U. S. Senator Herb Kohl today introduced legislation to ensure that farmers and ranchers will continue to have access to loan guarantees. The Farm Service Agency (FSA) offers loan guarantees to farmers who are unable to qualify for a commercial loan. Often times the inability of a farmer to receive a commercial loan is because of circumstances beyond their control, like weather-related disasters, sudden market downturns or economic downturns. Senator Chuck Grassley (R-IA) is the lead Republican co-sponsor of this legislation.
The FSA loan guarantee programs contain a limitation on the number of years a borrower is eligible to receive a loan guarantee. The Kohl bill would waive implementation in order to allow farmers to access loan guarantees that help cover operating expenses. Congress has waived implementation of this limitation several times -- most recently in the 2008 farm bill.
"There are many unforeseeable circumstances such as floods or economic downturns that can hurt a family farm. The FSA loan guarantee program is there to help during the hard times when farmers are unable to receive a commercial loan. Farming is a tough business and we need to make sure farmers have access to loans and loan guarantees they need keep their farms functioning and productive."
The FSA estimated that more than 4,100 farmers and ranchers became ineligible for additional loan guarantees last December, when the previous waiver expired. FSA projects another 1,500 farmers and ranchers will lose eligibility by the end of this year, if the term limitation remains in place.
Kohl's legislation is supported by the following groups:
American Bankers Association
American Soybean Association
Farm Credit Council
Independent Community Bankers of America
Midwest Dairy Coalition
National Association of Wheat Growers
National Cattlemen's Beef Association
National Family Farm Coalition
National Farmers Union
National Milk Producers Federation