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Letter to The Honorable Daniel K. Inouye Chairman Senate Appropriations Committee and The Honorable Thad Cochran Ranking Member and The Honorable Herbert Kohl, Chairman and The Honorable Sam Brownback, Ranking Member


Location: Washington, DC

Letter to

In Letter, Udall, Bennet Urge Increase in FY2010 Loan Aid to Farmers

Funding for Agricultural Loans Would Help Colorado Farmers Struggling to Get Loans After New Frontier Bank Closure

Today, as part of their ongoing effort to help Colorado farmers and ranchers struggling to get loans as a result of the economic crisis, U.S. Senators Mark Udall and Michael Bennet wrote to Senate appropriators, urging them to increase funding for direct farm operating loans in Fiscal Year 2010, which begins on Oct. 1.

In their letter, the Senators said the additional funding is critically needed in order to keep Colorado farmers in business. The Farm Service Agency (FSA) direct farm operating loan program was created to help qualified farmers, who depend on credit to make it through the planting season or to care for livestock before going to market. Demand for the program has increased dramatically in the last year as a result of the credit freeze and other problems related to the economic crisis - including the closure of New Frontier Bank in Greeley, Colorado. 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 Senators wrote that the demand for loans is expected to continue to rise over the next several months. They urged their colleagues to increase funding for the program by $124,905,000 - the amount recommended by President Obama in his proposed budget. It would mean approximately $7.8 million in loans would be available for Colorado farmers in FY2010 - an increase of about $1.4 million over last year. Overall, the increase would help an estimated 12,000 more family farms in 49 states.

"Colorado's farmers and ranchers need this help in order to get through the credit crisis, and we should be there for them," Senator Udall said. "The demand for help through FSA's loan program has skyrocketed - we need to be prepared to meet that demand. This funding will help farmers who already qualify for loans but can't get them because of a lack of credit, and it will help keep Colorado's farming economy strong."

"The huge increase in demand for FSA loans is a sign of how dire the situation is for so many Colorado farmers," Senator Bennet said. "We have to do everything we can to meet that demand and help Colorado farmers and our state's farming economy make it through this crisis."

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. Last week, the Senators wrote to Senate and House appropriators asking them to increase the money available for FSA loans this fiscal year (FY 2009) through the Emergency Supplemental Appropriations bill.

The Senators, along with Rep. Betsy Markey, also successfully appealed to U.S. Agriculture Secretary Tom Vilsack last month to shift funds in order to make additional agricultural loans available to farmers. USDA reallocated funding, making available an additional $110 million in direct operating loan funds and $143 million in unsubsidized guaranteed operating loan funds.

Additionally, 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. Udall, Bennet, and Markey have also 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:

Dear Chairman Inouye, Ranking Member Cochran, Chairman Kohl, and Ranking Member Brownback:

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 and America's agricultural industry. 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.

In a recent letter, we requested that Senate and House conferees selected to negotiate the Appropriations Supplemental (S.1054/H.R. 2346) consider the great need of farmers by supporting the greatest amount practicable in Direct Operating Loans to help farmers for the remainder of this fiscal year. Supplemental funding for FY09 will be helpful in relieving a backlog that is due to increased demand and increased loan amounts. Unfortunately, America's agricultural sector will continue to endure the ramifications of a tough economy in FY2010 and farmers demand for USDA loans is unlikely to wane.

We were pleased to see that President Obama's proposed budget includes a $124,905,000 increase for direct farm operating loans to assist family farmers in maintaining productive farming operations. The President also acknowledged the probable carryover of backlogged loan requests from FY09 into FY2010, along with the sustained need for these agricultural loans. The increased FY2010 funding will help an estimated 12,000 family farms in 49 of our 50 states and will go a long way in maintaining a vital Colorado and American industry. We urge you to support the President's proposed increase for the USDA's Direct Operating Loan Program and seriously consider the proposed funding increases for the Agricultural Credit Insurance Fund's loan program levels.

We thank you 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.


Mark Udall

Michael F. Bennet

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