Mark Scanlan: Farm bill feat

Community banks rose to the challenge of a farm bill passage.

By Mark Scanlan, ICBA

One of the biggest unanswered questions going into 2018 was whether Congress would overcome the partisan and policy hurdles necessary to adopt a new farm bill. Community bankers and the agricultural community had been told for most of the year that the most likely outcome would be a one-year extension, thus pushing the legislation’s enactment into the 116th Congress.

But not only did Congress close out the year by delivering a farm bill, it did so by historic margins. In December, the Senate voted 87-13 in favor of the ICBA-backed Agriculture Act of 2018, and the House passed it 369-47, sending it to the president for his signature on Dec. 20. But that doesn’t mean the process was easy.

The House passed the farm bill in June by just two votes a month after voting it down on the House floor. Immigration politics and a lack of Democratic support for food-stamp work requirements disrupted the bill’s progress, but ultimately House and Senate ag leaders hashed out a final bill.

Passage of the farm bill (P.L. 115-334) is good for American agriculture and for community bankers’ ability to provide credit to support local economies. Here are a few reasons why.

Quick stat


House vote on the Agriculture Act of 2018. The Senate voted in favor 87–13.

The 2018 farm bill continues the Agricultural Risk Coverage and the Price Loss Coverage programs, which are essential price-protection options for producers in the midst of the fifth straight year of declining net farm income. The Agriculture Department projected a 12 percent drop in net farm income in 2018 to $66.3 billion, well below the average from 2000 to 2017. Community bankers also felt it extremely important to protect crop insurance from amendments to curtail funding and producer eligibility. This goal was accomplished.

Meanwhile, ICBA urged Congress to raise loan limits on USDA-guaranteed farm loans. Congress responded by raising guaranteed limits to $1.75 million, up from the current $1.39 million level, with an index to inflation. The higher limits will be available immediately upon enactment. Given rising production expenses and the elevated cost of farmland, the higher guaranteed loan limits will allow community banks to better work with family farmers during the current times of financial distress. Congress also raised direct operating loans to $400,000 and direct farm ownership loans to $600,000.

Congress raised the population limit to 50,000 for three rural development programs—community facilities, broadband loans, and water and waste management—while also mandating a zero-subsidy rate. In addition to allowing these loans for larger communities, Congress’ intent is to shift more loan-making from USDA direct financing toward greater guaranteed lending from the private sector. The bill also includes a study of whether it is feasible to move to a zero-subsidy rate for guaranteed business-and-industry loans and Rural Energy for America Program loans without jeopardizing loan demand and participation by community banks and other small lenders.

ICBA staunchly opposed new lending powers for the Farm Credit System, though we expect FCS to push for amendments to other bills moving through Congress next year. A very real expansion threat from FCS in recent years has been due to creative rulemaking by its regulator, the Farm Credit Administration. Interestingly, the farm bill requires a Government Accountability Office study on “the lending situation for socially disadvantaged farmers with the Farm Credit System and all other commercial lenders as well as recommendations for improvement.” ICBA’s “Focus on Farm Policy” white paper issued last year revealed a decline of more than 450,000 FCS loans under $250,000 between 2014 and 2015.

The industry can take comfort in knowing that community bankers and ICBA were effective advocates on this crucial policy measure.

While ICBA and community bankers will need to closely follow implementation of the new bill’s many provisions in the coming months, the industry can take comfort in knowing that community bankers and ICBA were effective advocates on this crucial policy measure. For instance, community bankers responded in force with grassroots messages opposing harmful crop insurance amendments that would have raised premium rates, reduced premium assistance, limited participation and impeded private-sector delivery. The higher guaranteed loan limits with an inflation index means the farm bill’s guaranteed loan limit could reach approximately $2 million before the bill expires.

With 2019 well underway, we should nevertheless take a moment to recognize the unwavering advocacy of ICBA and community bankers across the nation that led to this policy victory—one of many from 2018. Our dedication has resulted in a new farm bill that will benefit our customers and rural communities for the next five years. With many policy battles left to wage, we should learn from successful campaigns such as this, which remind us that we can have a sizable impact on the debate in Washington.

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