NSAC's Blog

House Holds Farm Credit Hearing

July 15, 2011

On Thursday, July 14, the House Subcommittee on Agriculture Department Operations, Oversight and Credit held an audit hearing to discuss farm loan programs, hearing witness testimony from FSA Administrator Bruce Nelson and Assistant Deputy Administrator Jim Radintz.  The hearing was relatively short, ending abruptly when members were notified of an imminent floor vote.

Leading the hearing was Subcommittee Chairman Jeff Fortenberry (R-NE), with help from Ranking Member Marcia Fudge (D-OH) plus Reps. Rick Crawford (R-AR), Joe Baca (D-CA), and Jim McGovern (D-MA).

In his opening statement, Rep. Fortenberry emphasized the important role of credit for beginning farmers.  “My district is home to a growing community of farmers who raise food specifically for local farmers’ markets and other emerging food retailers,” he said.  “With little historical data on farmers producing for new markets, commercial credit institutions are sometimes reluctant to offer them credit.  Farm Service Agency loans ensure that new farmers have access to the credit they need to start farming.”

Rep. Fudge noted that she serves the urban district of Cleveland, but lauded the importance of peri-urban and urban farmers, farmers’ markets, and urban gardens in combating food insecurity in her city.  “The soundness and adequacy of credit and how it affects food in urban areas” is very much her concern, she said.  “We have young innovators and creative entrepreneurs…how do they qualify for FSA [loans]?”

Nelson took the opportunity to say that though the impression of FSA may be that it is strictly a rural loan program, that is not the case.  He said that FSA has made loans to support urban and peri-urban agricultural producers, but admitted that FSA is fairly new at programs to support these types of producers, and welcomes any suggestions on how to serve them better.  Nelson also spoke approvingly of the Know Your Farmer, Know Your Food initiative for its resources to link producers and consumers and to increase awareness and appreciation of the work of farmers and ranchers.

Rep. Fortenberry opened the hearing with questions about the term of FSA loans, noting the tension between wanting to transition borrowers to commercial sources of credit within the allotted term limit and providing adequate support for producers dealing with inherent uncertainties and vulnerabilities of farming.  Nelson appreciated the chance to talk about extending term limits, urging the members to give FSA the flexibility to determine whether producers merit an extension.  However, he also cited figures that the vast majority of borrowers stay within their current FSA loan term limits.  NSAC successfully pushed for a more explicit graduation policy in the 2008 Farm Bill, and we will urge Congress to approve improved use and enforcement of that policy in place of rigid term limits as part of the 2012 Farm Bill.

Rep. McGovern asked about the FSA’s efforts to reach out to specialty crop producers and loan participation across different types of producers, noting that in his district some new producers have had trouble accessing credit because of high land prices in proximity to urban areas.  Nelson emphasized that the FSA is interested in reaching out to groups they haven’t effectively reached before, but admitted that he did not have data at his fingertips regarding participation across producer types.

Just before the hearing concluded, Rep. Baca pressed Nelson on what FSA is doing to address the past history of discriminatory lending practices.  Nelson quickly assured the assembled members that FSA is committed to expanding credit access and fair lending.

To learn more about NSAC’s work on access to credit, especially for beginning and minority farmers, read our Grassroots Guide to the Farm Bill, or see our Farming Opportunities and Fair Competition issue committee.

You can also read the full testimony from witnesses on the Subcommittee’s website.

Categories: Beginning and Minority Farmers, Commodity, Crop Insurance & Credit Programs, Farm Bill

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