For Immediate Release
April 4, 2017
ABA Media Contact: Sarah Grano
(202) 663-5470
Email: sgrano@aba.com​
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ABA Testifies on 2018 Farm Bill, Credit Issues Faced by Rural Bankers

​WASHINGTON — The American Bankers Association testified today before the House of Representatives Agriculture Committee’s Commodity Exchanges, Energy, and Credit Subcommittee, offering the banking industry’s perspective on credit issues in the upcoming Farm Bill and the importance of credit for rural communities.  The hearing was conducted by Chairman Austin Scott and Ranking Member David Scott.
 
Nathan Franzen, president of agri-business at First Dakota National Bank in Yankton, S.D., testified on behalf of ABA. First Dakota National Bank is a family-owned and locally-controlled community bank with $890 million in agricultural lending.
 
In his testimony, Franzen emphasized the critical role banks play in the agricultural economy as a primary source of credit to the nation’s farmers and ranchers.
 
“Banks continue to be one of the first places that farmers and ranchers turn when looking for agricultural loans,” Franzen said. “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.”
 
Franzen also discussed the successes of the 2014 Farm Bill, including its protection of crop insurance, the Conservation Reserve Program (CRP), and the removal of term limits on FSA Guaranteed Loan Programs. However, he expressed concerns about the changing agricultural landscape and identified several essential reforms for inclusion in the upcoming Farm Bill to help the industry overcome the challenges ahead.
 
“The most important change that should be made to the next Farm Bill is an increase to the current loan limit on FSA Guaranteed Loans,” Franzen said, referring to the current $1.399 million limit. “The formula for indexing the programs has not kept up with the increasing costs of agriculture. It is much more costly for a young, beginning or small farmer to get into agriculture, and the guaranteed loan programs need to reflect that reality.”
 
Additionally, Franzen suggested the bill help modernize the loan programs by upgrading and improving technology, as well as addressing the rapid retirement rates of FSA staff. 
 
Franzen also advocated that the Farm Bill serve as a vehicle to improve Farmer Mac – an important partner for the banking industry. 
 
“Farmer Mac is a valuable tool in the toolbox for agricultural bankers because it provides another avenue for banks to increase credit availability,” said Franzen. “With the agricultural economy potentially going through some stressful times in the near future, Farmer Mac will need legislative changes. ABA believes the most needed change is the removal of the current 1,000 acre limitation.”
 
Franzen expressed concern about the growing size, complexity and tax advantages of the Farm Credit System – a government-sponsored enterprise like Fannie Mae and Freddie Mac – and called for it to refocus its mission on helping farmers and ranchers in need of subsidized credit.
 
“Congress created the Farm Credit System as a public option for farm finance when farmers were having trouble getting the credit they needed from non-government sources,” Franzen said. “The conditions that led to the creation of the Farm Credit System nearly 100 years ago no longer exist, and yet we continue to have a government-assisted, tax-advantaged farm lender providing credit to customers who would be able to easily borrow from taxpaying institutions like mine.”
 
Click here for a copy of Franzen’s full testimony.
 
The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.
 
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