Letter to The Honorable Daniel K. Inouye Chairman Senate Appropriations Committee and The Honorable Thad Cochran Ranking Member and The Honorable David Obey Chairman House Appropriations Committee and
The Honorable Jerry Lewis Ranking Member
Today, U.S. Senators Mark Udall and Michael Bennet continued their push to help Colorado farmers struggling to get loans as a result of the credit crunch. In a letter to Senate and House appropriators, the Senators urged their colleagues to help struggling farmers in Colorado and throughout the nation by increasing funding for the Farm Service Agency's (FSA) loan programs in the Emergency Supplemental Appropriations bill.
The Emergency Supplemental Appropriations bill funds emergency needs for the rest of this fiscal year, which ends Sept. 30, 2009. The House and Senate have passed different versions, and the final bill is now being hammered out by a Conference Committee. Specifically, the Senators ask appropriators on the Conference Committee to fund the FSA loan programs at the level approved by the House, which would provide $810 million - or $225 million more than the amount in the Senate version.
The 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. In their letter, the Senators said that at current funding levels, the Department of Agriculture likely won't be able to help all of the farmers who qualify for loans.
"Between low commodity prices and the credit crunch, farmers and ranchers in Colorado are hurting," Senator Udall said. "These are the people who produce our food and fiber, and they need this help to get through the economic crisis. FSA's loan program was created to help farmers through hard times like these, and we need to increase the funding levels so the program can meet the high demand."
"Plummeting commodity prices coupled with a devastating credit crunch have put Colorado's farmers and ranchers in a bind," Senator Bennet said. "What we're trying to do here is help fill the void left by New Frontier's collapse and ease the squeeze for Colorado's Ag producers. Farmers and ranchers are hurting in these tough economic times, and we need to do whatever we can - and use whatever tools we have at our disposal - to help them weather the storm."
The Senators' request was the latest of several pleas that both have made to the federal government to help farmers on the Eastern Plains, including those who are struggling to keep their farms running after losing access to loans when New Frontier Bank closed in April. 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 farmers. USDA has made available an additional $110 million in direct operating loan funds and $143 million in unsubsidized guaranteed operating loan funds. The Senators' request today would increase 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.
Additionally, Udall, Bennet, and Markey have asked the Treasury Department to reconsider releasing funds to Colorado banks through the Troubled Asset Relief Program (TARP) to ease the credit crunch. They are still waiting on a response.
A copy of the letter 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. 20515
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.
Michael F. Bennet