American Bankers Association Presents Testimony at House Agriculture Committee Hearing

An update this week at the American Bankers Association (ABA) Journal Online stated that, “Testifying on behalf of the [ABA] today at a hearing before the House Agriculture Committee’s Commodity Exchanges, Energy and Credit Subcommittee, banker Nate Franzen outlined several changes ABA is seeking in the upcoming Farm Bill. Franzen is president of agri-business at First Dakota National Bank in Yankton, S.D., and past chairman of ABA’s Agricultural and Rural Bankers Committee.

“Highlighting the successes of the previous Farm Bill — in particular, the bill’s improvement of crop insurance, the Conservation Reserve Program and removal of borrower term limits for the Farm Service Agency’s guaranteed loan programs — Franzen noted that the new bill must make ‘substantial changes’ to keep pace with the changing agricultural landscape. Specifically, he advocated for increasing the current loan limit on FSA guaranteed loans, noting that the formula for indexing the programs has not kept up with the rising costs of agriculture. ABA has endorsed legislation introduced by Rep. Mike Bost (R-Ill.) that would increase the cap from $1.4 million to $3.5 million and double the size of direct operating and ownership loans from $300,000 to $600,000.”

Mr. Franzen also noted that, “The agricultural economy has been slowing, with farm sector profitability expected to decline further in 2017 for the fourth consecutive decline. However, farm and ranch incomes for the past five years have been some of the best in history. With the 2014 Farm Bill in place, farmers, ranchers, and their bankers achieved a level of certainty from Washington about future agricultural policy. Interest rates continue to be at or near record lows, and the banking industry has the people, capital and liquidity to help American farmers and ranchers sustain through any turbulence in the agricultural economy.

Banks continue to be one of the first places that farmers and ranchers turn when looking for agricultural loans. Our agricultural credit portfolio is very diverse – we finance large and small farms, urban farmers, beginning farmers, women farmers and minority farmers. To bankers, agricultural lending is good business and we make credit available to all who can demonstrate they have a sound business plan and the ability to repay.

“In 2015, farm banks – banks with more than 15.5% of their loans made to farmers or ranchers – increased agricultural lending 7.9 percent to meet these rising credit needs of farmers and ranchers, and now provide over $100 billion in total farm loans. Farm banks are an essential resource for small farmers, holding $48 billion in small farm loans, with $11.5 billion in micro- small farm loans (loans with origination values less than $100,000). These farm banks are healthy and well capitalized and stand ready to meet the credit demands of our nation’s farmers large and small.”

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