Ag Policy Blog

Ag Groups Take on Bankers Over Farm Credit System

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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In the never-ending battle of farm credit versus bankers, it's 42-1 in Washington right now -- at least in the letter-writing department.

Forty two major agricultural groups representing most major commodities and general farm organizations all drafted a letter together to American Bankers Association President Frank Keating. The groups noted they wanted "to register our strong objection" to Keating's goal of eliminating the Farm Credit System. Keating had made the comments in an April 13 radio statement calling to end Farm Credit.

The agricultural groups noted the importance of competitive credit in rural America. They also noted Farm Credit lenders and local banks often work together on loans for farmers and businesses. Getting rid of the Farm Credit System or constraining it would hurt rural America.

"Rather than calling for the elimination of the FCS, we believe it would make more sense to find improved ways to work collaboratively with Farm Credit and other credit providers for the benefit of farmers, ranchers and rural communities," the ag groups wrote.

The ag groups added that the stakes are too high to limit financing options while trying to spur the rural economy. The tone of the letter was sharp. "We want you to know that your effort to reduce competition is not supported by those of us whose members live, work and form the economic foundation in rural areas."

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Groups signing on to the letter to ABA included: American Agri-Women, American Association of Farm Managers and Rural Appraisers, American Farm Bureau Federation, American Feed Industry Association, American Honey Producers Association, American Horticulture Industry Association, American Mushroom Institute, American Soybean Association, American Sugar Alliance, Association of Equipment Manufactures, California Association of Winegrape Growers, Florida Fruit and Vegetable Association, National Association of State Departments of Agriculture, National Association of Wheat Growers, National Barley Growers Association, National Black Growers Council, National Cattlemen's Beef Association, National Christmas Tree Association, National Corn Growers Association, National Cotton Council, National Council of Farmer Cooperatives, National Farmers Union, National Milk Producers Federation, National Pork Producers Council, National Potato Council, National Rural Electric Cooperative Association, National Rural Water Association, National Sorghum Producers, National Sunflower Association, NTCA-The Rural Broadband Association, Rural And Agriculture Council of America, Society of American Florists, Southern Peanut Farmers Association, United Egg Producers, USA Rice Federation, U.S. Apple Association, US Canola Association, US Cattlemen's Association, US Dry Bean Council, US Rice Producers Association, Western Growers and WTA -- Advocates for Rural Broadband.

http://www.dtn.com/…

Keating, a former governor or Oklahoma and prior to that a Reagan administration official, is retiring at the end of 2015 but is not backing off ABA's long-standing push to get rid of the tax-exempt Farm Credit lenders. In an April 17 op-ed in the Grand Forks, N.D., Herald, Keating called the Farm Credit System a potential danger to taxpayers. He compared Farm Credit to Fannie Mae and Freddie Mac.

“Thanks to the federal guarantee for Fannie and Freddie, home prices lost touch with reality. Could the Farm Credit System's loans -- made artificially cheap by taxpayers -- be distorting prices in the farm sector?”

Keating comments: http://dld.bz/…

Update: Keating also had a response to the various agricultural groups: http://www.aba.com/…

The letter from the 42 farm lobbies to ABA was sent the same day a lone congressman, Rep. Marlin Sutzman, R-Indiana, sent a letter to the Government Accountability Office. Stutzman called for the GAO to conduct a study on the Farm Credit System. Stutzman indicated that people have raised concerns about the way Farm Credit operates in rural America. "Given the importance of agriculture to my district and state, I am compelled to address recent concerns raised by constituents and industry participants from across the country," Stutzman wrote.

Stutzman had nearly three pages of questions that GAO should examine in an audit of Farm Credit. Stutzman wants to know about interest rates charged by Farm Credit and lending activity outside of agriculture. Moreover, Stutzman wanted to know if the Farm Credit Administration is properly regulating the lending institutions.

Stutzman's letter: http://dld.bz/…

Follow me on Twitter @ChrisClaytonDTN.

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