He reported the U.S. agricultural economy has been strong since 2009. Crop prices surged and farmland values increased dramatically from 2010-13 – rising by more than 20 percent annually in key crop-producing states.
"Although the overall financial position of the farm sector had improved, some agricultural producers were more at risk for financial stress than others," Kauffman reported. "Our banker contacts consistently voiced concerns about the viability of some livestock operations facing steep losses, as well as young and beginning farmers with significantly less equity in their operations."
Williams provided the subcommittee with the following conclusions from a recent ICBA banker survey:
•The farm bill and crop insurance are vital to extending credit
•Reference prices are "adequate" but won’t cover production costs
•Drought and weather problems exist in many states and are a concern
•More farm bill details and decision-making tools are needed
Wolfe added the USDA’s guaranteed farm loan program is vital to making additional credit available to farmers and ranchers. He thanked Congress and the agricultural committees for repealing borrower term limits.
"Term limits restricted farmer access to capital and with the expansion of the farm economy over the past 10 years, there are some farmers who are not able to obtain credit from banks like mine without a guaranty from USDA," he said. "We urge you to continue to support this very worthwhile program."
Wolfe closed his testimony by expressing the banking industry’s commitment to providing ag credit.
"When the agricultural economy collapsed in the middle 1980s, the banking industry worked closely with farmers and ranchers to restructure their businesses and to rebuild the agricultural economy. Since that time banks have provided the majority of agricultural credit to farmers and ranchers," Williams added.
"While other lenders, including the Farm Credit System (FCS), shrank their portfolios of agricultural loans or exited the business altogether, banks expanded agricultural lending. Bankers saw opportunity where others did not. Bankers still see great opportunities in agriculture."
Jill Long Thompson, board chair and CEO of the Farm Credit Administration, told Farm World the FCS remains important to rural economies as the System approaches its 100th anniversary.
"As when it was created, the System must be available to provide competitive credit to all eligible, creditworthy farmers and ranchers, and to the agribusinesses and rural service providers on which they depend through good and bad economic times," she said.
"In bad times, commercial lenders may be reluctant or unable to provide the credit that is the lifeblood of these operations. In good times, the competition provided by the System in the agricultural lending marketplace greatly benefits the nation’s farmers and ranchers."