Washington, D.C. – U.S. Senators Mark Udall and Michael Bennet joined their colleagues in the Senate in approving increased funding for the Farm Service Agency’s (FSA) loan programs in the Emergency Supplemental Appropriations bill. The funding will help Colorado farmers struggling to get loans as a result of the credit crunch.
The Senators had sent a letter earlier this month urging their colleagues on the House and Senate Appropriations committees to help farmers in Colorado and throughout the nation by making more FSA loans available – especially for farmers in Northern Colorado and the Eastern Plains who were hard hit by the closure of New Frontier Bank.
Their colleagues agreed, and increased the FSA loan funds in the Emergency Supplemental package to: $360 million in direct farm ownership loans; $400 million for direct operating loans; and $50.2 million in unsubsidized guaranteed operating loans. All of the funds will be released to the U.S. Department of Agriculture this fiscal year, which ends Sept. 30, 2009. The final bill, which also provides funding for the military and other federal agencies, passed by a vote of 91-5, and Senators Udall and Bennet last night joined their colleagues in sending it to President Obama for his signature.
The Senators said there is no question the money is desperately needed immediately. FSA is a lender of last resort for farmers who depend on credit to make it through the planting season or to care for livestock before going to market. In January, the demand for direct farm operating loans increased about 200 percent over last year, and FSA has been unable to keep up. The additional funding will enable the Department of Agriculture to approve more loans for qualified farmers before the end of the summer.
“Low commodity prices and the closure of New Frontier bank have been devastating for families in Northern Colorado, and the FSA just didn’t have the resources to help qualified farmers through the credit crunch,” Senator Udall said. “This increase in available funding is going to be a lifeline for the agricultural community in Colorado, and I am pleased that Congress heard our call and agreed to increase the pool of funds.”
“This is a good step forward in helping our farmers cope with the crippling credit crisis caused by the closure of New Frontier Bank. As the demand for FSA loans continues to grow, this increase in funding will help our farmers stay in business during these tough economic times,” Senator Bennet said. “As always, we must continue to search for more opportunities to help our farming community as they struggle to find credit and lending options.”
The Senators’ request was the latest of several pleas that both have made to the federal government to help farmers on the Eastern Plains as they continue to weather a tough economy. Udall and Bennet have also written to Senate Appropriators, urging them to increase funding for direct farm operating loans in Fiscal Year 2010, which begins on Oct. 1.
At the request of the Senators, along with Rep. Betsy Markey, U.S. Agriculture Secretary Tom Vilsack agreed last month to make additional agricultural loans available to qualified farmers. USDA has made available an additional $110 million in direct operating loan funds and $143 million in unsubsidized guaranteed operating loan funds. The Supplemental funding approved Thursday night increases the overall pot of money for FSA loans this fiscal year.
Last month, the Senators also successfully appealed to Vilsack to implement the Dairy Export Incentive Program (DEIP), which would help Colorado’s dairy farmers sell more of their products abroad.
The Senators and Markey have appealed to the Small Business Administration to use newly available incentives from the economic recovery act and the Troubled Asset Relief Program (TARP) to help Colorado lenders extend credit to small businesses affected by the closure of New Frontier Bank.
Lastly, the three lawmakers have asked the Treasury Department to reconsider releasing funds to Colorado banks through TARP to ease the credit crunch. They are still waiting on responses to the final two requests.
A copy of the original letter to Appropriators follows:
| The Honorable Daniel K. Inouye Chairman Senate Appropriations Committee The Capitol, Room S-128 Washington D.C. 20510 |
The Honorable David Obey Chairman House Appropriations Committee The Capitol Room H-218 Washington D.C. 20515 |
| The Honorable Thad Cochran Ranking Member Senate Appropriations Committee The Capitol, Room S-128 Washington D.C. 20510 |
The Honorable Jerry Lewis Ranking Member House Appropriations Committee The Capitol Room H-218 Washington, D.C. 2051 |
Dear Chairman Inouye, Ranking Member Cochran, Chairman Obey, and Ranking Member Lewis:
We can all agree that the downturn in our economy has had reverberating effects on every sector. A tightening credit market and weakening commodity prices have posed special challenges for farmers. In some cases, private agricultural lenders are turning farmers away, because the lenders are unable to access the necessary capital to service farmers’ credit needs.
The United States Department of Agriculture (USDA) has stepped in where it can to fulfill the outstanding demand for credit by utilizing programs created for farmers that cannot meet credit needs through traditional methods. The USDA’s Farm Service Agency (FSA) is a lender of last resort that makes direct loans and guaranteed commercial loans to farmers. In January of 2009, the demand for FSA’s direct farm operating loans increased about 200 percent from the same time last year; however, funding for these loans remained nearly constant. As expected, FSA has been unable to keep up with the demand for farm loans in FY2009 and many states now face backlogs of loan requests. Despite the supportive response from Agriculture Secretary Vilsack to our recent request to pool money and redistribute it among USDA’s loan programs, it is still very unlikely that FSA will be able to help all farmers who meet the requirements for these loan programs. As you know, these programs were designed to help farmers care for their livestock and crops and harvest their products to take them to market during tough economic times like these.
We were pleased that both versions of the Appropriations Supplemental (S.1054/H.R. 2346) included additional funding for USDA’s loan programs. We urge you and the other conferees to consider the great need of farmers from across the nation and the possible reverberations the credit crunch might have on agriculture producers, suppliers and ultimately consumers. The House passed version of the legislation included $810 million in loan authority comprising $360 million in Direct Farm Ownership Loans, $400 million in Direct Operating Loans, and $50.2 million in Guaranteed Operating Loans. The Senate passed version included $585 million loan authority comprising $360 million in Direct Farm Ownership Loans, and $225 million in Direct Operating Loans. Considering the mounting challenges of America’s farmers, we urge you to consider supporting the greatest amount practicable in Direct Operating Loans to help farmers for the remainder of this fiscal year.
We thank you and all of the conferees for considering the great need of America’s farmers. It is our hope that America’s agriculture industry will emerge more robust through this effort and related efforts to invigorate our struggling economy.
Sincerely,
Mark Udall Michael F. Bennet