Mark Scanlan: How ICBA is fighting for ag lenders

ICBA has laid out its 2018 farm bill priorities in a new white paper.

By Mark Scanlan, ICBA

With the current farm bill expiring in a matter of months, Washington has begun working in earnest on the 2018 version. Congress has been holding hearings for more than a year, and agriculture secretary Sonny Perdue has told lawmakers that adequate funding is necessary amid a persistent downturn in the agricultural economy.

A new farm bill is essential to the nation’s farmers and ranchers, as well as to the community bankers who serve them. It supports rural communities and allows borrowers and lenders to plan for the long term. Now that the House and Senate agriculture committees are developing legislation ahead of the Sept. 30 deadline, ICBA recently released a Focus on Farm Policy white paper with our core principles and focus areas for a new multi-year farm bill.

Commodity programs and crop insurance
The 2014 farm bill was written in an era of higher commodity prices and higher net farm incomes, which peaked as that bill was being written. But with rural America facing low commodity prices and rising production expenses, net farm income is forecast to drop to its lowest inflation-adjusted level since 2002 and is expected to decline for the fifth straight year.

Thus, the new farm bill will need to maintain robust price supports for ag commodities and crop insurance. Cash flows are tight, and a robust crop insurance program is necessary to ensure producers can repay their loans when weather disasters cause widespread production losses. Further, regulators view crop insurance as necessary for farm loans, but maintaining current funding will be difficult once the farm bill reaches the House and Senate floors. Community bankers should communicate with lawmakers about maintaining current funding without allowing harmful amendments during floor consideration.

Enhancing USDA Farm Loan Programs
The USDA Farm Service Agency’s Farm Loan Programs help producers and lenders through a combination of direct and guaranteed loan programs. Together, they provided more than $7.7 billion in loans for producers in 2017, supporting 42,000 farmers and ranchers. By reducing regulator concerns and allowing banks to provide continued credit in times of extreme financial distress, these programs play a significant role in helping American agriculture withstand a major farm credit crisis. But the loan limits need to be raised to $2.5 million or more to meet the credit needs of today’s family farmers.

Further, allowing banks to work with more than one county office, and ensuring consistency of loan approvals across state lines while reducing paperwork, would speed up loan approvals and allow greater use of these programs. ICBA’s white paper outlines the rationale for enhancing these programs.

Sustaining rural development programs
The farm bill authorizes a variety of important rural development programs. However, ICBA is concerned that recent budget proposals would eliminate and shift funding from guaranteed to direct loans. By maintaining the USDA’s focus on guaranteed loan programs and preserving funding for programs such as the Business and Industry Guaranteed Loan Program for small rural businesses, the federal government can avoid crowding out the private sector from extending credit in rural communities.

Reforming the Farm Credit System
The Farm Credit System has experienced dramatic growth while sharply reducing service to family farmers. Chartered by Congress to primarily serve bona fide farmers and ranchers, it has become the only government-sponsored enterprise competing directly against the private sector at the retail level. With lavish federal benefits, FCS lenders underprice loans offered by tax-paying community banks, siphoning off their best customers.

Meanwhile, the FCS increasingly ignores family farms while directing loans to some of the world’s largest corporations, such as Verizon and AT&T. Their complicit regulator, the Farm Credit Administration, is promoting the FCS’s expansion by mislabeling loans as “investments.” ICBA’s white paper is clear: Congress should require the FCS to focus on serving farmers, and bar it from venturing into non-farm lending beyond the limited scope of the law.

The bottom line
ICBA’s white paper explains to non-farm critics how farm policy benefits all Americans through an inexpensive and abundant supply of healthy food for our citizens. It also provides five guiding principles for a new farm bill: providing ample funding, making needed changes, reducing regulatory burdens, requiring fair implementation and ensuring that government programs complement private-sector lenders.

The farm bill can be daunting, complex and a grinding legislative effort. But these principles are simple. ICBA will continue working to ensure lawmakers remember these farm bill principles as they take up this important legislation over the coming months.

Read the white paper and act now

To access ICBA’s Focus on Farm Policy white paper and send a message to lawmakers in support of it, visit

Mark Scanlan ( is ICBA senior vice president of agriculture and rural policy.