Opening Statements

Opening Statement: Ranking Member Austin Scott - Subcommittee on Commodity Exchanges, Energy, and Credit Public Hearing: “Review of Credit Conditions: Report from Agricultural Lenders”

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Washington, December 11, 2019 | comments
Remarks as prepared for delivery:

Chairman Scott, thank you for calling today’s hearing, allowing the subcommittee to continue its review of credit conditions in rural America.

Last month, we had the opportunity to hear from the Farm Credit Administration to review the safety and soundness of the Farm Credit System. We heard that farm debt is forecast to climb to near all-time highs, reminiscent of the 1980’s farm financial crash. We heard about the dire situation for farmers’ incomes and cash flow. 

Despite this, we learned that Farm Credit institutions remain strong and continue to be a source of credit to farmers and ranchers during these tough economic times.

Due to this state of the rural economy, access to credit is even more essential to keep farmers and ranchers producing a safe, affordable, and abundant supply of food and fiber for America and the rest of the world. It is in times like these that our farmers and ranchers are most in need of reliable sources of credit at competitive rates. 

Thankfully we have a network of commercial and community banks and the Farm Credit System, each playing a crucial role in providing that access. I might add that after Hurricane Michael, our agricultural lenders in Georgia worked hard to help keep our farmers afloat. I thank the financial regulators for providing that flexibility.

The Farm Service Agency (FSA), operates as the lender of first opportunity, as well as a direct lender for producers in good standing who have trouble qualifying for credit elsewhere. FSA is not represented here today, however, I think it is important to highlight the USDA loan programs which provide targeted funding for beginning and socially disadvantaged farmers and ranchers to assist in developing the next generation of producers. FSA’s direct and guaranteed loans enable farmers and ranchers to gain or continue financing despite volatile commodity markets.

The 2018 Farm Bill ensures access to credit so farmers and ranchers—who borrow more money each year to produce a crop than most Americans will borrow in a lifetime—have the capital they need to invest in and run their operations. 

In addition to ensuring access to credit, the 2018 Farm Bill improves the Credit Title by updating credit authorities to meet the capital needs of modern production agriculture with an emphasis on beginning farmers and ranchers.

The need for agricultural credit given the status of the farm economy is clear. Net farm income has fallen over $44 billion in inflation-adjusted dollars from its peak in 2013, due to lagging prices and growing world supplies. The crop insurance safety-net is in place to help farmers recover from many losses, but it is not designed to address the current issue of multiple years of low prices. 

Further, while MFP payments that farmers receive are much-needed given the unfair trade practices from other countries, farmers would rather be able to sell their crops for a fair price.

With current economic conditions, I am encouraged that Speaker Pelosi will finally allow consideration of USMCA. This important trade agreement will bring more certainty and open new markets to America’s farmers and ranchers.

I would also like to offer my thanks to Ambassador Lighthizer for agreeing to work with me to address the unfair trade practices that we have seen impact the fruit and vegetable industry in my state and many others in the US. 

Today, we will hear from several of the financers who work with producers every day. They can give us valuable insight of credit conditions. I thank each of you for being here today and I look forward to hearing your testimony.

Again, thank you Mr. Chairman for holding this hearing.
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