The American Bankers Association is calling on lawmakers to raise Farm Service Agency guaranteed lending limits as part of the 2023 Farm Bill to combat rising input expenses.
The ABA recommended that the lending limits for farm ownership loans guaranteed by the Farm Service Agency be increased to at least $3 million from its current mark of $1.75 million. The ABA also supports raising the cap on FSA-guaranteed farm operating loans to at least $2.5 million from $1.75 million to keep pace with the rising costs of inputs.
“With these proposed increases, bankers will be able to better serve their customers over the life of the 2023 Farm Bill,” the ABA said.
The ABA is calling on lawmakers to increase funding for rural development and community facilities guaranteed loan programs. “FSA loan programs continue to lag far behind the technological capabilities of banks,” ABA said. “This can prolong the loan making process as the loan making systems will lack compatibility.”
Bankers have asked for more flexibility in the FSA’s beginning farmer and rancher lending process. “This flexibility should include less paperwork and the ability to use off-farm income when applying for beginning farmer and rancher loan programs,” the ABA said. “By reducing paperwork and allowing the inclusion of off-farm income, beginning farmers and ranchers will be able to enter a marketplace that includes more established farmers.”
Nearly 4,000 banks reported agricultural loans on their books at the end of 2021, according to the ABA, for a total of $179 billion or approximately 40 percent of all U.S. agricultural credit. Small loans constituted $69 billion in small and micro farm and ranch loans.
In a Farm Bill position paper late last month, ICBA Senior Vice President Mark Scanlan also signaled support for raising lending limits. He said any climate change programs included in a final bill should not increase economic or regulatory burdens for small businesses, ag producers or community banks.
Hearings on the Farm Bill are expected to take place early this year. The current Farm Bill is slated to expire at the end of September.