
finances of family farmers and ranchers and undermine their ability to
access credit. Enacting better Federal risk management programs helps
protect family farmers and ranchers against natural disasters and lower
prices. This reduction in risk makes getting a loan or line of credit
more accessible and affordable for family farmers. Farmers Union
supports improvements to crop insurance, including some of the changes
in the recently passed reconciliation bill, which bolsters the
Supplemental Coverage Option (SCO) and increases premium subsidies.
Outside of the recent improvements to crop insurance, Congress has
frequently authorized ad hoc disaster programs over the last several
years. Most recently, the American Relief Act of 2024 included $30
billion for farmers who suffered losses due to weather disasters or low
prices. The economic assistance portion of the aid, known as the
Emergency Commodity Assistance Program (ECAP), disbursed $7.8 billion
and remains open for participation for another month.\6\ Meanwhile, the
disaster assistance programs are mostly up and running, but family
farmers and ranchers need assistance quickly. This Committee and USDA
should closely review disaster programs like these--and other recent ad
hoc efforts such as the Coronavirus Food Assistance Program, Wildfire
and Hurricane Indemnity Program (WHIP), WHIP+, and Emergency Relief
Program (ERP)--to evaluate their effectiveness. These programs helped
keep family farmers and ranchers in business but must be made as
responsive and equitable as possible.
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\6\ https://www.fsa.usda.gov/resources/programs/emergency-
commodity-assistance-program/dashboard (Data retrieved July 11, 2025).
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Congress should consider policy changes to help beginning farmers
have more affordable access to risk management. Beginning farmers often
have less equity in their farm operations and are unable to withstand a
difficult farm economy.
For example, the Crop Insurance for Future Farmers Act (H.R. 2117),
led by Rep. Randy Feenstra (R-IA) and Ranking Member Craig (D-MN) and
cosponsored by eleven other Members of Congress, would make crop
insurance more affordable for beginning farmers and help these farmers
more easily manage their risk, which in turn improves their ability to
gain access to credit.
Another valuable risk management option in need of improvement is
Whole Farm Revenue Protection (WFRP). WFRP is a crop-neutral revenue
insurance product designed to protect a farmer's entire operation,
including livestock, and provides diversified farms an option to insure
all their crops and livestock under one policy. These farms may not
have access to separate policies for each crop they grow, and a well-
functioning WFRP could help. Currently, the program is not available to
or effective for many producers. Recent legislation, including the
Whole Farm Revenue Protection Program Improvement Act in the 118th
Congress and the Save Our Small Farms Act (H.R. 2435), led by Rep.
Jahana Hayes (D-CT) in the 119th Congress, offer some solutions to
these issues by reducing paperwork and increasing premium discounts for
family farmers using WFRP. Improvements to the Non-Insured Crop
Disaster Assistance Program (NAP) could also help.
While crop insurance and disaster programs are not a replacement
for fair market prices and an adequate price support program, they play
an important role in today's farm safety net and factor into
agricultural credit decisions.
Fair Markets and a Robust Farm Safety Net
While access to affordable and reliable credit and well-functioning
risk management tools are essential to farming successfully today, we
believe fair and competitive markets and a robust farm safety net are
even more foundational. Congress should do more to ensure our antitrust
and competition laws are strengthened and better enforced, and invest
in building local, regional, and other market opportunities that help
farmers capture a larger share of the retail food dollar. While we
welcome recent investments and improvements to the farm safety net
through the budget reconciliation process, Congress should make further
improvements by establishing permanent dual enrollment in the
Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs,
and institute other innovative policies that help farmers improve their
bottom lines while ensuring the long-term economic sustainability of
their farms.
Advancing Fair and Competitive Markets
Fair, open, and competitive markets are foundational for the well-
being of the American economy and our democracy, but farmers must buy
from and sell into highly consolidated and uncompetitive markets. Very
few firms control the market for agricultural inputs (such as seeds,
crop protection products, fertilizer, and farm equipment), processing
(including livestock slaughter and processing), food manufacturing,
wholesale distribution, food service, and grocery retail. The small
number of large, consolidated firms in the middle of the agricultural
supply chain wield immense market power.7, 8, 9 High levels
of concentration throughout the food supply chain have contributed to
driving down the farmer's share of the retail food dollar while also
raising costs for inputs and creating higher prices for consumers.
Today, farmers and ranchers on average receive only 15.9 of every
dollar that consumers spend on food, which remains near historic
lows.\10\
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\7\ Jonathan B. Baker, ``Market power in the U.S. economy today,''
Washington Center for Equitable Growth. March 2017. https://
equitablegrowth.org/market-power-in-the-u-s-economy-to
day/.
\8\ USDA, Agricultural Marketing Service (AMS), Packers and
Stockyards Division. ``Packers and Stockyards Division: Annual Report
2021 & 2022,'' (March 2024). https://www.ams.usda.gov/reports/psd-
annual-reports.
\9\ Claire Kelloway and Sarah Miller, ``Food and Power: Addressing
Monopolization in America's Food System,'' Open Markets Institute, May
13, 2019. https://www.openmarketsinstitute.org/publications/food-power-
addressing-monopolization-americas-food-system.
\10\ USDA ERS. November 2024, Food Dollar Series. http://
www.ers.usda.gov/data-products/food-dollar-series/documentation.
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We need to tackle these problems to ensure farmers like me have
genuine access to fair and open markets, which would allow me to
continue investing in and building a business that sustains my family
farm, supports my local economy, and helps feed people.
As the Committee looks to further update farm policy, it should
take steps to make markets fairer and more competitive by strengthening
the connection between USDA and our chief Federal competition and
antitrust law enforcers at the Department of Justice (DOJ) and the
Federal Trade Commission (FTC), protecting the Packers & Stockyards Act
(P&S Act), and spurring the development and expansion of alternative,
local, and regional markets.
Congress should pass the bipartisan Meat and Poultry Special
Investigator Act (H.R. 1380/S. 1312). The bill would establish an
independent office at USDA to strengthen enforcement of the P&S Act and
to ensure USDA has a liaison to the DOJ and FTC on competition and
trade practices matters in the food and agriculture sectors. A raft of
private price fixing and other lawsuits in the food and agriculture
sector demonstrates that, without strong Federal enforcement of
antitrust and competition laws, harmful practices are being carried out
under the noses of Congress and at the expense of family farmers and
consumers. It is also essential that recently finalized P&S Act rules
are maintained and implemented.
There are many other actions Congress should take to make markets
more competitive and fair, including ensuring truth-in-labeling through
reestablishing country-of-origin labeling for beef, establishing the
right to repair our own farm equipment, permanently establishing a
Farmer Seed Liaison at USDA to strengthen competition and choice in the
seed marketplace, and supporting additional research into consolidation
in the livestock industry.
Expanding local, regional, and diverse markets and processing
Anticompetitive practices have eroded local and regional livestock
processing options, which limit opportunities in the marketplace for
producers while making our food system less resilient. Local and
regional market opportunities, supported by adequate alternative
processing capacity, can help farmers capture a larger share of the
retail food dollar.
In recent years, USDA increased its support for businesses and
communities looking to invest in expanded meat and poultry processing.
Members of Congress have also taken note of the importance of this
issue, introducing the bipartisan Strengthening Local Processing Act
(H.R. 3076/S. 1509). USDA's investments are critical, and we must
ensure these new facilities are able to operate sustainably and thrive
over the long term.
These new facilities are making a big difference in Montana so far.
Montana consumers eat about 100,000 head of cattle each year. Before
the recent investments in local meat processing, we could only process
about 30,000 head annually, far short of the approximately two million
calves we sell each year. The disruptions to meat processing during the
pandemic made it clear that something needed to change so that we could
better feed ourselves. Thanks to recent investments in the state,
supported by USDA grants and low-interest loans, we now have the
capacity to process over half of the cattle we consume.
These investments are also helping alleviate inflexible scheduling
for harvesting livestock due to insufficient shackle space. Montana
Farmers Union worked with several direct-to-market producers to form
meat processing cooperatives, including the Montana Premium Processing
Co-op,\11\ which also leveraged USDA grants and low-interest loans to
build meat processing plants. Participating member-owners now can
schedule harvest in a more manageable period of three months out,
rather than more than a year out. Food security is national security,
and investing in our food security should be a top priority.
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\11\ Montana Premium Processing Cooperative. https://
www.mtpremiumprocessing.com/directors.
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Despite this good news, without strong enforcement of the P&S Act
and our antitrust laws, and ongoing and consistent support for new
processing facilities from USDA, we fear the major meatpackers will
force new, smaller packing plants out of business.
Another way to create more competitive markets and ensure
Americans' food security is to strengthen local and regional markets.
Until recently, local and regional procurement programs like the Local
Food Purchase Assistance (LFPA) and Local Food for Schools (LFS)
programs were strengthening local and regional food systems, putting a
larger share of the retail food dollar in farmers' pockets, helping
farmers expand and build new markets, while also creating a stronger
connection between farmers and their local communities. We were
disappointed that USDA decided to terminate funding for these programs,
especially given their great success in such a short period of time,
spurring roughly $400 million in new direct food purchases from farmers
and generated an estimated $747 million in new economic activity in
rural communities across the country. We have been heartened by the
bipartisan support in Congress for permanently authorizing these
programs, and we look forward to continuing to work with Members of the
House Agriculture Committee and other Members of Congress on this
matter.
Ensuring and Maintaining a Strong Farm Safety Net
The recently enacted reconciliation bill included major changes and
improvements to the farm safety net. Increases to commodity reference
prices--ranging from about 10 percent to 20 percent--reflect higher
costs of production over the last decade. The provision to
automatically boost reference prices based on inflation is also a
welcome adjustment. Farmers Union has also long-supported another good
provision included in the law: that producers will receive either the
ARC guarantee or PLC assistance, whichever is higher. This dual
enrollment provision was only added for the 2025 crop year, and we hope
that provision will be extended indefinitely, because ARC/PLC does not
provide a true safety net if family farmers need to gamble on which
program is going to work best for them in any given year.
The reconciliation bill also authorizes a one-time allocation of
new base acres, up to a total of thirty million additional acres, to
help cover more cropland and farmers. Congress made encouraging
improvements to existing permanent disaster programs like the Livestock
Indemnity Program (LIP) and Livestock Forage Program (LFP), which will
now reflect regional price differences, include unborn livestock
losses, and make the trigger for assistance due to drought more
responsive.
Despite this progress, Congress should make further improvements to
the farm safety net in additional agricultural legislation this year.
Congress should take a closer look at the Inventory Management Soil
Enhancement Tool (IMSET), which is a voluntary, incentive-based
conservation and farm safety net program concept. It has two core
purposes: to help conserve our soil and to protect net farm income when
agricultural markets falter. By voluntarily enrolling in IMSET, farmers
would have an additional opportunity and incentive to participate in
working lands conservation programs in exchange for stronger farm
safety net protections. This policy concept can address important
conservation needs while maintaining fiscal responsibility and merits
inclusion in the future farm policy. Congress should also close farm
program eligibility loopholes to ensure safety net support is directed
to family farmers and ranchers.
Tariffs and Market Instability
Management of relationships with our trading partners also has
major implications for farms like mine, and my ability to access the
credit I need to stay in business. This past winter, I faced a long and
frustrating experience while negotiating contracts for the 2025 lentil
crop. Canada has made significant investments in lentil and pulse
processing, meaning a large portion of our crop is exported north. Much
of that product is then re-imported to the U.S. for sale.
When the threat of tariffs was raised, Canadian processors became
hesitant to finalize contracts. Some explicitly stated they would
invoke the ``act of God'' clause to terminate the contract if tariffs
were enacted. Others declined to set delivery dates. As a result,
Canadian offers dropped, and rather than maintaining U.S. market rates,
American buyers followed suit by low-balling offers based on Canadian
pricing.
Even though tariffs were only being discussed and not enacted, the
speculation alone cost me tens of thousands of dollars and drastically
reduced our market opportunities. The uncertainty harmed American
producers without achieving any meaningful trade protections.
Federal Funding Freezes and Reductions in Force at USDA
Several Executive Orders, ongoing Federal funding freezes, and
massive reductions in staffing levels pursued by the current
Administration are continuing to create uncertainty for family farmers,
ranchers, and my community. We have already faced inadequate Federal
workforce staffing levels for FSA field offices in recent years, and
current policy decisions are making matters worse. USDA office closures
and reductions in force put more pressure on existing staff, add to
wait times for farmers, and increase the burden of getting a loan
reviewed and approved. While we should always be striving for greater
efficiency, we need well-trained staff in the field who can help
farmers navigate USDA programs.
Data show that most of that nearly 13,000 of the approximately
15,000 USDA employees who accepted buyouts from the Trump
Administration worked outside of the national capital region. More than
1,100 FSA and county committee employees took buyouts.\12\ We worry
about how these reductions in force will affect our community and my
ability to farm successfully. We also worry that the move to make cuts
or prompt early retirements are not over.
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\12\ https://www.agri-pulse.com/articles/23031-usda-buyouts-extend-
well-beyond-the-beltway-data-shows.
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I urge the Subcommittee to take seriously how current policy is
jeopardizing farm livelihoods. Congress and the Administration should
review and reform Federal programs and processes if they are performing
poorly or can be improved, but they should pursue improvements in an
orderly manner, after robust stakeholder feedback. I ask the
Subcommittee to seek information, explanations, and clarity from the
Administration about the many problems ongoing funding freezes and
reductions in force are causing in our rural communities.
Conclusion
Thank you for the opportunity to testify. I appreciate the
Subcommittee's attention and look forward to answering your questions.
The Chairman. Thank you all for your testimony today.
At this time, Members will be recognized for questions in
order of seniority, alternating between Majority and Minority
Members, and in order of arrival for those who joined us after
the hearing convened. Each Member is recognized for 5 minutes
in order to allow us to get as many questions as possible.
I now recognize myself for 5 minutes.
To those of you who are lenders here with us today, we all
know that the process of approving a loan is not simple. What
are some of the lending programs at the Farm Service Agency you
are able to utilize to ensure that you are making a sound
financial decision when reviewing a loan application?
Additionally, what are some of the changes and improvements
we can look at making as we continue our work to finish the
farm bill? And I would specifically like to hear your opinion
on the time that it takes to get the approval. Mr. Hood?
Mr. Hood. Ask me again.
The Chairman. I am sorry?
Mr. Hood. Were you asking that to me?
The Chairman. I am asking it to all of you who are lenders.
Mr. Hood. Okay. Yes, please.
Mr. Gilbert. I can go first. At First National Bank, we
have teamed up with FSA on many, many loans. I know in my oral
testimony I said that we use FSA for customers that maybe don't
qualify for conventional financing and beginning farmers. But I
would tell you that that has really expanded. Our partnership
with them has really expanded in the last couple years where
some of our more sophisticated, younger borrowers are utilizing
joint financing where they will finance a portion, 45 percent
we'll finance 50, and they only have to put 10 percent down. It
is a very great way for a young producer to be able to compete
and enter the market, so those farm ownership joint loans.
We utilize the guaranteed program at First National Bank,
but probably not as heavily as what a smaller, more rural bank
would because of their lending limits versus ours, but we do
use guaranteed loans.
We are a preferred lender with FSA, so our loan approvals,
they come fairly reasonable, but I know we have had some of our
banks through ICBA that aren't preferred lenders, and they are
saying timing is 30 or 60 or 90 days, which that doesn't really
cut it today, just with how fast things are moving.
Ms. Minick. I would echo that as well. So AgWest is a
preferred lender also when we are getting guarantees, so that
is very helpful, but oftentimes, even though we go through a
rigorous program ahead of time to look at those applications
and make sure that they are packaged well, it can still take
quite a long time for them to come back from FSA. So making
that more streamlined, particularly for preferred lenders, as
well as the increase to the loan limits that are out there for
those when you send a loan to FSA to get a guarantee or even in
the direct lending and it is close to the top of the lending
limits, then that puts up some red flags and things that they
have to look at a little bit longer. So both of those, making
it just easier for our customers to get access more quickly are
very important.
Mr. Hood. Mr. Chairman, I don't have a lot to add to that.
My bank handles a very mature ag portfolio, and we don't have
the staff right now to do the new farmer, the young farmer
programs like I would like to. As we grow our portfolio, I am
going to add some more staff.
For me personally, I think it is an extremely valuable tool
that bankers can use to help farmers, not just farmers that are
farming with their parents or with their family, but also
farmers that the bug just hit them that they want to get out on
the farm and take the leap. It is hard to do when you don't
have the resources. Even when you compare it to what you go to
the equipment place to buy this several hundred thousand dollar
equipment, it is monumental the task that it takes to be able
to finance all that. But I love the first-time farmer programs.
We just don't utilize them right now.
The Chairman. Mr. Hood, you are a banker in my part of the
world. You have a front row seat to the economics of what is
happening in rural America. You have outlined some of this, and
how our economy starts and stops with the farm economy, where
we come from. Each season, certainly in the last several
seasons especially, farmers have put more and more money at
risk to continue to seek from what I can tell is a smaller and
smaller profit margin. What does a long-term farm bill mean to
that community that you serve? And how can we build on the work
of the legislation that is recently passed to make sure that
our rural communities and specifically our ag economy can
expand?
Mr. Hood. Yes, sir, Mr. Chairman. That is a vital tool that
not just the ag bankers have but the farmers have to be able to
have a farm bill that they can count on. And historically,
farmers have used the commodities market wherever that market
price falls to be able to either break even or make a profit.
Now, the commodity market is so depressed that all these
margins are upside down. Well, the proverbial safety net that
the farm bill has always provided is really way below where
that margin needs to be, so the farmer finds themselves in no
man's land. The commodity market can't help them survive, and
the farm bill can't help them survive. So they are in between,
and it is really hard on these families right now.
The Chairman. My time has expired, but I literally--as my
neighbor was talking to me about his concerns with planting
cotton, the question I asked him is why would you plant it with
the price that it is at? And I know you have the payment on the
cotton picker and you have the payments on everything else and
sometimes you have to have it in the rotation, but man, it is
sure hard to plant when you know you are going to lose X
numbers of dollars per acre even if you do everything right.
Mr. Hood. One hundred and eight dollars per acre loss, with
brackets around it, on paper. So, if we are not working on
paper, it is not going to work in real life either.
The Chairman. And that is for cotton.
Mr. Hood. Yes, sir, cotton.
The Chairman. Ms. Davids?
Ms. Davids of Kansas. Thank you, Mr. Chairman.
It might seem as though I planned this based on your first
question. We didn't coordinate that. We could have. And thank
you for holding this hearing.
So, Kansas producers rely, of course, on credit and crop
insurance to navigate those ups and downs that we have been
hearing about from you all already. And I think those tools are
especially important for new and beginning farmers who face
significant barriers when trying to get started, whether it is
land access, equipment costs, just the securing of a loan. And,
in Kansas, less than ten percent of our producers are under the
age of 35, and that is concerning, I think not just to me but
to quite a few people, and it is something that we need to
address if we are going to see a future of farming that is
sustainable.
Mr. Wicks, I was hoping to hear from you on the other side
of the ledger there for the FSA. In your written testimony and
in your oral testimony, you talked about the value of the Farm
Service Agency and specifically mentioned the young farmers
program. I am curious if you could just share a bit about
improvements that we could make to those programs to better
support access to credit for beginning farmers and ranchers who
are just getting started, and then if others want to chime in
after for improved provisions that you think might help.
Mr. Wicks. Yes, thank you. I think it is really important
to increase those loan limits a little bit to help with the
rising costs of everything and to maybe expedite the process of
the paperwork to kind of get people the financing quicker. But
the tools are really amazing and really helpful for somebody
that, on our farm, we were struggling with. We were reaching
the end of our equity and needing a new operator to come in,
and that was me. So just having that access to maybe more
funding. And, for the farm ownership loan, that was quite a
process to start, and it took months, and, I mean, the buyer
was my mother, so she knew she was going to sell to me.
Ms. Davids of Kansas. A hard bargain.
Mr. Wicks. In another case, you might have somebody else
outbid you while you are going through all the loan approval, I
think the pre-approval would be great.
Ms. Davids of Kansas. Oh, okay. Thank you. I was going to
ask that specific thing. Okay.
Mr. Wicks. Thank you.
Ms. Davids of Kansas. I don't know if anybody else--go
ahead, Mr. Gilbert.
Mr. Gilbert. Yes. I touched on it a little bit, but that
express loan program, to get quicker answers. And I think banks
across the country, I won't speak for Farm Credit, Mandy can,
but I think we would be okay with reducing the level of the
guarantee if we could get an answer quicker in some cases so
the banks or Farm Credit would take more of the burden, say, if
it was a 50/50 guarantee or a 75/25 guarantee versus that 90
percent FSA guarantee.
One thing we struggle with a little bit that I could
mention is, and John kind of touched on it, but that farm
ownership piece, when a piece of land goes to auction and we
want to finance it through FSA, it is very difficult because of
the time constraints. Usually, they want to close within 60
days. Appraisals are taking longer, title work is taking
longer, and the FSA, at least in our area, doesn't allow for
the bank to fund it on a bridge loan, say, a 90 day note, and
then refinance it with FSA. So we jump through a lot of hoops
with that, but there is one thing there that if they would
allow us to just finance it initially and then refinance it
with FSA with the same borrower, it would be very helpful.
Ms. Minick. I would agree with that and appreciate the
journey we have had with Mr. Wicks on getting his farm up and
running. I think that FSA-AgWest Farm Credit partnership is
invaluable, so having those partnerships, especially on the
preferred lenders, so those of us that have already gone
through a lot of qualifications with FSA, if there are a few
more things you have to ask us and we have to do ahead of time
for us to be able to get those guarantees, that would be
another option as opposed to lessening the amount of the
guarantees. So tell us what we need to do to qualify more, and
then come back and look at those loans later on if you need to.
And again, we have already talked about increasing those loan
limits for beginning farmers is really important.
Ms. Davids of Kansas. Thank you.
Mr. Hood. The only thing I would add to that--a great
question--I have been in banking for 37 years, and they sucked
the fun out of banking years ago, and it takes----
Ms. Davids of Kansas. Did you say Congress?
Mr. Hood. No.
Ms. Davids of Kansas. I am just kidding. Sorry. Sorry,
sorry.
Mr. Hood. Just the process.
Ms. Davids of Kansas. Yes.
Mr. Hood. It is very difficult being an ag lender today. It
is difficult being a banker in general, especially agriculture.
But what I would love to see, anything that can help reduce the
time constraints on the process, and there are some really good
ideas here, I am in favor of. The reason I haven't put this in
place in my bank, it takes a lot more staff to do it because
even a commercial loan now takes over 60 days to get through,
and the farmer is sitting there waiting on money. The
government guarantee is even longer, so anything that can
reduce the time constraints.
Ms. Davids of Kansas. Thank you. These are some great
ideas, and I will probably end up following up.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank you. I heard you loud and clear on the
bridge loan. We will find out if that is legislative or
regulatory and follow up on that.
With that, Mr. Crawford, you are recognized for 5 minutes.
Mr. Crawford. Thank you, Mr. Chairman.
I have a bill that I have been working on actually probably
since I have been here in Congress. It is called Farm Risk
Abatement and Mitigation Election, or the FRAME Act (H.R. 1400,
115th Congress; H.R. 10045, 118th Congress). What this does is
it sets up a tax-deferred savings account for farmers, we call
them FRAME accounts, where a farmer can deposit funds tax-free
during profitable years and withdraw tax-free during hard
times. So it is almost a little bit like an HSA kind of model,
but it is geared toward farmers and providing some degree of
risk abatement for those. And it opens another option for
farmers to invest tax-advantaged profits outside of the
traditional section 179 where we are going to run out and buy a
new tractor or a combine to avoid a tax liability, but now we
have incurred more debt. And so when that is appropriate, I am
all for section 179. Buy the new combine. Buy the new cotton
picker or tractor as you need it, but not as a tax strategy. I
think that creates more problems. So this serves a couple of
different things. The other thing it does is the deposit
account can be used to help collateralize an operating loan. I
mean, there are a lot of advantages to it.
So I want to get your feedback. I know we have some lenders
at the table. We have farmers at the table here. I want to get
your feedback, understanding that, obviously, in the current
crisis, it is really difficult to try to tell farmers to put
money in a FRAME account. That is the whole point. It is not
always going to be like this. We are going to get back to a
point at which we will have some more profitable years,
hopefully, hopefully. But you get my point here. I just kind of
want to get your feedback.
And, Mr. Hood, I will start with you because you have a
long history of ag lending and kind of want to get your
perspective on that.
Mr. Hood. Yes, sir, Congressman, and that is a great
question. And I love the premise of what you are trying to do.
My first initial question would be, really, to fund the
account, you are pulling capital out of the farm enterprise and
putting it into account, the same way I do with the bank with
my health savings account. I get that. The question I would
have, is it subject to seizure? Is it subject to being used in
hard times? And does it become an off-balance-sheet item to
where the bank can't count that as capital? Because these
farmers need all the capital they can get right now to qualify
for loans. If it is an on-balance-sheet savings account, then I
say, ``Heck, yes, put that in.'' It is not that dissimilar than
a CD except you have had to pay taxes on the CD, so I like the
idea.
Mr. Crawford. Right. Yes, good. Yes, I think your
assessment is right. I do think that would be an on-balance
account for those purposes, as you described, so that is our
goal there.
Anybody else want to weigh in on that?
Mr. Gilbert. Conceptually, we think it is a great idea as
well. I think about, like you said, the number of farmers that
have utilized section 179, and some of them should have, but a
lot of them probably got in, or some of them got in over their
heads. So I think farmers can always benefit from having tax-
free accounts. And I think we could accomplish placing a hold
on that account or some way to collateralize it. So yes, we
would love to work with you on the details to get across----
Mr. Crawford. I have to be careful about that section 179
piece because, having worked in the equipment business for a
long time, I don't want to alienate my equipment dealers.
Mr. Gilbert. Right.
Mr. Crawford. But, we also know, too, that it is important
for the farmers to make good choices with regard to how that is
reflected on the balance sheet and incurring more debt to avoid
tax liability is not necessarily a good strategy long-term. Any
other comments?
Mr. Wicks. Yes, I would just say that that might be an
option. I have never been a fan of spending money, putting on
debt, just to avoid a little tax. But I think, as a farmer, I
would be more worried about the safety net first and really
encouraging that to be a----
Mr. Crawford. You just led into my next question on this.
Mr. Wicks. Okay.
Mr. Crawford. It has been brought up to my attention from
some of my constituents that crop insurance companies have been
pulling out of areas they consider to be high risk, and that is
certainly in my district that has been brought to my attention.
Since crop insurance companies receive Federal subsidies to
offer services, that is a concern to me. So have any of you
heard anything like that? And what is your perspective on that?
I mean, I don't think we should be taking a geographic look at
crop insurance eligibility, but let me get your thoughts on it.
Mr. Wicks. I haven't had experience in that.
Ms. Minick. I would like to say thank you, first of all.
Some of the relief for that, I think, came in the budget
reconciliation around the A&O and then some of the payouts that
are going to go to the AIPs. But it is still a problem with the
high risk levels that are happening, especially in specialty
crops that are one-off. The markets are so volatile because
there is such a short period of time to be able to market those
crops. So there is still some work to be done to make sure that
all of our producers have access to the crop insurance programs
that are out there, and there is still some more programs that
could be put in place as well.
Mr. Crawford. Thank you. Mr. Chairman, I yield back.
The Chairman. Mr. Sorensen, you are recognized for 5
minutes.
Mr. Sorensen. Thank you, Mr. Chairman.
Our farmers are betting big every season with borrowed
money up against Mother Nature and economic uncertainty. The
stakes get higher every year. In the United States, more farms
have filed for bankruptcy in the first 3 months of this year
than all of 2024. It is a clear sign that the extreme financial
pressures of 2018 and 2019 are coming back. Input costs are
rising significantly while commodity prices are dropping. Add
to that uncertainty with trade and tariffs, with the cherry on
top being any potential drought or flash flood, tornado, or
straight-line winds that flatten a crop. In fact, severe
weather is in my district ongoing right now over the farm
fields of northern Illinois.
The one thing that we can do today is put American farms
first. This Administration needs to work harder so producers
can be competitive, and it needs to create an environment that
is predictable and stable. Even with the most fertile soils on
Earth, Illinois is challenged. Lenders remain a critical part
of the equation, helping farmers finance the equipment and
infrastructure needed to keep operations running. And during
downturns, these programs don't replace profitability, but they
do reduce income volatility, preserve credit access, and help
producers stay afloat so they can get to the next growing
season. Crop insurance and price supports are necessary
safeguards that not only protect their operations, but are also
often required to secure financing.
Farmers in Illinois are some of the most productive and
resilient in the country, in the world, but to keep that legacy
going, to ensure these operations can be passed on to the next
generation, we have to give them the tools to succeed, and that
means strengthening the farm safety net, expanding access to
credit, and crafting policies that are flexible enough to
reflect the real conditions on the ground.
And Mr. Hood, I want to begin with you. In your opening
statement just a few moments ago, you talked about the value of
the FFA. I am so grateful that I had some young men and women
in my office today wearing those corduroy jackets. We need to
make sure that that next generation is there for us in
agriculture. It is so important. And so I hope that you can
talk a little bit more about how we can make sure that we are
doing everything when it comes to credit for new and beginning
farmers. Could you touch on that?
Mr. Hood. Yes, sir, I can, Congressman, and I love that
topic. Thank you for bringing that up. This is near and dear to
my heart, not just because I serve on the Georgia FFA
Foundation where we try to raise money to make sure some of
these underprivileged kids that want to experience the ag, that
they can't do it in their own pocketbook, that we are able to
help them do it, so I love that program.
You mentioned the difficulties in various times during the
cycle of agriculture. It made me go back to the mid-1980s. When
you take 2025 and you subtract my 37 years of banking, you
arrive in the mid-1980s. That is when I had to leave the farm.
And I have a hard time sometimes talking about it because it is
very emotional for me. My family continues to farm today. My
brothers have taken over. But I was the oldest son, and I had
to leave. One day my daddy stopped at the mailbox. I don't know
what was in the mailbox. It was probably something from a bank.
But he looked at me in the truck and said, ``Clint, you
probably need to go do something else for a living because the
farm is holding you back.''
Well, that was the catalyst for me to leave. Thank goodness
God was shining on me, and I went into the ag finance business.
But I don't want that happening to people. I have been very
fortunate that I could come back and be part of agriculture,
but a lot of people can't when this goes, and we are at a crux
of time where this is about to happen to these farmers. The
1980s is about to happen again. The only difference in the
1980s and today, in the 1980s, farmers were flat broke. They
were insolvent. Their liabilities were higher than their
assets. Today, their assets are still higher than their
liabilities, but it is because of the equities that they have
in the farmland.
Well, as you know, equity is given to you in two different
places. Number one, the market can give you equities, running
up value, depending on where your farm is. The other way to get
equity is to pay debt down. So our equities are eroding right
now.
Mr. Sorensen. And I may open this up to all of you. What is
the canary in the coal mine? We talk about the 1980s, and I
live in Moline, Illinois. And International Harvester is just a
slab, right? John Deere is holding on only because of the
diversification and also the international nature of their
business. What is the canary in the coal mine when it comes to
Farm Credit and making sure that we are there for our
producers?
The Chairman. The gentleman's time has expired. If one of
you can answer that real quick.
Mr. Gilbert. I think one of the biggest differences is the
crop insurance safety net here versus the 1980s, so that is
just extremely important to all lenders and all farmers. That
is the biggest thing I would say, my takeaway.
Mr. Sorensen. Thank you, Mr. Chairman, for giving me some
extra time, and I yield back.
The Chairman. Mr. Bost, you are now recognized for 5
minutes.
Mr. Bost. Thank you, Mr. Chairman. I want to thank you all
for being here.
And as we were just describing, farming is a risky
business, and it requires specific time, energy, and
investment. Getting into this industry can be a challenge with
the rising cost of land, input prices, and equipment. Many
farmers hit the FSA guaranteed loan limit quickly, very
quickly. Mr. Hood, can you comment on the importance of
increasing FSA loan limits and how it could be mutually
beneficial to both farmers and the banks? And additionally,
what other provisions should we look at to support in the
credit title of the farm bill to help new and beginning farmers
gain access?
Mr. Hood. Yes, sir, Congressman. Thank you for that. I
don't see how we can't increase limits. Our cost to put a crop
in is unbelievable now. And when you have depressed commodity
prices, that gives you a recipe for failure. And I do believe
that it is time to increase, in my bank in the last 2 years, I
have told my bankers, whether the farmer is asking for an
increase in their line of credit for the coming year or not,
increase it by 20 percent. It is so much easier to do it on the
front-end in March and April than it is August and September
when you have to really worry, are they going to be able to pay
me back, and then have to go give them a little bit of extra
money. You can tell as a banker. You can tell as a farmer. You
can tell as a Congress Member. There is not enough money out
there to operate on without increases, so I love that idea.
Mr. Bost. So Mr. Gilbert, in your role as a local lender,
you are not just providing credit. You are often a trusted
advisor for producers making complex business decisions. Can
you speak on how you and your institution support producers
beyond the loan itself, specifically maybe how you talk to the
producer, give them risk management decisions, discussions, and
tools like crop insurance or Title I program, and financial
advice, giving them to help them understand what is available
to them. I know most farmers, if they have been around a long
time, they are going to know, but most of our young farmers
that we are wanting to keep in don't always know.
Mr. Gilbert. That is right. No, great question. At the
First National Bank in Sioux Falls, education and adding value
is a huge piece of what we do because we don't want to just
lend money, and a big part of that is being a trusted advisor.
I spoke to our Farmers and Bankers Program. That is an intense
four-to-five-session program where we do teach them or help
coach them through their farm financials. We talk about
insurance, the importance of marketing, and also the programs
that are out there that we can team up with FSA and Farmer Mac
and other folks to help them achieve their goals.
Our lenders, the vast majority of them, are licensed to
sell crop insurance, as well as livestock risk protection. We
take a different approach than what other banks and
institutions do. We are not trying to increase our bottom line.
What we are trying to do is make our lenders and agents more
knowledgeable to help our farmers through that, or through the
ups and downs and work with them, especially on the LRP side of
things, has been huge.
I can speak from my own personal experience. Margin calls,
if you are hedged, are tough. It is easier as a banker to say
you made the right choice when it is your own dollars. It is
tough. So that LRP program that producers don't have to pay the
premium until the end of the period until the cattle are sold
has been really beneficial and, quite frankly, I think will
stop a huge, I don't want to say this, but a huge decline in
profitability. The cattle market is so high right now, and
without a risk protection, price protection, there could be
severe losses of money, so that program has been awesome for
that, in my opinion.
Mr. Bost. Thank you. And I want to thank you all for being
here. With that, I am going to yield back.
The Chairman. Thank you. Ms. Brown, you are now recognized
for 5 minutes.
Ms. Brown. Thank you, Chairman Scott and Ranking Member
Davids.
So it seems like the only predictable thing about farming
is that it is unpredictable. Whether it is rising input costs,
extreme weather, or shifting tariff policies, producers today
face uncertainty at every turn. But access to capital and risk
management tools shouldn't be a part of that uncertainty.
Farmers and ranchers and dairymen and -women need confidence to
plan and plant and invest in equipment and recover from a
natural disaster. That comes not only from investing
meaningfully in key farm bill programs but also making sure
that those dollars are backed up by thoughtful and forward-
looking policy. Well-funded is only half the battle. Well-
designed is the other half.
Unfortunately, the partisan bill passed 2 weeks ago missed
the mark. It fractured the historic farm bill coalition and
plussed up programs without doing the hard work of improving
and modernizing them. That is exactly why we have a farm bill
process, to be deliberative and responsive.
So Ms. Minick, your testimony talks about some of the
unique challenges that specialty crop farmers face when
accessing traditional risk management tools. Ohio ranks fourth
in the nation for the diversity of specialty crops grown, so I
have heard firsthand about how one size doesn't fit all when it
comes to risk management tools. Can you talk about what policy
or structural changes would help make those tools more
accessible and relevant for specialty crop growers?
Ms. Minick. Yes, thank you for that question. So
California, I believe, is the top state for the specialty crops
grown, and so throughout the West Coast, we have many of those
in our service territory. And the Whole Farm Revenue Protection
Program and the micro farm have been really instrumental in
moving things forward because folks with specialty crops that
weren't qualified for crop insurance in the past can use those.
Those tools have been important, but they are very complex and
hard to understand as the agent and as the producer.
We have had a couple of experiences in the last year or two
where other crop insurance agencies have come to us saying we
have people that work here that are retiring or things like
that. Will you take our whole farm revenue portfolio? There is
no buying, there is not anything like that because it is so
complex. They don't feel like it is worth the investment to
learn how to administer those policies. And so if you don't
have agents that are willing to learn and know how to work with
those customers, then having them out there, if producers can't
access them, then it doesn't support that, so really making
sure that we can streamline those processes, that they can
cover more commodities, and also that agents remain compensated
to be able to do that, to keep the lights on is a very
important part of that.
And then also continuing to broaden the different specialty
crops that are included in some of the different programs. For
example, we have been working on an oyster policy for many
years that we would like to see come to fruition. Sometimes
specialty crops will have policy rolled out in specific
geographic areas, but then they are not expanded to other
counties where there is a lot of that production or other
states. So those are some areas where we could really see some
improvements just to have more access for more producers.
Ms. Brown. Thank you. Mr. Hood, your testimony talks about
the importance of supporting young and beginning farmers and
ranchers on their journey to enter the industry. Despite
increased funding for beginning farmer programs, the average
age of farmers in this country is 58 years old and rising. That
is a clear sign that our tools need to be improved. Mr. Hood,
you know the challenges that beginning farmers face when they
enter the industry. Costs are high, programs just don't fit the
realities of starting a new operation. What policy changes
beyond just increasing funding are most critical to making
Federal credit and risk management tools truly accessible and
workable for beginning farmers?
Mr. Hood. Thank you, Congresswoman. That is a very
difficult question, and I ask myself that all the time because
I am the father of six children, and the first five have not
come back to the farm. I am the oldest of five in my family,
and three of us did not come back home to the farm. We couldn't
afford to. I have a hold out on my 13 year old. Hopefully, he
has got enough interest in it to where he will come back.
But the biggest issue that I have seen is just the
monumental expense. And it is not just finding the operating
money, getting the FSA guaranteed loan. It is how do you go to
John Deere or some of these other equipment places and
negotiate hundreds of thousands of dollars of equipment needs?
You really have to have a family member that already has that
equipment and that they like you and that they will let you use
that equipment. Trying to start from scratch in this country
today is a daunting task, and I don't have a clear answer for
that. I know it needs to be paid attention to, and you guys
have the power to do that, and I would welcome any other ideas,
but something needs to be done to help preserve this for young
people.
Ms. Brown. My time has expired. Thank you, Mr. Chairman.
The Chairman. Thank you, Ms. Brown.
I can tell you my personal scenario, and you know this, Mr.
Hood, or Clint, back home. I have a brother, a sister, and five
first cousins, and all of our grandparents farmed and none of
us farm, and that is what scares me for the future of
agriculture.
Mr. Taylor from Ohio, you are recognized for 5 minutes.
Mr. Taylor. Thank you, Mr. Chairman and Ranking Member, for
holding this hearing today, and great thanks to our witnesses
for sharing your expertise on credit in our agricultural
industry and the sacrifices you all made to be here with us
today.
I want to go further on with the line of questioning. My
colleague, Representative Brown, was just talking about over
the next 2 decades, almost 50 percent of our farmland is
expected to transfer hands. Currently, only nine percent of
farmers are under the age of 35, while nearly 40 percent are
over the age of 65. As we think about our farmland, in my
opinion, it should remain in farmland and not in solar panels,
not be sold to adversaries like China and others, and be owned
and operated by a local farmer. I mean, that is what my
preference would be. I think that would be the most positive
road forward. This not only helps the next generations, but it
helps all of our rural communities thrive. As a guest in my
office earlier put it succinctly, succession is success.
So Mr. Hood, you were asked about it. I want to open it up
to the panel. What USDA programs do you folks think have been
helpful or productive for beginning farmers who are looking to
acquire land and get into the business or take over their
family business?
Mr. Wicks. I would just say that the farm ownership loan
for beginning farmers has been very helpful, along with having
access to an operating line. That is quite a bit of money we
are talking about for a young person starting out, maybe
leasing part of a farm and buying another. So those programs
there for farm ownership and equipment purchases are really,
really helpful for young people to get into agriculture and
remain there for the succession.
Mr. Taylor. Sure.
Mr. Gilbert. I know we talked about the average age or the
demographic of farmers being about 58\1/2\. We have the luxury
at First National Bank of having a younger-than-that portfolio.
Our average age of our entire portfolio of the farmer is 51\1/
2\. And there are two things, I think, that have helped our
customer base either enter the market or be younger than the
average, and not that we are trying to age discriminate, but we
all know that we have to get the next generation involved. And
those two things are livestock and agribusiness. We have worked
tirelessly with the USDA to get EQIP funds, things like that,
to help our borrowers, mostly young, build a deep pit cattle
barn, or a hog confinement facility to add revenue to their
farms.
And we have also really pushed in our area, we are
fortunate because we do have very fertile ground in most of our
trade territory, but we have really pushed the focus on
agribusiness too. A lot of these young farmers have to have
something besides just the farm to help.
Mr. Taylor. Sure.
Mr. Gilbert. So if there is something we could tie in with
that, I think it would be very helpful. And I don't know what
that is, but we can get back to you on that, but----
Mr. Taylor. Okay. Thank you. Ms. Minick, did you have
anything you wanted to add?
Ms. Minick. I would just agree with what they have all
said, and I would also say that those programs where it is not
always, especially for a beginning farmer or somebody that has
maybe been in farming for a while but they are experiencing
some economic downturns to be able to jump straight from FSA to
a full-fledged borrower, and so to have some of those down
payment assistance, some of those different steppingstones is
really important. And then I think working closely, having
great folks in your FSA offices, they really understand those
customers and want to see them graduate, so I think that that
staff at the FSA office is really important as well.
Mr. Taylor. Okay. Thank you. Since this is being recorded,
I do want to give my position on 58 not actually being old,
just so we all agree with it.
We talked about what programs are helping some, and I don't
have a whole lot of time left, but is there something anybody
on the panel has in their pocket that they say I wish Congress
would act on this specific thing, this would make such a big
difference for young farmers for succession of family farms?
Ms. Minick. To your point, since this is being recorded and
we have said it a lot is increasing those FSA loan limits would
make a huge difference.
Mr. Taylor. Okay. Thank you. Anybody else?
Mr. Hood. I would second that.
Mr. Taylor. Okay. Great. Thank you, guys. Oh, go ahead, Mr.
Hood.
Mr. Hood. The only thing I will add to that is I love any
program that will help a farmer start to get on their feet, but
we still have to adhere to the banker's creed of the five C's
of credit: the character, the capital, the capacity, the
conditions, and the collateral, specifically the character,
which most of that is in place. But that capacity to repay
right now is diminished. It is knocked in the head. So if you
can't adhere to those five C's of credit, I am not sure what
program could help. So we need help in having the capacity to
repay the debts.
Mr. Taylor. Thank you all very much. I yield back, Mr.
Chairman.
The Chairman. The chair now recognizes Mr. Harris for 5
minutes.
Mr. Harris. Thank you, Mr. Chairman. And thanks to all of
you for your time and your expertise that you brought. I
greatly enjoyed reading through your testimonies that were
submitted prior and reading through them.
And I just had a couple of questions, and I think all of us
have a lot of the same things on our minds today in this
Committee. But I did want to ask, Mr. Hood, in your testimony,
you specifically mentioned that raising the limits on
guaranteed loans and the down payment assistance program as
changes that would greatly help the industry. You also
mentioned the need for the Farm Service Agency to have access
to new technology. Can you just elaborate more on the need and
the value of the new technology you had in mind?
Mr. Hood. Everybody benefits from new technology,
Congressman, and I love that you brought this up. Our bank is
constantly spending dollars on new technology to make us better
bankers, but especially in the FSA program. My next-door
neighbor, who is also a cattle and pecan farmer, she is a
retired FSA loan officer, and she and I, we get together for
drinks and we talk about this all the time. If they had had
today's technology back in the 1970s and 1980s, she said we
could have gotten a lot more done for more farmers. So the
technology piece, you are spot on. I don't know what all it
includes. I still have to have a 7 year old show me how to
operate a new phone when I get one. But the need is definitely
out there to bring the technology level up.
Mr. Harris. Okay. Great. Thank you.
And, Mr. Gilbert, you have a great perspective as both a
lender and a producer, and I imagine most farmers don't go into
the business because they have a love of finance. However, it
is clear that today's farmers have to be savvy on debt and
lending while also experts on crops and livestock in the
process. So can you share more about the Farmers 'N Bankers
program that you mentioned in your testimony and how education
on finance is a key part of the farming operations?
Mr. Gilbert. Can we push the non-record button here? No, I
am just kidding. The Farmers 'N Bankers program actually was
started by our current chief credit officer, and he was a
lender at the time. And it was about--I am going to get this
wrong--but probably 2016, and we were facing some challenges in
our area. And we had noticed that a lot of our customers were
just kind of--they were just kind of going through the motions,
and they didn't necessarily understand a lot of what it takes
to be profitable or to improve margins even to get closer to
zero maybe sometimes.
So he had developed a four- or five-session program, and we
bring in industry leaders from our ag advisory board that we
have at the bank to FSA loan officers to--we bring in tax
specialists. We do also have a wealth management department, so
we bring them in too for some estate planning to help with that
transition, and as well as--I can't remember if I said it--but
commodity brokers to just coach on break-evens. And it is just
another set of eyes other than their banker saying, hey, this
is what you need to do.
But probably the most instrumental thing that we do there
is we take them through case studies, and we show them,
obviously, we change the names, change the numbers, but show
them the decisions that we had to make for farmers that were
their age and let them make the decision on whether they would
have approved that loan or not.
And I would say in the last 9 years that we have done that,
I would say almost every group has said no, and we said yes in
both of those case studies, and they are both still customers
of ours. So it just helps the producer realize that, hey, there
is more than just getting up every day, going out and doing
chores, and planting the crop and harvesting the crop. It is a
lot. It is not their dad's farm anymore.
Mr. Harris. Super. Well, thank you. Thank you so much for
sharing that.
Mr. Chairman, I yield back.
The Chairman. Thank you, Mr. Harris.
Before we adjourn today, I would like to invite Ranking
Member Davids to share any closing comments she may have.
Ms. Davids of Kansas. Thank you, Mr. Chairman.
Well, I want to first of all start by thanking all of our
witnesses today. Thanks for sharing your time and your
expertise and personal experiences.
I mean, this is a crucial part of the work we do here. The
Subcommittee definitely needs to understand how producers and
farmers are using credit and risk management tools that are
available, and then, of course, where improvements can be made.
And the testimony we heard today is absolutely going to help
with that.
I am certainly committed to strengthening the farm safety
net, especially for producers and our rural communities who
keep our country and, frankly, the world fed, so thank you
again.
And, Mr. Chairman, I yield back.
The Chairman. Thank you, Ranking Member.
And I have already checked on some of the things I
understand are legislative, and we will draft legislation and
hopefully work together to try to get some simple changes done
that help move this in the right direction.
I appreciate you all for being here. And while lending is a
big part of any successful operation, ultimately, you have to
have more dollars coming in than you have going out. The safety
net is important for those bad years, but long-term, we have to
have a system that works for our farmers to have more dollars
coming in than they have going out.
That said, under the Rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional materials and supplementary written
responses from the witnesses to any questions posed by Members.
Thank you, and this hearing of the Subcommittee on General Farm
Commodities, Risk Management, and Credit is adjourned.
[Whereupon, at 3:16 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Questions
Questions Submitted by Hon. Mary E. Miller, a Representative in
Congress from Illinois
Response from Mandy Minick, Senior Vice President, Stakeholder
Relations, AgWest Farm Credit; on behalf of Farm Credit Council
Question 1. Ms. Minick, could you speak about how AgWest Farm
Credit has partnered with the FSA Beginning Farmer programs to support
new producers in your region?
Answer. Farm Credit's partnership with USDA, through programs such
as the 50/50 joint financing option, provides substantial benefits for
emerging agricultural producers by enabling access to nearly 100%
financing.
AgWest Farm Credit has used FSA guarantees for many of our
beginning producers. As they improve financially, they gradually
graduate from the guarantees after their first five years. We do this
through joint partner land loans with the FSA, which can vary between
50/50 financing and the beginning farmer down payment land loan option
(5/45/50). These two programs have been instrumental in allowing us to
finance our customers who otherwise would not be able to attain 100% of
the loan directly with us. This collaborative approach significantly
reduces the up-front capital requirements that would otherwise
necessitate substantial down payments, thereby preserving borrowers'
liquidity during the critical establishment phase of their operations.
This financing structure proves particularly advantageous for
young, beginning, and small-scale (YBS) producers who typically operate
with limited capital reserves. By reducing initial equity requirements,
these collaborative programs allow producers to maintain adequate
working capital reserves to address the inevitable operational
challenges that arise during enterprise development. Such flexibility
enables borrowers to respond effectively to unexpected expenses,
including equipment repairs, additional input costs, market
fluctuations, or seasonal cash flow gaps--without jeopardizing their
operational viability.
The preservation of working capital through reduced down payment
requirements represents a crucial risk mitigation strategy for new
agricultural enterprises, where access to liquid funds can determine
the difference between successfully navigating startup challenges and
potential business failure.
This story highlights a partnership with FSA, creating
opportunities for our customers:
AgWest began working with customer Doug back in the summer of
2015. He farms in remote eastern Washington raising soft white
wheat, garbanzo beans, barley and canola. Doug started farming
in 2013 and was able to attain direct operating funds from the
FSA. Prior to 2013 Doug worked full time for a local farmer and
realized how much he loved agriculture. This passion gave him
the determination to try and attain his own farm leases. He was
fortunate enough that his extended family provided 548 acres of
farm ground to lease in 2013. He had very limited assets and no
farm equipment, and his only option to start farming was
utilizing the FSA's direct operating loan funds. His father-in-
law allowed him to use some of his farm equipment to seed,
fertilize, spray and harvest his crop.
Doug approached AgWest about providing financing in early
2015 and discussed the possibility of buying out his wife's
aunt's farmland. Following the advice and guidance of his FSA
loan officer, Doug was able to build up working capital during
his first two crop years and became strong enough for AgWest to
enroll him into our YBS program called AgVision. We provided
his first real estate loan to purchase 227 acres in August 2015
in conjunction with the FSA using their 5/45/50 beginning
farmer land loan program. The FSA land loan program allowed
Doug to put 5% down in cash and the FSA provided 45% of the
funding and we provided the remaining 50%. Without the ability
to partner with the FSA on this land loan, Doug would not have
been able to put the standard 30% down payment. This would have
resulted in the family selling the farmland to another farmer
or investor.
In the fall of 2016, we agreed to provide Doug with an
operating loan using an FSA loan guarantee. The loan guarantee
provided us with additional security in the event of financial
deterioration. If we had not been able to attain an FSA
guarantee, we would not have been able to provide operating
financing, and he would have needed to maintain his direct FSA
financing. In 2017 he was able to purchase an additional 116.5
acres from his wife's family, and we utilized the joint 50/50
financing with the FSA for the additional property. While Doug
continued to improve financially, we would not have been able
to provide traditional financing if we had not been able to
utilize the FSA joint financing program.
Doug has made substantial improvements throughout the years,
and we were able to stop using the FSA guarantee program in
2020. We have since moved him to a traditional operating loan
and have been able to provide him with additional traditional
loans the last few years. He continues to financially perform
and make progress and now farms over 3,200 acres of farmland in
the prime Palouse region.
Question 2. Second, based on what you're seeing in the field, Ms.
Minick, would raising the program's loan limits be timely and helpful?
Answer. It would be extremely helpful and timely to increase loan
limits for both direct and guaranteed loans. Most notably, it would
broaden the number of operations that would benefit from FSA financing
options at a time when the cost of doing business has significantly
increased, input and labor costs are higher, and the amount of capital
for beginning farmers is extremely limited. Farmers face an ever-
growing array of regulations related to environmental protection, food
safety, animal welfare, and traceability. Meeting these standards often
requires additional expenditure on infrastructure, certification,
documentation, and specialized equipment. While these regulations aim
to protect consumers and the environment, they contribute to the rising
cost structure of modern farming.
We support the Producer and Agricultural Credit Enhancement (PACE)
Act to modernize Farm Service Agency loan programs, including increased
loan limits that reflect current costs of production agriculture.
Strong FSA Guaranteed Loan Programs assist agriculture lenders in
working with farmers and ranchers dealing with these challenges and
provide opportunities for young and beginning farmers and ranchers.
Along with increasing the loan limits, streamlining the approval
process for Preferred Lender approval of guarantees and lessening the
paperwork requirements for loan applications is needed. Time is of the
essence for producers, especially those with specialty crops, and
anything that can be done to speed up the approval process would be
welcomes improvements.
This story illustrates a young, beginning producer hindered by
current FSA loan limits:
Beginning farmer Beau planted his first crop when he was
still in high school and came to AgWest after graduating and
farming for 4 years in rural eastern Montana. Beau previously
borrowed from FSA, but due to LOC limits and higher input
costs, borrowing from FSA was no longer an option. Beau came to
us as a referral from another AgWest customer. After reviewing
Beau's financial information and 2025 cropping plan, we used
the FSA Guarantee program to meet his financing needs. Beau had
previously visited several other financial institutions, but
most were not interested in working with him due to his lack of
experience, weaker financial position and lack of a strong
cosigner.
Another area of timely concern is the beginning farm purchase
program. The value of farmland has risen sharply in many
regions, driven by competition from investors, urban expansion,
and alternative land uses such as solar farms or real estate
development. Higher land prices translate directly into
increased costs for farmers.
The biggest hurdle our young producers face when trying to
purchase farmland is lack of cash to help with a down payment.
Being able to utilize the beginning farmer land loan program
with the FSA allows the customer to put 5% down on the
purchase, however the loan limit for the FSA portion is only
$300,000. We end up needing to provide more than $300,000 for
our loan for most producers, but market rates are typically
significantly higher than the FSA rate, adding burden to the
beginning of producers already challenging situation. Raising
these loan limits would be particularly helpful, and I would
encourage Congress to approve moving the limit up to $600,000
to match the current loan limit for joint financing 50/50 loans
while maintaining 5% down payment requirement.
Question 3. We've also heard from producers innovating in small-
scale, high-value specialty markets. Ms. Minick, what are the biggest
credit challenges these producers face, and what USDA program fixes
could help better serve this growing niche?
Answer. Specialty crop growers encounter challenges not faced by
larger commodity producers. These crops have shorter harvest periods,
are vulnerable to weather and pests, often require manual harvesting,
and must be delivered to market quickly due to their perishability. Our
smallest producers feel these outside influences even more as they
often have very limited, niche marketing opportunities and little to no
capital to fall back on. Timely availability of credit and risk
protection is very important.
Collateral and Asset Valuation Challenges
Small-scale innovative operations frequently encounter significant
barriers when seeking financing due to insufficient traditional
collateral. These enterprises typically operate on limited land bases
with specialized equipment that fails to meet conventional asset-
backing requirements. While high-value specialty crops can generate
substantial revenue per acre, the smaller acreage footprint provides
inadequate security from a traditional lending perspective.
This customer story illustrates collateral challenges:
Kyle and Alix are YBS customers who had an opportunity to
purchase a piece of land that bordered their ranch on three
sides. They had the overall financial capabilities but lacked
collateral for traditional financing. AgWest had worked with
the young couple in the past, helping them with other financing
needs. They secured a one year, lease-to-own option on the
ground and then closed the sale the following year. AgWest,
using joint financing with FSA to offset collateral deficiency,
allowed Kyle and Alix to purchase the ground. AgWest earned
business because of our strong customer relationship and our
Preferred Lending Agreement with FSA.
Infrastructure and Risk Assessment Complexities
Specialty crop production often necessitates unique infrastructure
investments--including greenhouses, specialized processing equipment,
and cold storage facilities--that present elevated risk profiles for
lenders. These assets typically have limited resale markets and
uncertain residual values, complicating standard risk assessment
methodologies used in conventional agricultural lending.
Institutional Knowledge Gaps
A critical barrier stems from lenders' limited familiarity with
innovative agricultural business models, specialty crop production
systems, and their associated profitability patterns. The complexity
and diversity of these operations often exceed the expertise of loan
officers trained primarily in traditional commodity agriculture,
resulting in conservative underwriting decisions that may not
accurately reflect the true risk profile or potential of these
enterprises.
This knowledge disparity creates significant geographic inequities
in credit access. For instance, certain loan officers who have
developed expertise through repeated exposure to innovative operations
demonstrate consistently successful lending outcomes with specialty
crop producers. However, other offices within the same state frequently
decline credit applications for substantially similar business models,
primarily due to their limited experience with these operation types.
This variance underscores how institutional knowledge gaps can create
arbitrary barriers to capital access, where a producer's ability to
secure financing may depend more on their geographic location and
assigned loan officer's experience than on the actual viability of
their enterprise.
Systemic Solutions and Recommendations
Establishing specialized lending expertise at the state or regional
level--with officers specifically trained in alternative agricultural
models--would significantly reduce access barriers for innovative
producers. Such specialization would enable more accurate risk
assessment and appropriate loan structuring for non-traditional
operations.
Consequences of Current Limitations
These systemic challenges often compel promising small-scale
producers toward alternative financing sources that, while accessible,
frequently lack the comprehensive financial education and constructive
credit-building opportunities essential for early-stage agricultural
enterprises. This dynamic can ultimately undermine the long-term
financial sustainability and growth potential of innovative farming
operations.
Federal crop insurance is a vital tool in stabilizing access to
credit. Continued expansion of crop insurance products to specialty
crop producers will continue to support small scale producers. The
Microfarm policy has helped many and it can continue to be improved.
Additional programs for fresh market products and specialty crops must
continue to be developed. Streamlining these products will make them
more user friendly for both the producer and the agents and will help
ensure they remain current and viable tools.
Response from Brian Gilbert, Senior Vice President, Ag Banking Manager,
First National Bank in Sioux Falls; Member, Rural America and
Agriculture Committee, Independent Community Bankers of America
Question. Mr. Gilbert, how has your institution used FSA guarantees
to support younger or less established producers who may not yet be
bankable under traditional programs?
Answer. First, I'd like to thank you for taking the time to reach
out with your question. The First National Bank in Sioux Falls has a
large and diverse Ag portfolio that spans across most of South Dakota,
SW Minnesota, NW Iowa, and northern Nebraska.
Given our large geographic footprint we run into several unique
situations where a borrower may benefit from utilizing FSA guarantees
or direct loans. We have a former FSA Loan Officer on our team and
several other experts that have executed several FSA guarantees,
assisted borrowers with FSA's direct financing programs and FSA/Bank
joint financing.
At FNBSF, we assist the borrowers with the application process and
work with producers from application to loan closing.
Specifically, to the FSA guarantee program below are a few of the
ways we've helped younger/less established Ag producers:
1. Guaranteed operating loans to lessen the necessary collateral
they have to pledge.
2. Guaranteed M&E and Livestock loans to ease the cash flow through
longer amortizations.
3. Guaranteed farmland loans that we then sell to Farmer Mac to
achieve lower rates and longer amortizations for the
borrower.
All of these programs assist the borrowers to build their
operations and compete with more established farmers, which is
essential to help the next generation be able to come back into the
family operation and keep farm operations viable for many years to
come. With the price of land and inputs today vs. even 6 years ago, we
as lenders work diligently to help ease cash flows and mitigate risk to
help farmers through the cyclical nature of agriculture.
With my roots growing up as a farm kid from South Dakota, I take
great pride in helping our ag producers achieve their financial goals
and I know firsthand that things don't always go according to plan with
production issues or commodity prices or both. FSA guarantees certainly
help give us another tool to keep farmers farming and bring in the next
generation of farmers.
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