As a borrower and director of Farm Credit Services of Mid-America, I believe the hundreds of thousands of American agricultural producers who collectively own the Farm Credit System deserve better than the uninformed opinions expressed recently in your publication by columnist Alan Guebert. Farmers, ranchers, agriculture-related business owners and everyone concerned with the success of rural communities need the real facts about Farm Credit.

Farm Credit’s congressionally mandated mission is to serve agriculture and rural America.  Farm Credit Services of Mid-America fulfills that mission in the states of Indiana, Ohio, Kentucky and Tennessee.  In contrast, banks serve their stockholders and can enter or leave markets at any time to suit their business needs. Farm Credit, meanwhile, is mission-focused through good times and bad.

Competition from Farm Credit has not harmed commercial banks – Farm Credit has 31 percent and commercial banks have 40 percent of the U.S. farm lending market.

Providing competition in the marketplace by being a stable, reliable lender is part Farm Credit’s mission.

Much is made of Farm Credit being “government sponsored,” but the fact is Farm Credit is privately owned, by the farmers and ranchers who borrow from the System. Farm Credit is privately financed.

The capital that Farm Credit loans to farmers comes from the sale of bonds on the open market by the System. No taxpayer money is involved. And while banks’ profits go to stockholders, Farm Credit Services of Mid-America’s earnings are passed on to our owner/borrowers in the form of lower interest rates.

Bankers promote the myth that Farm Credit does not pay taxes. The majority of Farm Credit institutions do pay Federal tax. The mortgage interest earned by Farm Credit institutions is not taxed at the federal and state level, but interest earned on short-term commercial loans (such as a line of credit) is fully taxable. What’s more, Subchapter S commercial banks generated far more untaxed income in 2006 than did Farm Credit, and the banks’ tax benefit does not support any specific mission purpose.

As for what’s going on in Congress right now, Farm Credit has proposed a few modest changes to its lending eligibility to make more farm-related businesses eligible to borrow from the System. These won’t allow Farm Credit to finance “any Main Street businesses,” as the bankers claim. Farm Credit proposes to increase the competitive credit options for farm-related businesses by allowing more of them to borrow from Farm Credit.

This would reflect the changes that have already taken place in the agricultural economy and allow more farm-related businesses to benefit from the reliable, flexible financial products offered by Farm Credit to help them compete in a rapidly changing business environment.

I encourage your readers to get both sides of the story, not just the bankers’ side, and make up their own minds as to who has the better vision for America’s agricultural producers and rural communities.

Matt Walther,
Farmer and Indiana Director –
Farm Credit Services
Centerville, Ind.