Independent Banker - February 2019 - 41

Passage of the farm bill (P.L. 115-334) is good
for American agriculture and for community
bankers' ability to provide credit to support local
economies. Here are a few reasons why.
The 2018 farm bill continues the Agricultural
Risk Coverage and the Price Loss Coverage programs,
which are essential price-protection
options for producers in the midst of the fifth
straight year of declining net farm income. The
Agriculture Department projected a 12 percent
drop in net farm income in 2018 to $66.3 billion,
well below the average from 2000 to 2017. Community
bankers also felt it extremely important
to protect crop insurance from amendments to
curtail funding and producer eligibility. This goal
was accomplished.
Farm Credit Administration. Interestingly, the
farm bill requires a Government Accountability
Office study on " the lending situation for socially
disadvantaged farmers with the Farm Credit
System and all other commercial lenders as well
as recommendations for improvement. " ICBA's
" Focus on Farm Policy " white paper issued last
year revealed a decline of more than 450,000 FCS
loans under $250,000 between 2014 and 2015.
While ICBA and community bankers will need
to closely follow implementation of the new
bill's many provisions in the coming months,
the industry can take comfort in knowing that
Meanwhile, ICBA urged Congress to raise loan
limits on USDA-guaranteed farm loans. Congress
responded by raising guaranteed limits to $1.75
million, up from the current $1.39 million level,
with an index to inflation. The higher limits will
be available immediately upon enactment. Given
rising production expenses and the elevated cost
of farmland, the higher guaranteed loan limits
will allow community banks to better work with
family farmers during the current times of financial
distress. Congress also raised direct operating
loans to $400,000 and direct farm ownership
loans to $600,000.
Congress raised the population limit to 50,000
for three rural development programs-community
facilities, broadband loans, and water and
waste management-while also mandating a
zero-subsidy rate. In addition to allowing these
loans for larger communities, Congress' intent
is to shift more loan-making from USDA direct
financing toward greater guaranteed lending from
the private sector. The bill also includes a study
of whether it is feasible to move to a zero-subsidy
rate for guaranteed business-and-industry
loans and Rural Energy for America Program
loans without jeopardizing loan demand and
participation by community banks and other
small lenders.
ICBA staunchly opposed new lending powers
for the Farm Credit System, though we expect
FCS to push for amendments to other bills moving
through Congress next year. A very real expansion
threat from FCS in recent years has been
due to creative rulemaking by its regulator, the
The industry can take
comfort in knowing that
community bankers
and ICBA were effective
advocates on this crucial
policy measure.
Quick stat
369-47
House vote on
the Agriculture
Act of 2018. The
Senate voted in
favor 87-13.
community bankers and ICBA were effective
advocates on this crucial policy measure. For
instance, community bankers responded in force
with grassroots messages opposing harmful crop
insurance amendments that would have raised
premium rates, reduced premium assistance,
limited participation and impeded private-sector
delivery. The higher guaranteed loan limits with
an inflation index means the farm bill's guaranteed
loan limit could reach approximately $2
million before the bill expires.
With 2019 well underway, we should nevertheless
take a moment to recognize the unwavering
advocacy of ICBA and community bankers across
the nation that led to this policy victory-one of
many from 2018. Our dedication has resulted in a
new farm bill that will benefit our customers and
rural communities for the next five years. With
many policy battles left to wage, we should learn
from successful campaigns such as this, which
remind us that we can have a sizable impact on
the debate in Washington.
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Independent Banker - February 2019

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