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Critical need for credit access
Testimony at a Senate Ag Committee hearing Thursday focused on the critical need for farmers to have access to affordable credit during the difficult farm economy.
Jeffrey Hall with the Farm Credit Administration testified that the farm credit crisis of the 1980s might be similar but is not the same for today’s farmers. “At that point, a lot of the farm income was going to pay off debt. I think farmers have paid down debt coming into this current period and I think with lower interest rates they’re going to be able to work their way through it, so I don’t see a comparison to the 80s, but I do see that there is volatility and bigger challenges for producers.”
Leonard Wolfe, President of United Bank and Trust, a community bank in Marysville, Kansas, said the difference between today’s farm economy and that of the 1980s is crop insurance. “The primary difference, as far as the producer protection is crop insurance. In the 1980s, I saw statistics that said that less than five percent of all crops were insured at that time. Today that number’s reversed, it’s now 95 percent.”
Ag bankers told the committee they cannot compete with the Farm Credit System because they don’t have the tax breaks to offer farmer lower rates.
Army veteran and Michigan farmer Jed Welder said he left in the middle of corn planting to stress the importance of the Farm Credit System to Congress. “Farmers like veterans are not victims, we’re not looking for a free ride, just a fair deal.” He says, “Having a lender that works with me, that knows my farm and the challenges I face is more important than ever.”
The USDA expects farm profitability to continue to decline for the third straight year in 2016.
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