April 15, 2011
On Thursday, April 14, the House Agriculture Subcommittee on Department Operations, Oversight, and Credit held a hearing to review credit conditions in rural America. The two panels primarily featured witnesses from different credit providers, from independent banks to federal loan providers.
Among the witnesses was Matt Starline, a young farmer and owner of Starline Organics in Athens, Ohio and a member of Ohio Ecological Food and Farm Association, an NSAC member group. He testified on the second of two panels alongside Michael Gerber, the President and CEO of the Federal Agricultural Mortgage Corporation (Farmer Mac), Doug Stark, the President and CEO of Farm Credit Services of America; and Matthew Williams, the Chairman and President of Gothenburg State Bank on behalf of the American Bankers Association. The earlier panel consisted of USDA’s Farm Service Agency, Farm Credit Administration, and the Federal Reserve.
Starline was the only farmer on either panel, and told his story as a young and beginning farmer in the Appalachian foothills of Ohio. Starline is a full-time farmer, and sells all of his produce, grain, and meat within 20 miles of his farm. He is certified organic, and despite being located in a relatively low-income region of Ohio, he reported that his customers are enthusiastic about eating organic, local, and fresh food. He noted that some of his customers were WIC and SNAP participants who made good use of farmers market nutrition assistance coupons.
In his testimony, Starline spoke about the credit needs of beginning farmers, emphasizing the importance of agricultural real estate loans and the need for credit to be available on a timely basis in the fast moving land market. He has a real estate loan from a Farm Credit institution and is in the process of securing an Farm Service Agency (FSA) loan for a cold storage unit. Starline urged the Subcommittee to ensure adequate and more timely funding for the Farm Service Agency’s direct loan programs and urged the Farm Service Agency and other lenders to learn more about servicing diversified, locally-oriented agriculture.
Many of the witnesses emphasized the importance of young and beginning farmers in their loan portfolio — Doug Stark, CEO of Farm Credit Services of America, said that the Farm Credit System as a whole last year lent $7.3 billion to young farmers (35 and under) and $10.3 billion to beginning farmers (in operation 10 years or less), with substantial overlap between the two numbers. At the end of 2010, he reported, nearly 17% of their loan portfolio consisted of loans to young and beginning borrowers. Pressed by the Subcommittee, Stark said he did not have the breakdown of the type of beginning farmers or how many were diversified, smaller-scale farms.
Subcommittee Chair Jeff Fortenberry (R-NE) asked a series of thoughtful questions about the increased entrepreneurial opportunities in small-scale, diversified agriculture in the wake of the popularity of local foods. He also commented that, given the growing numbers of beginner farmer-entrepreneurs, this will undoubtedly be a growing sector and said in his view the commercial lending community needs to get more involved in financing local food producers and systems.
Ranking Member Marcia Fudge (D-OH) asked pointed questions about the relationship of the farm credit providers to more urban consumers. She, too, was interested in smaller-scale growers as related to outlets like farmers’ markets and farm to school, and asked if the funds could ever be directed at marketing infrastructure in urban areas. Val Dolcini, Acting Administrator of the Farm Service Agency (FSA), said that, except for youth loans, FSA lending is not limited to rural areas and that they do in fact make loans in urban areas, to entities like small apiaries to rooftop gardens.
Starline left the Subcommittee with some important thoughts to ponder: “We need a national strategy and commitment to support beginning farmer and ranchers entering agriculture…A new farms policy, especially in the local food sector, is a jobs creator, a sound investment that can provide long-term societal benefits and contribute to the revitalization of our rural as well as urban communities….If we are serious about growing a new generation of farmers and reversing the aging of American agriculture, we need to be serious about ensuring a healthy FSA loan budget.”
Noting the major 2008 Farm Bill advances on beginning farmer issues, he urged the Subcommittee “to explore the positive outcomes generated by these farm bill gains and to redouble your efforts on beginning farmers issues in the 2012 bill.”
Categories: Beginning and Minority Farmers, Farm Bill, Local & Regional Food Systems, Organic
[…] Discretionary Ag spending has been cut by $3 billion, or 14%. Reduction to Farm Service Agency credit program has been cut by $433 million (which means loans $ to beginner farmers, etc.). This is very sad because of growing need for new farmers and new farmers seeking credit. Read more about the congressional hearing. […]