NSAC's Blog

Standing up for the Local Food Economy

July 29, 2011

This summer hundreds of NSAC supporters and members, farmers, and allies took action in support of a proposed rule that could bring millions of dollars in new investment to the local and regional food producers all across this country.  The Farm Credit Administration’s (FCA) proposal would require Farm Credit System (FCS) lending institutions to be more responsive to the credit needs of young farmers, small and mid-sized farms serving local and regional food systems, and limited resource and ethnically diverse farmers and ranchers.  If you shop at a farmers’ market, CSA, food coop, or other local food source, this rule could provide the credit necessary to help your local farmers grow the local food economy.

Out of the 403 comments FCA received on the rule, approximately 85 percent reflected NSAC’s call to action.  The comments asked that FCS institutions create a baseline analysis of their current borrowers.  This would allow institutions to measure progress and to provide training to FCS staff on the special needs of local and regional food producers across the full range of credit, tax, and business planning services provided by these locally controlled and borrower owned lending cooperative lending associations.  The comments also asked that FCS set an investment goal for local and regional food producers of not less than 10 percent of each institution’s capital within 5 years.  Many commented with unique personal stories on the importance of credit for local and regional food systems:

From West Virginia:

I live in an area of WV that is a mix of rural and burgeoning suburb… FCS support could mean the difference between keeping the family business — or, even better, expanding it — or selling out to developers with no interest or involvement in the community.

From Pennsylvania:

I am a small dairy farmer that direct sells to my community and restaurants.  It is important to me to be able to access low rate capital for improvements in able to expand.

From Massachusetts:

I help run a farmers’ market in Massachusetts.  In our region, demand for local farm produce way outstrips supply.  Small farms tucked in and around towns are the norm here, demand for land (for non-farming purposes) is high, farming takes huge persistence against stiff odds, and the entry-barrier for young farmers is dauntingly high.

From New Hampshire:

I am a very small, beginning farm here in NH.  I would love to see a minimum requirement for banks to invest in small local farms and ranches.  So much of the farm money goes to the  huge farm conglomerates, and the little guy tends to get squeezed out.

From Virginia:

The USDA has set a goal of 100,000 new farmers in the next few years….I urge the Farm Credit System to start rebuilding regional food systems that will create economic opportunity for a new generation of food producers that are ready and willing to be put to work.

From Tennessee:

Here in our part of Middle Tennessee, farming is changing.  There are now many very small farms providing food to the local area, mainly through farmers’ markets and CSAs.  The customers are eager to get fresh, local food.  Strengthening the local food system is important to both our security and economy.

From New York:

I work for a small local food company, and I feel that these small ventures like mine are trying so hard to grow, but with very, very small margins.  People are excited about the opportunities, but they need backing and support to get the wheels in motion.  I ask that FCS marketing plans take into account the importance of local and regional producers.

From Arizona:

As a producer of grass finished beef and seed stock for that industry and a former credit officer and appraiser for the Farm Credit System, I am uniquely attuned to the potential impact that FCS can have on our food supply.  Smaller, less commodity driven farmers and ranchers are vital to the “quality and quantity” of our nations food supply.

NSAC also submitted comments on the proposed rule.  NSAC’s comments ask FCA to consider ways to leverage other sources of capital for the task of rebuilding our local and regional food system infrastructure.  NSAC also states that FCS lending institutions can have a huge impact on growing the next generation of farmers, by incorporating diversity and inclusion into their lending portfolio by prioritizing lending to young and beginning farmers, including limited resource and ethnically diverse farmers and ranchers.  NSAC also asks FCA to resolve the internal conflict this new rule creates due to the long-standing regulation that places certain restrictions on lending to part-time farmers, many of which produce for local markets.

Many more NSAC member organizations and allies submitted comments as well, including:

  • Angelic Organics Learning Center
  • California Certified Organic Farmers
  • Carolina Farm Stewardship Association
  • Community Food Security Coalition
  • C.S. Mott Group for Sustainable Food Systems – Michigan State University
  • Farm Aid
  • Center for a Livable Future – John Hopkins University
  • Michigan Food and Farming Systems
  • Regional Food Solutions
  • Rural Advancement Foundation International
  • Rural Coalition

Several common themes emerged from these comments, including a need for FCA to support (and provide financing for) robust local and regional food systems; a need to revise FCA’s definition of diversity to include farm size and producers with diversified operations; a need for scale-neutral financing; a need to increase FCS staff knowledge about local and regional food systems; and a need to market financial products and services that are appropriate for diverse borrowers.

From C.S. Mott Group at Michigan State University:

The social and demographic makeup of our food production system should reflect the diversity of our Nation in order to ensure a supply of foods that meet the nutritional and cultural needs of our communities.

From the Rural Coalition:

Recognizing that institutional barriers still exist that impede socially disadvantaged and limited resource farmers and ranchers from having equal access to credit, we commend the Farm Credit Administration for proposing to amend its regulations to require each Board of Directors of each Farm Credit System institution to adopt a human capital plan as well as a marketing plan within its overall operational and strategic plan that emphasizes diversity and inclusion.

From Michigan Food and Farming Systems:

The small/mid-size farm, traditionally built by a (albeit somewhat less) diverse base of European immigrants, has been the ‘backbone’ of American agriculture.  Adapting to the new, diverse agriculture with inclusive policy and business positioning will help the FCS entities and American agriculture thrive into the future.

The Farm Credit Council (FCC) also submitted comments on behalf of its membership after soliciting input from all Farm Credit System institutions.  They raise three main concerns related to the burden the new rule would place on smaller institutions, and the conflict or redundancy the new rule would create with existing rules.  FCC also stated that FCA’s goal would be best accomplished if individual institutions were allowed significant discretion to address the issues of diversity and inclusion as appropriate for their local regions.

Thank you to all the NSAC members and supporters who submitted comments to FCA.  NSAC will continue to monitor the progress of this proposed rule and post any updates once a Final Rule is issued.

Categories: Commodity, Crop Insurance & Credit Programs, Local & Regional Food Systems

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