Delgado Leads Bipartisan Bill to Ease Chapter 12 Bankruptcy Rules Amid Farm Economy Slump

A news release last week from House Ag Committee member Antonio Delgado (D., N.Y.) stated that, “On Thursday, [Rep. Delgado] led House Judiciary Committee Ranking Member Jim Sensenbrenner (R-Wisc.), House Agriculture Committee Chairman Collin Peterson (D-Minn.), and Reps. TJ Cox (D-Calif.), Kelly Armstrong (R-N.D.) and Dusty Johnson (R-S.D.), in introducing the bipartisan Family Farmer Relief Act of 2019, legislation that would ease the process of reorganizing debt through Chapter 12 bankruptcy rules. The restructuring of the rules to make more farms eligible comes amid a continued downturn in the farm economy.

“‘For folks in Upstate New York, farming is more than a job—it’s a way of life. And in this extremely challenging farm economy, we must come together to help our family farmers overcome years of low prices and increased market consolidation. The Family Farmer Relief Act will provide the critical restructuring and repayment flexibility these folks need to get through these hard times without permanently closing their operations,’ Delgado said.

“The bill, which is the House companion to legislation introduced by Senators Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.), Ron Johnson (R-Wisc.), Patrick Leahy (D-Vt.), Thom Tillis (R-N.C.), Doug Jones (D-Ala.), Joni Ernst (R-Iowa) and Tina Smith (D-Minn.), expands the debt cap that can be covered under Chapter 12 bankruptcy from $3,237,000 to $10,000,000. The changes reflect the increase in land values, as well as the growth over time in the average size of U.S. farming operations and are meant to provide farmers additional options to manage the downturn in the farm economy. The legislation is endorsed by the American Farm Bureau Federation and National Farmers Union.”

The release added that, “The bill will now be referred to the Judiciary Committee for consideration.”

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Home Buyers, Often Millennials, Are Looking Farther Away for Affordable Housing

Wall Street Journal writer Laura Kusisto reported recently that, “The exurbs, the engine of the American housing market, are back.

“A decade ago, the sight of new homes under construction in Maricopa, an enclave of tidy cul-de-sacs 35 miles from downtown Phoenix, was almost unimaginable. Four in five homeowners were underwater, with their outstanding mortgages worth more than their properties, according to housing data tracker Zillow. Neighbors felt compelled to cut the hedges and clean up garbage at empty houses.

Last year, Maricopa issued permits for nearly 1,000 new homes. In the depths of the housing downturn, in 2010, it issued just 110.”

The Journal article explained that, “Across the country, the housing market overall has slowed. But in the regions just beyond the affluent suburbs, new home building and sales are showing signs of life. Rising mortgage rates and home prices, especially in urban centers, are once again motivating buyers to drive until they can afford a home, including in Dallas, Las Vegas, Atlanta and the San Francisco Bay Area. Low gas prices help as well.

“Analysis by the National Association of Home Builders, set to be released later this year, shows that single-family construction rose nearly 7% in exurban areas in 2018 compared with a year earlier. Home building overall rose less than 3% in the same period. The group defines exurbs as outlying counties in major metropolitan areas.

“These buyers, often millennials and retirees, purchased homes on average more than 16 miles from central business districts in 2018, the greatest distance since 2004, according to Fannie Mae loan data.”

“A Decade After the Housing Bust, the Exurbs Are Back,” by Laura Kusisto. The Wall Street Journal (March 26, 2019).

Ms. Kusisto noted that, “In recent years, millennials have driven demand for rental apartments in downtown areas. Some in the industry thought this could be a permanent phenomenon. And yet, as they begin to marry and have children, millennials are proving like generations before them that they are willing to move to more affordable outlying areas.”

The Journal article added that, “Compared with the last boom, builders and lenders say new communities aren’t reliant on subprime mortgages and speculative investment. Buyers are more often using loans backed by the Federal Housing Administration that require only a 3.5% down payment and a minimum credit score of 580, or Department of Veterans Affairs or U.S. Department of Agriculture loans that require no down payment.”

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Legal Fees Awarded in Iowa Ag Gag Case

The Associated Press reported yesterday that, “A federal judge has awarded more than $181,000 in legal fees to seven lawyers who successfully fought a 2012 Iowa law that made it illegal to get a job at a livestock farm to conduct an animal cruelty undercover investigation.

“Animal rights and civil rights organizations, including the Animal Legal Defense Fund and Iowa Citizens For Community Improvement, sued Iowa Gov. Kim Reynolds and others over the so-called ag gag law.

In January, U.S. District Court Judge James Gritzner concluded the law violated the constitutional right to free speech. The state has appealed to the 8th U.S. Circuit Court of Appeals.”

The AP article added that, “Last week, Gritzner approved animal rights groups’ attorney fees, which the state must pay. Additional costs are mounting for the appeal.”

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Dicamba Complaints Persist in Hopes of Securing Tighter Regulations

In a recent article posted at The Des Moines Register Online, Molly Hunter reported that, “Normally, Story County soybean farmer Kevin Larson said he would resolve a dispute with a neighbor privately.

“Instead, he went to the Iowa Pesticide Bureau in 2017 when he suspected powerful herbicides drifting from a nearby farm damaged his crop.

“Other Iowa soybean farmers IowaWatch spoke with are doing that, too.”

The article noted that, “Increasingly, they are filing complaints with the state bureau about drifting herbicides, some with hopes of securing tighter regulations of powerful weed killers containing dicamba.

“‘That’s the only way to get them to listen to you,’ said Larson, who farms near Story City.

“The state and federal government have not implemented the temperature and date cutoffs for dicamba application that some farmers believe are necessary to reduce drift damage. Rather, state guidelines require applicators to follow the existing instructions on pesticide container labels, which are regulated by the U.S. Environmental Protection Agency.”

Ms. Hunter stated that, “With the introduction of new dicamba-based herbicides in 2017, the bureau reported a 69.7 percent increase in complaints about the pesticide drifting from 2016 to 2017 and a 2 percent increase from 2017 to 2018.”

The article added that, “Iowa State University extension weed specialist Bob Hartzler said 90 percent of the 2017 drift complaints filed after June 15 of that year were about dicamba applications. The volatile nature of the dicamba plays a significant role in its destructive impact on soybeans.

“‘That’s what differentiates dicamba from other products. If you do a good job in paying attention to the environment and adjust your sprayer right, there’s minimal risk of problems, but with dicamba a person would do everything right … and still have problems,’ Hartzler said.”

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Higher Limits Now Available on USDA Farm Loans

A news release last week from USDA’s Farm Service Agency (FSA) stated that, “Higher limits are now available for borrowers interested in USDA’s farm loans, which help agricultural producers purchase farms or cover operating expenses. The 2018 Farm Bill increased the amount that producers can borrow through direct and guaranteed loans available through [FSA] and made changes to other loans, such as microloans and emergency loans.

“‘As natural disasters, trade disruptions, and persistent pressure on commodity prices continue to impact agricultural operations, farm loans become increasingly important to farmers and ranchers,’ FSA Administrator Richard Fordyce said. ‘The 2018 Farm Bill provides increased loan limits and more flexibility to farm loans, which gives producers more access to credit when they need it most.'”

Last week’s update added that, “Key changes include:

  • The Direct Operating Loan limit increased from $300,000 to $400,000, and the Guaranteed Operating Loan limit increased from $1.429 million to $1.75 million. Operating loans help producers pay for normal operating expenses, including machinery and equipment, seed, livestock feed, and more.
  • The Direct Farm Ownership Loan limit increased from $300,000 to $600,000, and the Guaranteed Farm Ownership Loan limit increased from $1.429 million to $1.75 million. Farm ownership loans help producers become owner-operators of family farms as well as improve and expand current operations.
  • Producers can now receive both a $50,000 Farm Ownership Microloan and a $50,000 Operating Microloan. Previously, microloans were limited to a combined $50,000. Microloans provide flexible access to credit for small, beginning, niche, and non-traditional farm operations.”

“For more information on FSA farm loans, visit or contact your local USDA service center.”

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Some States Seeking to Amend “Right-to-Farm” Laws

National Public Radio’s (NPR) Leah Douglas reported today that, “Every state has a ‘right-to-farm’ law on the books to protect farmers from being sued by their neighbors for the routine smells and noise created by farming operations. But this year, the agriculture industry has been pushing in several states to amend those laws so that they will effectively prevent neighbors from suing farms at all — even massive industrial livestock operations.

“The push is a response to the millions of dollars awarded so far to five groups of farm neighbors in North Carolina who sued a subsidiary of Smithfield Foods, the biggest pork company in the country, over air pollution — including the manure particles and intense odors put out by large hog operations. The first of 26 lawsuits against the company, representing nearly 500 plaintiffs, was heard in 2017.

“In the past several months, legislators in Utah, Nebraska, Georgia, North Carolina, West Virginia, and Oklahoma have proposed, and in some cases passed, legislation that they say will protect farmers against similar lawsuits. The legislation varies, but several proposals reduce the potential damages that plaintiffs could win in such a suit or limit the distance from the farm a neighbor must live in order to bring a suit. Some do both.”

The NPR update noted that, “The agriculture industry is framing these bills as a necessary response to the threat farmers face from nuisance lawsuits, such as those brought in North Carolina, where since last spring, juries in five cases have awarded plaintiffs in Duplin, Bladen, Pender, and Sampson counties more than $574 million in their lawsuits against pork company Murphy Brown, a subsidiary of Smithfield. The plaintiffs alleged that the company’s mismanagement of hog waste degraded their quality of life and reduced their property values. (The plaintiffs’ awards have been reduced to comply with a North Carolina law capping punitive damages.)

“Farm lobby groups say they must fend off similar outcomes in other states. And state farm bureaus and industry lobby groups have been clear that the North Carolina lawsuits are the impetus behind the expanded right-to-farm proposals.”

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House Flipping is Back

Wall Street Journal writer Laura Kusisto reported earlier this week that, “House flipping is back to nearly the same level it was around the 2006 peak of the housing boom, when it became a symbol of the rampant speculation that soared before the bubble burst.

“But a new analysis from CoreLogic Inc. suggests most of the current flips are less risky than those more than a decade ago, making today’s flippers less likely to cause market volatility if prices decline in the next few years.

Some 10.6% of homes sold in the U.S. in the fourth quarter of 2018 were flips, defined as having been owned for less than two years, according to CoreLogic. That is near the level of the first quarter of 2006, when 11.3% of homes sold were flips, and the highest fourth-quarter level in the two decades since CoreLogic started tracking the data.”

The Journal article noted that, “The study, however, shows that flippers today have much larger profit margins than flippers at the peak of the previous housing cycle. By one measure, the trades are more than twice as profitable as the flips made in 2006. That offers current flippers more of a cushion if home prices begin to flatten or fall.”

Ms. Kusisto added that, “Professional flippers can be stiff competition for first-time buyers, helping to drive up the price of lower-cost starter homes. They can, however, also help to create more inventory because many younger buyers don’t have the skills or cash needed to fix up older, dilapidated homes.

“Flipping is becoming more professionalized at the local level, too, including in Memphis, Tenn., which was the second most popular market for flipping in the fourth quarter behind only Birmingham, Ala. The median economic profit for investors in the Memphis area is nearly 42%.”

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National Corn Growers Association Releases Pollinator Protection Guide

A recent update from the National Corn Growers Association indicated that, “The National Corn Growers Association – in partnership with the Honey Bee Health Coalition – is releasing new best management practices (BMPs) to protect bees and other pollinators in and around corn fields.

“At roughly 92 million acres, field corn covers more land than any other row crop in the country, and in the Midwest Corn Belt, corn often makes up to 40 percent of the landscape or more. The BMPs presented in the NCGA’s new guide identify potential effects of agricultural practices on bees at each stage of production and recommend ways to mitigate those impacts.

“The digital publication showcases specific strategies such as reducing dust and drift while planting a pesticide-treated seed.”

The update noted that, “‘While corn does not rely on honey bees for pollination like some crops, bees depend on neighboring plants for forage,’ said Nathan Fields, NCGA vice president of production and sustainability. ‘As good stewards of the land, corn growers can follow these BMPs to help protect honey bee health, ensuring productive agricultural systems for all.’

“Corn farmers who rotate with soybeans could also see added benefit from their pollinator stewardship because bees can increase soybean yields by up to 18 percent, according to a 2005 study.

Planting time is a key time for farmers to map out a bee-friendly strategy, and the NCGA Best Management Practices guide features season-long BMPs for growers. It also contains information for beekeepers who often work in concert with farmers on healthy bee populations.”

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Texas Seeks National Injunction on WOTUS Rule

DTN writer Todd Neeley reported last week that, “The Texas attorney general is pressing a federal court in Galveston, Texas, to issue a national injunction on the 2015 waters of the United States, or WOTUS, rule after a court in Ohio denied a similar motion in recent weeks.

“After a long series of court actions in the past couple of years, a split remains between states still under jurisdiction of the 2015 rule and those that are not.

“At present, the rule is on hold in 28 states and in effect in 22.”

The DTN article stated that, “In the meantime, the EPA continues a public comment period on a proposed new rule.

“The states of Ohio and Tennessee had asked the U.S. District Court for the Southern District of Ohio for a national injunction on the 2015 rule. At the end of March, that court denied the request.”

Mr. Neeley added that, “States and agriculture interest groups have expressed concern the split in jurisdiction has created confusion and is harming stakeholders including farmers and ranchers.”

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Lower Rates Increase Mortgage Applications- Mixed Bag for Banks

Wall Street Journal writer Aaron Back reported earlier this week that, “For banks, slowdown fears come with a silver lining. Sharply lower lending rates typically spur a surge in profitable mortgage originations as existing or aspiring homeowners pounce. This lining loses some of its luster every time storm clouds gather, though.

Interest rates have plummeted in recent weeks after an especially dovish policy statement last month from the Federal Reserve. The yield on 10-year U.S. Treasury notes fell from 2.61% on March 19 to 2.37% on March 27.

“In response, total mortgage-application volumes rose by 28% from a year earlier in the week through March 29, according to data from the Mortgage Bankers Association. Mortgages for home purchases were up just 10%, but refinancing applications soared by 58% and the dollar value of refinancing applications more than doubled.”

“Mortgage Surge a Mixed Bag for Lenders,” by Aaron Back. The Wall Street Journal (April 3, 2019).

The Journal article stated that, “The volume of refinancing applications was only around 60% of those seen in a prior surge in the summer of 2016, though. What is more, as Mortgage Bankers Association Chief Economist Michael Fratantoni notes, it was only around a third of peak volumes in the post-crisis years of 2009-2012.

Homeowners in that period had taken out mortgages at much higher, pre-crisis interest rates so they had much more to gain by refinancing at lower rates. Today most homeowners either bought or have already refinanced at some time during the long era of low rates that followed. The result is that every downdraft in rates now brings less of a response in terms of refinancing demand.

And, while they produce a short-term fillip, refinancing waves are at best a mixed bag for banks. Lenders that hold big books of mortgage-backed securities are forced by early repayments to reinvest those holdings at lower rates. Similarly if a bank refinances a mortgage that it is currently holding on its books, then it earns a lending fee but is left holding a lower-yielding loan. Many nonconforming ‘jumbo’ loans are retained.”

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