▶ 0:06:20Maybe I need this for my kids. Uh, we're going to start in about 60
▶ 0:07:08All right, committee will come to order. Uh, welcome and thank you for joining today's hearing entitled Financing Farm Operations: The Importance of Credit and Risk Management. After brief opening remarks, members will receive testimony from our witnesses today and then the hearing will be open to questions. Uh, in consultation with the ranking member, pursuant to rule 11E, I want to make members of the subcommittee aware that other members of the full committee may join us today. And today we will hear from lenders representing diverse regions across the country along with a producer.
▶ 0:07:38All of whom bring firsthand insight into the challenges farmers face when seeking the capital necessary for success. The reality is that farming is getting tougher every year. Input costs are up and market prices are down. If we don't support today's farmers, there won't be a next generation ready to step in. We must ensure the resources available to those who provide capital to our producers can meet the moment. This is why farm bill programs matter. They form the foundation of affordable, reliable credit for our producers.
▶ 0:08:08Lending tools and risk management programs like crop insurance and commodity programs work handinand to help farmers withstand downturns and sustain their operations. The loan programs to the safety net. It's critical that producers and their lenders have as many tools in the toolbox as possible to ensure dependable access to capital. This essential to maintain the safest, most abundant food supply in the world.
▶ 0:08:32Over the past six years, we've seen nearly $130 billion in ad hoc assistance flow to producers, many of that in my While that support was necessary in times of crisis, it is no substitute for a durable, predictable safety net. We owe it to farmers and lenders alike to build a system that doesn't rely on ad hoc assistance every time a disaster strikes. And I might add, the ad hoc assistance in many cases takes well over a year to get to the producers.
▶ 0:09:02That's exactly what the one big beautiful bill does. We've strengthened the farm safety net, increased reference prices, expanded access to crop insurance, and the opportunity to add additional base acres are just a few of the real improvements that will bring more certainty to producers and reduce risk for lenders. Additionally, the bill significantly raises the federal estate tax exemptions and makes it permanent in the tax code, allowing farmers more clarity to plan for their future.
▶ 0:09:31We know work can our work cannot stop there. Today, our loan programs don't reflect the realities of the modern family farm. Loan limits are outdated and the lending process is often slow and burdensome. We must ensure that the credit programs at the Farm Service Agency are improved to serve both producers and lenders. That's why today's hearing is so important. The discussion today will help guide the next steps in our farm bill reauthorization process and ensure that the credit title complements the changes we made in the one big beautiful bill.
▶ 0:10:00It will also underscore the need to support our producers who take the risk to grow the food, fiber, and fuel our country depends on. I want to thank our witnesses for being here and for all of the work that you do every day. Your insight is critical to helping this committee get it right. With that, I'd like to welcome the distinguished ranking member, the gentle lady from Kansas, Miss Davids, for any opening remarks she would like to give.
▶ 0:10:24Thank you, Chairman Scott, for convening this uh important hearing. You know, Kansas is home to more than 55,000 farms and agriculture remains the number one economic driver in our state. And when I speak to Kansas producers, one issue consistently rises to the top, and that's the importance of the farm safety net. Since Congress last passed a full bipartisan farm bill in 2018, the landscape for producers has changed dramatically.
▶ 0:10:53Farmers and ranchers are facing high input costs, rising interest rates, supply chain disruptions, and market volatility driven by uh global uncertainty, including tariffs. These producers make programs like crop insurance and access to affordable credit, especially through USDA's credit programs, that much more critical.
▶ 0:11:14That's particularly true for beginning farmers and those in underserved communities who are trying to break into agriculture at a time when the average age of a Kansas producer is nearly 60 years old. Kansas producers have always been resilient, adapting to challenges that are immense, the dust bowl, droughts, climate change. But resilience is uh in the DNA of canons.
▶ 0:11:41Um, but it does take partnership and it's our job on this committee and in the Congress to be that partner to ensure that the riskmanagement tools that farmers rely on are strong, that they're accessible, and that they're responsive to the needs of the folks making use of them. And I want to thank you um, our panel today for being here, for sharing your insights and expertise.
▶ 0:12:07Your experiences are certainly critical to this um to our ability to ensure that fa fed federal agricultural policy uh works for all farmers and that includes new ones, inexperienced, experienced farmers large and small and and folks in every corner of our country. So I look forward to hearing your testimony and I appreciate the time. Thank you, Chairman. And I yield back.
▶ 0:12:34Thank you, Ranking Member Davids. Um, the chair would request that other members submit their opening statements for the record so the witnesses may begin their testimony and ensure that there is ample time for questions. Please limit your statements to approximately five minutes. You got a a marker in front of you. Red, yellow, green. Uh, green is good.
▶ 0:12:56Yellow is getting close and red means blue light's our first witness today, Mr. Clinton Hood from my home state of Georgia. With almost four decades of experience, Clinton has an extensive background in banking. He currently serves as a senior vice president, the director of the A and timber group at Snovas Banking Our next witness is Miss Mandy Minnik, the senior vice president of stakeholder relations at A West Farm Credit.
▶ 0:13:26Our third witness, uh, and let me say this, uh, one of my fellow subcommittee chairmans, M Mr. Johnson. Dusty Johnson's on the floor of the House of Representatives right now. Uh he our next witness is Brian Gilbert of South Dakota from his home state. Mr. Gilbert is senior vice president and the a banking manager at First National Bank in Sou Falls, South And our final witness is Mr.
▶ 0:13:53John Russell Wixs, the owner and operator of Timber Ridge Organics in Ledger, Montana. Uh thank you all to all of our witnesses for joining us today. Uh we'll now proceed to your testimony. As I said, you each have five minutes. Uh I'm sure you understand the timer. Mr. Hood, please begin when you're ready. Thank you, Chairman Scott, Ranking Member Davids, and members of the subcommittee.
▶ 0:14:19My name is Clint Hood, and yes, I'm a senior vice president with Senovas Bank down in Dublin, Georgia. I'm the head of our a and timber division where we finance production, agriculture, aggra business, and forest I worked in agricultural finance for over 37 years for banks of all sizes. Prior to banking, I farmed with my father in East Central Georgia on a very diverse brocrop and livestock family farm.
▶ 0:14:46My wife and I now live on our farm in Dublin, and I' I've enjoyed instilling farm values in our children and our growing number of grandchildren. I'm a proud Georgia Bulldog. Go dogs. and I've always been lucky, felt lucky to be around agriculture my entire life. I believe my story is somewhat similar to other agricultural bankers. I have passion for agriculture that extends well beyond the bank.
▶ 0:15:12All my career I've been involved with many agricultural organizations including Georgia Farm Bureau, Georgia Aggra Business Council, Georgia FFA Foundation, and the Georgia Cattleman Association. My favorite organization of those is the FFA and it's the this is the reason it strives the FFA strives to teach kids values and disciplines of agriculture through its youth programs.
▶ 0:15:36As an agriculture banker, I believe it's vital that we're working closely with our agriculture producers and agricultural I appreciate this opportunity to present the views of agricultural banking at this hearing. Banks continue to be one of the first places that farmers and ranchers look for if when they're trying to find agricultural loans. And over 80% of the banks in the United States have agriculture in their portfolio. Bankers finance all types of agriculture in every part of the country.
▶ 0:16:06Agricultural lending is a noble, but it's a tough profession. We work with our customers to improve their businesses, their livelihoods, both in the long and the short term. The current state of the agricultural economy is not healthy right now. However, the emergency commodity assistance pro program payments, better known as ECAP, have been very helpful, not only the farmers and ranchers, but to the a bankers as well.
▶ 0:16:34And we thank Congress and the USDA for getting those payments out quickly. But ECAP payments are a short-term solution to a long-term problem. All the farmers in my area continue to struggle. financially due to low commodity prices and high input cost. I recently had to have a discussion with a farmer who does not borrow any working capital.
▶ 0:16:57He and his brother needed to cash out a long-term CD, a CD that had been in their family for years, but they had to cash it out in order to pay their shortfall in their operating cost because their margins margins continue to be upside down.
▶ 0:17:11Farmers are trying to find solutions to keep their operations going as working capital lines dry up and without taking any unnecessary extra Congress took the first steps to provide new economic relief to to our farmers and ranchers by increasing reference prices for commodities and by increasing the cost share for crop insurance.
▶ 0:17:33In the recent tax legislation, our farmers and ranchers have basically have badly needed those provisions to be modernized to reflect our where agriculture is now, not where it was 12 to 15 years ago. I still believe we need a long-term farm bill to help our rural communities. To me, the farm bill is really a food bill as it supports the financial stability of our nation's food producers, but it also guarantees the consumers access to that food.
▶ 0:18:03We need to get a farm bill done now or we're going to see the demise of American farmers and ranchers, the agricultural lenders that support them, and the rural communities where they live. ABA has a list of priorities that bankers would like to see in the next farm bill that I've highlighted in my written testimony. This includes increasing FSA guaranteed and direct loan programs. Additionally, changes to eligibility for beginning farmers and ranchers is vital to bringing the next generation of farmers and ranchers.
▶ 0:18:33Lastly, Farmer Mack is a tremendous partner and we support efforts to modernize Farmer Mack to meet the needs of rural America. Beyond the farm bill, bankers continue to work on additional solutions to help our customers during these tough times.
▶ 0:18:48I'd like to thank Congressman Randy Finstra, Congressman Don Davis, and the additional co-sponsors of the Access to Credit Rural Economy Act, better known as the Acre Act, which recently passed into law in rural communities across this country and especially the five-state footprint of my employer, Senovas Bank. Farmers and ranchers will see real benefit from the Acre Act, and lowering costs for farmers and ranchers is vital at this time.
▶ 0:19:16Bankers are proud of the work that we do to support our nation's farmers and ranchers. The agriculture committee community is a critical part of our economy and America remain committed to serve it through good times and bad. Thank you and I'll be happy to answer any questions.
▶ 0:19:41Chairman Scott, Ranking Member Davids, and members of the committee, thank you for hosting this hearing today to discuss the importance of the Farm Bill on lending and credit. My name is Mandy Minnik. I hold the position of senior vice president stakeholder relations with A West Farm Credit located in Spokane, Washington.
▶ 0:20:02Could you bring your mic a little closer, please?
▶ 0:20:04Is that better?
▶ 0:20:06Okay. Egg West Farm Credit offers dependable credit, crop insurance, and business resources supporting farmers, ranchers, fishermen, foresters, and rural residents in Alaska, Arizona, Idaho, Montana, Oregon, Washington, and parts of California. This includes support for growers that produce traditional crops as well as many crops categorized as specialty by the USDA.
▶ 0:20:36We are a member-owned, locally governed cooperative and a proud member of the farm credit system. Along with 58 other farm credit institutions, we share a critical mission to support rural communities and agriculture with reliable, consistent credit and financial services today and tomorrow. As a cooperative, farm credit profits are used in only two ways.
▶ 0:21:01either retained in the institution to build financial strength and support more lending to our customers or return to our customers via patronage dividends. Annually, our board approves the distribution of cash dividends to customers through our patronage program, representing 54% of our total earnings in 2024. This equated to $414 million returned to eligible customers last year.
▶ 0:21:30While patronage benefits help to effectively reduce the total borrowing costs for our customers, today's producers in the western US are facing down markets across most crops. It is troubling when specialty crops, which are mainly influenced by market demand at home and abroad, are incurring multiple years of loss. The struggle in today's a economy are serious. And what makes this economic downturn unique is the widespread impact across most commodities.
▶ 0:21:59Price declines, higher input costs, shrinking margins, tariff volatility, egg labor, invent environmental and regulatory pressures, and farm bill uncertainty are impacting not only business viability, but also the mental health in rural communities.
▶ 0:22:18Farmers and ranchers are manage managing today's problems under the 2018 Farm Bill solutions which serve agricultural well then but no longer adequately address current challenges. And the longer this takes, the more problems elevate.
▶ 0:22:35One thing that we can control in the current egg environment is advocating for the certainty that a strong farm bill will bring our Important to egg west producers is the passage of a strong farm bill to advance multiple important tools and programs. Federal crop insurance is a vital risk mitigation tool for our customers. A west is committed to serving all producers regardless of size, complexity, or commodities that they grow.
▶ 0:23:04Whole farm revenue protection and microarm policies are successful risk tools for traditional crops like apples in Washington, grapes in California, and non-traditional crops like wasabi and kiwi berries that they grow in Oregon. We are grateful to Congress for their ongoing investment and improvements in this program.
▶ 0:23:24A west supports the producer and agricultural credit enhancement pace act that would modernize FSA loan programs through increased loan limits that reflect current costs of production Full details are included in my written testimony in which I share how strong FSA guaranteed loan programs assist agricultural lenders in providing opportunities particularly for young and beginning farmers.
▶ 0:23:50The fishing industry credit enhancement act act would allow farm credits to provide commercial fishing related businesses access to farm credit loans just like other farm businesses do. Reliable credit sources for fishing related businesses such as tinder boats or diesel mechanics in the communities that count on fishing to survive is a much needed resource.
▶ 0:24:13In my written testimony, I have included additional items for the farm bill that would benefit agriculture and rural A west farm credit appreciates appreciates the farm and farm related tax legislation included in the recent budget reconciliation package. Passing a strong farm bill remains a top priority to provide safety, certainty, and muchneeded support to our producer owners in these very uncertain and challenging times.
▶ 0:24:42Thank you for having us today and I look forward to your Uh, Mr. Gilbert, please begin when you're ready. Thank you, ma'am. Chairman Scott, ranking member Davids and subcommittee members. Thank you for the opportunity to discuss financing farms. I am Brian Gilbert, senior VP and a banking manager at the First National Bank in Sou Falls, representing Independent Community Bankers of America.
▶ 0:25:09I own and operate a family farm that raises cow calf pairs, finishes approximately 750 head of cattle each year, and I also raise corn and soybeans. Our nation's more than 4,000 community banks make nearly 80% of all a loans made by commercial banks, or 151 Community banks have deep roots in their communities.
▶ 0:25:31More than 1,000 banks are more than 100 years old and have survived the Great Depression, the Great Recession, and are still standing by their customers through good times and bad. Community banks are relationship lenders that fund local loans with local deposits. First National Bank in Sou Falls started 140 years ago in 1885. We are a two billion dollar bank heavily involved in egg lending and risk management with a bank-owned crop insurance agency.
▶ 0:26:01Several of our bank's one dozen egg lenders own family farms. We want to help producers buy that next parcel of ground, add to their herd, or figure out how to make their operations more efficient and productive. As a farmer myself, I can attest that agriculture can often be difficult and have great uncertainty due to extreme fluctuations in prices, weather, markets, diseases. Our bank works with farmers to prepare them for a wide variety of challenges.
▶ 0:26:30We look at whether producers can cash flow and crop insurance is a very important tool. We have an insurance agency called first egg risk management or farm. Due to the unpredictable weather, financial risks are always present. Drought, hail, floods, and other weather events put farmers and ranchers and their crops and livestock in danger. Crop insurance enables producers to repay bank loans and qualify for credit. Crop insurance fits into the bigger system of inputs, marketing, risk mitigation.
▶ 0:27:00Our farm agency solutions help producers build a customized risk management plan. USDA's livestock risk protection protection program is also quite important and we have many producers that utilize that We offer education through our farmers and bankers program. Topics include farm financials, crop insurance, marketing, trust and estate planning, and taxes. Having strong marketing skills can generate profits.
▶ 0:27:30USDA guarantees allow banks to work with borrowers who cannot qualify for conventional credit or who are beginning farmers. a USDA loan express loan program requiring USDA to approve uh guaranteed loan applications within a couple days in exchange for a lower guarantee amount for loans up to $1 million is needed. SBA's express loan program works well to have real impact. The USDA Express concept should apply to standard and certified lenders.
▶ 0:27:59We appreciate the committee's higher USDA guaranteed farm loan limits. $3.5 million for a real estate loans and $3 million for guaranteed operating loans are necessary given today's land values and production cost. I purchased my first farm ground 240 acres with USDA's down payment loan program. It's a great program for a beginning farmer.
▶ 0:28:22The farm credit system has major proposals that would fuel tens of billions of dollars or more in the new in new non-farm financing for the FCS for at the expense of taxpaying community banks. As a government sponsor sponsored enterprise, FCS's tax effective effective tax rate in 2024 was only 2% far below what community banks pay.
▶ 0:28:46The FCS is a central community facility proposal to finance schools, fire stations, health clinics, etc. without regulators preapproval considerably broadens their scope. FCS should at most be a supplemental source of credit once the private sector lenders have committed to providing the majority of funds. FCS proposes expanding housing loans in towns of 10,000, a 300% increase.
▶ 0:29:1675% of all towns are below or at 5,000 population. The Farm Credit Act should be tightened to limit FCS deposit taking activities, which is draining community banks of deposits. In conclusion, we appreciate the committee's work and we thank Congress for the $10 billion in economic loss payments, 20 billion in disaster aid and higher reference prices and continued crop insurance protections.
▶ 0:29:42We appreciate the inclusion of the Acre Act in HR1, but encourage the 25% tax exemption to be raised to 100%. Thank
▶ 0:29:54Thank you, Mr. Gilbert. Mr. Wixs, please Thank you, Chairman Scott and Ranking Member Davids for your invit invitation to testify today. My name is John Wixs and I'm a fourth generation farmer in Montana. I'm a farmers union member and I serve as president of the Liberty Tool Local Farmers Union. I grew up on a dryland farm and have been running our family farm since 2007.
▶ 0:30:18I was attending college when my father passed and I returned to the farm where I primarily raised lentils, chickpeas, wheat, durham, rye and barley. Farming is a way of life, an important part of my identity. But it's also a business which demands significant investment in land, equipment, and inputs to succeed. It also comes with inescapable risks. That's why I need access to affordable and reliable credit and riskmanagement tools to build and sustain successful farm business.
▶ 0:30:49I will focus much of my testimony today on how important USDA FSA loan programs have been for my farm. While FSA lending is a small percentage of the overall agricultural lending portfolio, it's been critical for me and many others. My first experience with FSA loan programs was when I was 14 years old. I received a $5,000 youth loan to purchase cattle, and I ran those cattle alongside my dad's herd for four years. The proceeds helped fund my college education.
▶ 0:31:20Many beginning farmers lack equity, credit history, and can have difficulty accessing capital. USDA loan programs are designed to provide a pathway for beginning farmers to access credit. And this made a big difference for my farm. When I was starting out, our farm's combine suffered a major breakdown during harvest. Our bank wasn't able to provide another line of credit, but through FSA, I quickly purchased a replacement combine, which saved our harvest and helped me build equity in an operation still paying dividends today.
▶ 0:31:51FSA loan programs came in handy once again when I started growing pulse crops like lentils and chickpeas, which are more delicate to handle than grain crops. To make handling pulses feasible, I needed to purchase hopper bottom bins, which I bought using FSA farm storage facility loan. FSA loans also helped us transition the farm to the next generation.
▶ 0:32:14An FSA farm ownership loan helped me over to take over land and the generational debt that was tied to it through a relatively safe loan option. I asked the committee to make important updates and improvements to FSA loan programs this year, including adjusting loan limits to reflect current economic environment, making it more feasible for farmers to restructure debt when needed, and ensuring those programs meet the unique needs of all types of producers.
▶ 0:32:44My family is also a customer of Egg West Farm Credit. We remain grateful for the time that Egg West helped us through a period of major financial stress. They understood the value of what we were trying to accomplish on our farm and more accur accurately evaluated our risk compared to other lenders we consulted.
▶ 0:33:02While access to affordable and reliable credit and well functioning risk management tools are important for family farmers, we must have fair and competitive markets and a robust farm safety net. Farm bankruptcies are on the rise.
▶ 0:33:17Recent changes to improve the farm safety net may help alleviate some challenges with persistently high input costs and low commodity prices, but farmers will face major economic stress as long as corporate monopolies in agriculture remain unchecked the way they are today. Thankfully, lawmakers can take action to address these challenges.
▶ 0:33:38For example, you can strengthen the connection between the USDA and our chief federal comp federal competition and antitrust law enforcers, the DOJ and the FTC by passing the Meat and Poultry Special Investigator Act. We can ensure that recently finalized Packards and Stockyard Act rules are retained and forcefully implemented. You can reestablish country of origin labeling for beef so consumers know where their food is really coming from and so farmers and ranchers are paid fairly.
▶ 0:34:08You can guarantee farmers the right to repair their own farm equipment. You can expand local and regional market opportunities for farmers such as by investing in new local meat processing. And you can strengthen these markets with more financial and technical support, local and regional food procurement by food banks, schools and other institutions. Thank you for the opportunity to testify today and I look forward to answering your questions.
▶ 0:34:35Uh thank you all for your testimony today. Uh at this time members will be recognized for questions in order of seniority alternating between majority and minority members and an order of arrival for those who join us after the hearing convened. Uh each member is recognized for five minutes in order to allow us to get as many questions as possible. I now recognize myself for five minutes. Uh to those of you who are lenders here with us today, uh we all know that the process of approving a loan is not simple.
▶ 0:35:03Uh what are some of the lending programs at the Farm Service Agency you're able to utilize to ensure that you're making a sound financial decision when reviewing a loan application? Additionally, what are some of the changes, improvements we can look at making as we continue our work to finish the farm bill? And I would specifically like to hear uh your opinion on the time that it takes to get the approval.
▶ 0:35:31Mr. Hood,
▶ 0:35:36ask me again. I'm sorry. Were you asking that to me?
▶ 0:35:40I'm asking to all of you who are
▶ 0:35:45Yeah, please.
▶ 0:35:46Yeah, I can I can go first. Um, at at First National Bank, we've uh we've teamed up with FSA on many many loans. I know in my oral testimony, I said that we use FSA for um customers that maybe don't qualify for conventional financing and beginning farmers, but I would tell you that that has really expanded.
▶ 0:36:08Our partnership with them has really expanded in the last couple years where some of our more sophisticated, younger borrowers are utilizing uh joint financing um where they'll finance a portion, 45% will finance 50 and they only have to put 10% down. Um it's a very great way for a young producer to be able to compete and enter to the market. So those farm ownership, joint uh joint loans.
▶ 0:36:34Um we utilize the guarantee program at First National Bank, but probably not as heavily as what a smaller um uh more rural bank would because of their lending limits versus versus ours. But we do use guaranteed loans.
▶ 0:36:48Um, we're a preferred lender with FSA, so our our loan approvals, um, they come fairly reasonable, but I know we've had some of our our banks through ICBA that are, uh, that aren't preferred lenders, and they're saying timing is 30 or 60 or 90 days, which that doesn't really cut it in today's just with how fast things are moving.
▶ 0:37:16I would echo uh that as well. Also, A West is a preferred lender um also uh when we're getting guarantees. So, that is very helpful. But oftent times, uh even though we go through a rigorous program ahead of time, uh to look at those credits and make sure that they're packaged well, it can still take quite a long time for them to come back from FSA.
▶ 0:37:37So making that more streamlined particularly for per preferred lenders as well as the increase to the to the loan limits that are out there for those when you send a loan uh to FSA uh to get a guarantee or even in the direct lending and it's close to the top of the lending limits then that puts up some red flags and things that they have to look at um a little bit longer. So both of those uh making it just easier for our customers to get access uh more quickly are very important.
▶ 0:38:10Mr. Chairman, I don't have a lot to add to that. My my bank handles a very mature a portfolio and we don't have the staff right now to do the the new farmer the young farmer uh programs like I would like to. As we grow our portfolio, I'm going to add some more staff.
▶ 0:38:28For me personally, I think it's an extremely valuable tool that farmers uh bankers can use to help farmers, not not just farmers that are uh uh farming with their parents or with their family, but also farmers that the the bug just hit them that they want to get out on the farm and and and take the leap.
▶ 0:38:48Um it's it's hard to do when you don't have the the resources and even when you compare it to what you go to the equipment place to to buy this uh several hundred,000 equipment. It it's just it's monumental the the task that it takes to uh to be able to finance all that. So, but I I love the first time farmer programs. We just don't utilize them right now.
▶ 0:39:11Mr. Hood, you you've uh I mean, you're a banker in in my part of the world. I mean, you've got a front row seat to the economics of what's happening in in rural America. Um, you've outlined some of this, you know, and and how, you know, our economy starts and stops with the farm economy where where we come from.
▶ 0:39:31um each season, certainly in the last several seasons especially, farmers have put more and more money at risk to continue to seek from I can tell is a smaller and smaller profit margin. Um what does a long-term farm bill mean to that community that you serve?
▶ 0:39:54and and how can we build on the work of of the legislation that has recently passed to make sure that our rural communities um and our specifically our a economy can expand.
▶ 0:40:06Yes, sir. Uh Mr. Chairman, that that is a vital tool that not just the a bankers have but the farmers have to be able to have a farm bill that they can count on. And you know historically farmers have used the commodities market wherever that market price falls to be able to either break even or make a profit. Now the commodity market is so depressed that all these margins are upside down.
▶ 0:40:32Well the proverbial safety net that the farm bill has always provide provided has really way below where that margin needs to be. So the farmer finds themselves in no man's land. the the commodity market can't help them survive and the farm bill can't help them survive. So, they're they're in between and it's it's really hard on the on these uh families right now.
▶ 0:40:56My my time has expired, but I I literally as my neighbor was talking to me about, you know, his concerns with planting cotton. I I just the question I asked him is why would you plant it with the price that it's at? and and I know you've got the payment on the cotton picker and you got the payments on everything else and sometimes you got to have it in the
▶ 0:41:17but man, it's sure hard to plant when you know you're going to lose x numbers of dollars per acre even if you do everything right.
▶ 0:41:24$180 per acre loss with brackets around it on paper. So, you know, if it's not working on paper, it's not going to work in real life either.
▶ 0:41:32And that's for cotton.
▶ 0:41:33Yes, sir. Cotton.
▶ 0:41:35Miss Davids,
▶ 0:41:37thank you chairman. Uh it might seem as though I planned this based on your first question. Um we didn't coordinate that. We could have uh and thank you for holding this hearing. Uh so you know Kansas producers rely on uh of course on credit and crop insurance uh to navigate those ups and downs that we've been hearing about from you all already.
▶ 0:42:00Uh and I think those tools uh are especially important for new and beginning farmers who are who face significant barriers when trying to get started. That's you know whether it's land access, equipment costs, the just the securing of a loan. Um and you know in Kansas less than 10% of our uh producers are under the age of 35. And that is concerning I think not just to me but to quite a few people.
▶ 0:42:29and it's something that we need to address if we're going to see a future of farming that's sustainable. Mr. Wix, I was hoping to hear from you on uh the other side of the ledger there for um uh this FSA uh you know in your in your written testimony and in your oral testimony, you talked about the value of the Farm Service Agency and specifically mentioned the Young Farmers Program.
▶ 0:42:54I'm curious if you could just share a bit about uh improvements that we could make to those programs to better support access to credit for beginning farmers uh and ranchers who are just getting started. And then if others want to chime in uh after for uh improved uh provisions that you think might help.
▶ 0:43:16Yes, thank you. Um, I think it's really important to, um, you know, increase those loan limits a little bit to help, you know, with the rising costs of everything and to maybe expediate the process of the paperwork to kind of get people the financing quicker. Um, but the tools are really um, amazing and really helpful for somebody that, you know, our farm, we were struggling with, we were reaching the end of our equity and needing a new operator to come in and that was me.
▶ 0:43:45So, um just having that access to maybe more funding and you know for the farm ownership loan that was quite a process to start and you know it took months and I mean the buyer was my mother um so you know she knew she was going to sell to me but
▶ 0:44:03in another case uh yeah you think
▶ 0:44:06um in another case you might have somebody else outbid you while you're going through all the loan approval so
▶ 0:44:13I think the pre-approval would be great Oh, okay. That Thank you. I was um I was gonna ask that specific thing. Okay.
▶ 0:44:21Thank you.
▶ 0:44:22Does I don't know if anybody else Go ahead, Mr. Go.
▶ 0:44:24Yeah. um we I touched on it a little bit, but that express loan program um and if we you know to get quicker answers and I think banks um across the country, I won't speak for Farm Credit, but um Mandy can, but I think we would be okay with reducing the level of the guarantee if we could get an answer quicker in some cases.
▶ 0:44:46So the banks or a farm credit would would take more of the burden um say if it was a 5050 uh guarantee versus or 7525 guarantee versus that 90% FSA guarantee.
▶ 0:45:00Um, one thing we struggle with a little bit that I could mention is, uh, and John kind of touched on it, but that farm ownership piece, when a land when a piece of land goes to auction, um, and we want to finance it through FSA, it's very difficult because of the time constraints. Usually, they want to close within 60 days. There's no appraisals are taking longer, title works taking longer.
▶ 0:45:25Um, and the FSA, at least in our area, doesn't allow for the bank to fund it on a bridge loan, say a 90-day note, and then refinance it with FSA. Um, so we go we jump through a lot of hoops with that. But there there is one thing there that if they would allow us to to just finance it initially and then refinance it with FSA with the same borrower, it'd be very helpful.
▶ 0:45:50I would agree with that and um appreciate uh the journey we've had with uh Mr. Wix on um getting his farm up and running. I think that FSA um uh egg west farm credit partnership is invaluable.
▶ 0:46:05So having those partnerships um I on the especially on the preferred lender so those of us that have already gone through a lot of qualifications with FSA if there's a few more things you have to ask us and we have to do ahead of time for us to be able to get those guarantees that would be another option um as opposed to lessening the amount of the guarantees. So tell us what we need to do to qualify more and then come back and look at those loans later on if you need to.
▶ 0:46:35Um, and again, we've already talked about increasing those loan limits for beginning farmers is really
▶ 0:46:41Thank you.
▶ 0:46:43The only thing I would add to that is a great question. Um, I've been in banking for 37 years and they suck the fun out of banking years ago. And
▶ 0:46:52did you say what did you say? Congress.
▶ 0:46:54I'm just kidding. Sorry. Sorry. Sorry.
▶ 0:46:57Just just the process. It is very difficult being an a lender today. It's difficult being a banker in general, especially agriculture.
▶ 0:47:05But what I would love to to see anything that can help reduce the time constraints on the process and there's some really good ideas here. I'm in favor of the reason I haven't put this in place in my bank. It takes a lot more staff to do it because even a commercial loan now takes over 60 days to get through and and the farmer's sitting there waiting on money. The government guarantee is even longer. So, anything that can reduce the the time constraint.
▶ 0:47:30Thank you. I these are some great ideas and I'll probably end up following up. Thank you, chairman. I yield back.
▶ 0:47:36Thank you. I heard I heard you loud and clear on the uh bridge loan. We'll find out if that's legislative or regulatory and uh follow up on that. With that, Mr. Crawford, you're recognized for five
▶ 0:47:47Thank you, Mr. Chairman. Um I have a a bill that I've been working on actually probably since I've been here in Congress. It's called Farm Risk Abatement and Mitigation Election or Frame Act. What this does is sets up u a tax deferred savings account for farmers. We call them frame accounts where a farmer can deposit funds taxfree during profitable years and withdraw taxfree during hard times.
▶ 0:48:11So, it's almost a little bit like an FSA or I mean HSA kind of model, but it's geared toward farmers and and providing um some degree of risk abatement for those and and and it opens another option for farmers to invest tax advantaged profits outside of the traditional section 179 where we're going to run out and buy a new tractor or a combine to avoid, you know, tax liability, but now we've incurred more debt.
▶ 0:48:39And so when that's appropriate, I'm all for section 179. Buy the new combine, buy the new cotton picker, or tractor as you need it, but not as a tax strategy. I think that creates more problems. So this this serves a couple of different things. The other thing it does is is the, you know, the deposit account can be used to help collateralize an operating loan. I mean, there's a lot of advantages to it. So I wanted to get your feedback. I know we've got some lenders at the table. We've got farmers at the table here. Want to get your feedback.
▶ 0:49:05Um, understanding that obviously in the current crisis, it's really difficult to try to tell farmers to put money in a frame account. That's the whole point. It's not always going to be like this. We're going to get back to a point at which, you know, we'll have some more profitable years hopefully. Hopefully. Um, but you get my point here. I'm just kind of want to get your feedback and and Mr. Hood, I'll start with you because you've got a long history of a lending and kind of want to get your perspective on that.
▶ 0:49:32Yes, sir. Congressman, and that's a great question and and I love the premise of what you're trying to do. My first initial question would be really to fund the account. You're pulling capital out of the farm enterprise and putting it into account same way I do with the bank with my H uh uh health savings account. I I get that. The question I would have is it subject to seizure? Is it subject to being used in in hard times?
▶ 0:49:59And do does it become an offbalance sheet item to where the bank can't count that as capital?
▶ 0:50:06Because these farmers need all the capital they can get right now to qualify for loans. If it's an onbalance sheet uh savings account, then I say heck yeah, just put that aside. It's not that dissimilar than a CD except you've had to pay taxes on the CD. So I I like the idea.
▶ 0:50:22Yeah. Good. Good. Yeah. I think your your assessment is right. I do think that would be an onbalance account for those purposes as you as you described. So that's that's our goal there. Any anybody else want to weigh in on that?
▶ 0:50:34Um conceptually we think it's a great idea as well. Um I think about like you said the number of farmers that have utilized section 179 that and some of them should have but uh a lot of them probably got in or some of them got in over their heads. So, I think, you know, farmers can always benefit from having tax-free accounts, and I think we could um placing a hold on that account or some way to collateralize it.
▶ 0:51:02So, yeah, we'd love to work with you on the details to
▶ 0:51:05I have to be careful about that section 179 piece because having worked in the equipment business for a long time, I don't want to alienate my equipment dealers. But we also know too that it's important to, you know, for that farmers make good choices with regard to how that's reflected on the balance sheet and incurring more debt to avoid tax liability is not necessarily a good strategy long term. Any any other
▶ 0:51:28Yeah, I'd just say that that might be an option. I've never been a fan of uh spending money putting on debt just to avoid a little tax. Um, but I think I as a farmer, I'd be uh more worried about the safety net first. Um, and really encouraging that to be a you you just led into my next question on this that's been brought up to to my attention from some of my constituents that crop insurance companies have been pulling out of areas they consider to be high risk. And that's certainly in my district that's been brought to my attention.
▶ 0:51:58Since crop insurance companies receive federal subsidies to offer services, that's a concern to me. So, have any of you heard anything like that? And and what are what are some of the what's your perspective on that? I mean, I I don't think we should be taking a geographic look at crop insurance eligibility, but let me get your thoughts on it.
▶ 0:52:16Um, I haven't had experience in that.
▶ 0:52:20I would like to say thank you. First of all, some of the relief for that I think came in the budget reconciliations around the the A&O and then some of the payouts that are going to go to the AIPs, but it's still a problem uh with the high uh risk levels that are happening especially especially in specialty crops that are oneoff. Uh the markets are so volatile because there's such a short period of time to be able to market those crops.
▶ 0:52:46So, there's still some work to be done to make sure that all of our producers have access to the crop insurance programs that are out there and there's still some more programs that could be put in place as
▶ 0:52:56Thank you, Mr. Chairman. I yel back. Mr. Sorenson, you are recognized for five
▶ 0:53:01Thank you, Mr. Chairman. Um, our farmers are betting big every season. Uh, with borrowed money up against mother nature and economic uncertainty, uh, the stakes get higher every year. Uh in the United States, more farms have filed for bankruptcy in the first three months of this year than all of 2024. It's a clear sign that the extreme financial pressures of 2018 and 2019 are coming back.
▶ 0:53:30Input costs are rising significantly while commodity prices are dropping. Add to that uncertainty with trade and tariffs with with the cherry on top being any potential drought or flash flood tornado or straight line winds that flatten a crop. In fact, severe weathers in my district ongoing right now over the farm fields of northern Illinois. The one thing that we can do today is put America farms first.
▶ 0:53:54This administration needs to work harder so producers can be competitive and it needs to create an environment that is predictable and stable. Even with the most fertile soils on Earth, Illinois is challenged. Lenders remain a critical part of the equation, helping farmers finance the equipment and infrastructure needed to keep operations running.
▶ 0:54:19And during downturns, these programs don't replace profitability, but they do reduce income volatility, preserve credit access, and help producers stay afloat so they can get to the next growing season. Crop insurance and price supports are necessary safeguards that not only protect their operations, but are also often required to secure financing. Uh, farmers in Illinois are some of the most productive and resilient in the country, in the world.
▶ 0:54:47But to keep that legacy going, to ensure these operations can be passed on to the next generation, we have to give them the tools to succeed. And that means strengthening the farm safety net, expanding access to credit, and crafting policies that are flexible enough to reflect the real conditions on the ground. And Mr. Hood, I want to begin with you. In your opening statement just a few moments ago, you talked about the value of the FFA.
▶ 0:55:13I'm so grateful uh that I had some young men and women uh in my office today wearing those corduroy jackets. How we need to make sure that that next generation is there for us in agriculture. It is so important. And so I hope that you can talk a little bit more about how we can make sure that that we're doing everything when it comes to credit for new and beginning farmers. Could you touch on that?
▶ 0:55:41Yeah, sure. can congressman and I love I love that topic. Thank you for bringing that up. This is near and dear to my heart. Not just because I serve on the Georgia FFA Foundation where we try to raise money to make sure some of these underprivileged kids that want to experience the A that they can't do it in their own pocketbook that we're able to help them do it. So I love that program. You mentioned the the difficulties in various times during the the cycle of agriculture. It made me go back to the mid 80s.
▶ 0:56:11When you when you take 2025 and you subtract my 37 years of banking, you arrive in the mid 80s. That's when I had to leave the farm and and I I have a hard time sometimes talking about because it's very emotional for me. My family continues to farm today. My my brothers have taken over, but I was the oldest son and I had to leave. One day my my daddy stopped at the mailbox. I don't know what was in the mailbox. It was probably something from a bank.
▶ 0:56:36But he looked at me in the truck and said, "Clint, you probably need to go do do something else for a
▶ 0:56:43because the farm is holding you back." Well, that was the catalyst for me to leave. Thank goodness God was shining on me and I went into the uh a finance business. But I don't want that happening to people. I've been very fortunate that I could come back and and be part of agriculture, but a lot of people can't when this go and we're at a crux of of of time where this is about to happen to these farmers. The 80s is about to happen again.
▶ 0:57:10The only difference in the 80s and today, in the 80s, farmers were flat broke. They were insolvent. Their liabilities were higher than their assets. Today their assets are still higher than their liabilities, but it's because of the equities that they have in the farmland. Well, as you know, equity is given to you in two different places. Number one, the market can give you uh equities running up values depending on where your farm is. The other way to get equity is to pay debt down. So, our equities are eroding right now.
▶ 0:57:40So, so and I may open this up to all of you. What is the canary in the coal mine? Talk about the 1980s and I live in Molen, Illinois and International Harvester is just a slab, right? John Deere is holding on only because of the diversification and also the international nature of their business. What is the canary in the coal mine when it comes to farm credit and making sure that we're there for for our producers?
▶ 0:58:04The gentleman's time's expired. If one of you can answer that real quick. I think one of the biggest differences is the is the crop insurance safety net here versus the 80. So that's just extremely important to uh all lenders and all farmers. That that's the that's the biggest that's the biggest thing I would say my takeaway.
▶ 0:58:25Thank you, Mr. Chairman, for giving me some extra time and I yield back. Mr. Balch, you're now recognized for five
▶ 0:58:31Thank you, Mr. Chairman. I want to thank you all for being here and uh as we were just describing farm is risk farming is a risky bis business business and it requires specific time energy and investment and getting into this industry can be a challenge with the rising cost of land input prices and equipment. Many farmers with the hit the uh guaranteed loan limit quickly very quickly. Mr.
▶ 0:58:58Hood, can you uh comment on the importance of increasing FSA loan limits and how it could be u mutually beneficial to both farmers and the banks? And additionally, what other uh provisions should we look at to support in the credit title of the farm bill to help new and beginning farmers gain
▶ 0:59:21Yes, sir. Congressman, thank you for that. I don't see how we can't increase limits. our our cost to put a crop in is is is unbelievable now. And when you've got depressed commodity prices, that just that sets that gives you a recipe for for failure.
▶ 0:59:39And I I do believe that it it is it is time to increase a lot in in my bank in the last two years, I've told my bankers, whether the farmer is asking for an increase in their line of credit for the coming year or not, increase it by 20%. It is so much easier to do it on the front end in in March and April than it is August and September when you got to really worry, are they going to be able to pay me back and then have to go give them a little bit extra money?
▶ 1:00:07You you can you can tell as a banker, you can tell as a farmer, you can tell as a a congress member there there's not enough money out there to operate on without in increases. So, I I love that idea.
▶ 1:00:20So, Mr. Gilbert, uh, in your role as a local lender, you're not just providing credit, you're often a trusted advisor, uh, for producers making complex business decisions. Can you speak on how you and your institution support producers beyond the loan itself?
▶ 1:00:41specifically maybe how you talk to the producer, give them risk management decisions, uh discussions and and and tools like crop insurance or title one program. In fact, the factor advice uh that giving them to help them understand what is available to them. I know most farmers if they've been around a long time, they're going to know, but most of our young farmers that we're wanting to keep in don't always know.
▶ 1:01:07That's right. No, great question. uh at the first national bank in Sou Falls, education um and adding value is a huge piece of what we do because we don't want to just vend money and a big part of that is being a trusted advisor. I spoke to our farmers and bankers program that's an intense uh four to five session program where we do teach them uh or help coach them through their farm financials.
▶ 1:01:32We talk about insurance, the the importance of marketing and and also the programs that are out there that we can team up with with FSA and Farmer Mack uh and other folks to uh you know to help them achieve their their goals. We our lenders are the vast majority of them are licensed to sell crop insurance as well as livestock risk protection. Not because we're we take a different approach than what other banks and institutions do.
▶ 1:02:00We're not trying to increase our bottom line. Um what we're trying to do is is make our lenders and agents um more knowledgeable to help our to help our farmers through that uh or through you know through the ups and downs and work work with them to especially on the the LRP side of things is is been huge. Um uh you know I can speak for my own personal uh experience. Margin calls if you're if you're hedged are tough.
▶ 1:02:29you know, it's it's easier as a banker to say you made the right choice when it's your own dollars. It's tough. So, that LRP program that they producers don't have to pay uh pay the premium until the end of the period till the cattle are sold has been really beneficial and quite frankly um I think we'll stop a huge uh I don't want to say this but a huge decline in profitability.
▶ 1:02:56I'll just c the cattle market is so high right now and without without a risk protection price protection there could be a severe losses of money. I mean so that has been that program has been awesome for that in my opinion.
▶ 1:03:10Thank you and I want to thank you all for being here and with that I'm going to yield back.
▶ 1:03:14Thank you uh Miss Brown
▶ 1:03:16now recognized for five minutes.
▶ 1:03:18Thank you Chairman Scott and Ranking Member Davids. So it seems like the only predictable thing about farming is that it is unpredictable. Um whether it's rising input costs, extreme weather, or shifting tariff policies, producers today face uncertainty at every turn. But access to capital and risk management tools shouldn't be a part of that uncertainty. Farmers and ranchers and dairy men and women need confidence to plan and plant and invest in equipment and recover from a natural disaster.
▶ 1:03:47That comes not only from investing meaningfully in key farm bill programs, but also making sure that those dollars are backed up by thoughtful and forward-looking policy. Wellunded is only half the battle. Well-designed is the other half. Unfortunately, the partisan bill passed two weeks ago missed the mark. It fractured the historic farm bill coalition and plused up programs without doing the hard work of improving and modernizing them.
▶ 1:04:14That is exactly why we have a farm bill process to be deliberative and responsive. So, Miss Manik, your testimony talks about some of the unique challenges that specialty crop farmers face when ac accessing traditional risk management tools. Ohio ranks fourth in the nation for the diversity of specialty crops grown. So, I've heard firsthand about how one size doesn't fit all when it comes to risk management tools.
▶ 1:04:42Can you talk about what policy or structural changes would help make those tools more accessible and relevant for specialty crop growers?
▶ 1:04:50Yes. Yes. Thank you for that question. So, um, uh, California, I believe, is the top state for, um, the specialty crops grown. And so, uh, throughout the West Coast, we've got many of those in our service territory.
▶ 1:05:06and uh the whole farm revenue protection program and the micro farm have been really instrumental in moving things um forward because folks with specialty crops uh that weren't uh qualified for crop insurance in the past can use those uh those tools have been important but they're very complex and hard to understand as the agent and as the producer.
▶ 1:05:29Uh we've had a couple experiences in the last year or two where uh other crop insurance agencies have come to us saying, "We've got people that work here that are retiring or things like that. Will you take our whole farm revenue portfolio? There's no buying. There's no anything like that because it's so complex. They they don't feel like it's worth the investment to learn how to administer those policies.
▶ 1:05:54And so if you don't have agents that are willing to learn and know how to work with those customers, then having them out there uh if producers can't access them, then it doesn't doesn't support that. So really making sure that we can streamline those processes that they can cover more commodities and also that uh agents remain uh compensated to be able to do that to keep the lights on uh is a very important part of that.
▶ 1:06:21And then also continuing to broaden uh the different specialty crops that are included in some of the different programs. Uh for example, we've been working on the oyster policy for many years that we would like to see come to fruition. Sometimes specialty crops will uh have policy rolled out in specific geographic areas, but then they're not expanded to other counties where there's a lot of that production or other states.
▶ 1:06:46So, those are some areas where we could really see some improvements just to have more access for more producers.
▶ 1:06:52Thank you, Mr. Hood. Your testimony talks about the importance of supporting young and beginning farmers and ranchers on their journey to enter the industry. Despite increased funding for beginning farmer programs, the average age of farmers in this country is 58 years old and rising. That's a clear sign that our tools need to be improved. Mr. Hood, would you know the challenges that beginning farmers face when they enter the industry? Costs are high. Programs just don't fit the realities of starting a new operation.
▶ 1:07:18What policy changes beyond just increasing funding are most critical to making federal credit and risk management tools truly accessible and workable for beginning farmers?
▶ 1:07:31Thank you, Congresswoman. That is a very difficult question and I and I ask myself that all the time because I I I'm the father of six children and the first five have not come back to the farm and of of I'm the oldest of five in my family and uh three of us did not come back home to farm. We couldn't afford to. I'm I got a hold out on my 13-year-old. Hopefully he'll he'll get he's got enough uh interest in it to where he'll come back.
▶ 1:07:59But the the biggest issue that I've seen is just the monumental expense. And it's not just finding the operating money, getting the FSA guaranteed loan. It's how do you go to John Deere or or some of these other uh equipment places and negotiate hundreds of thousands of dollars of equipment needs. You really have to have a family member that already has that equipment and that they like you and that they they will let you use that equipment.
▶ 1:08:26Trying to start from scratch in this country today is a daunting task and I don't have a clear answer for that. I know it needs to be paid attention to and you guys have the power to do that and and I I would welcome any other ideas but um something needs to be done to help preserve this for for young people.
▶ 1:08:45My time is expired. Thank you, Mr.
▶ 1:08:47Thank you, Mr. Brown. Uh I can tell you my personal scenario and you know this Mr. Hood or Clint back home. Um, I have a brother, a sister, and five first cousins. Uh, and and all of our grandparents farmed, and none of us farmed. Yes, sir.
▶ 1:09:05And, uh, and that's what scares me for the future.
▶ 1:09:07Yes, sir.
▶ 1:09:09Of agriculture. Uh, Mr. Taylor from Ohio, you were recognized for five Thank you chairman and uh ranking member for holding this hearing today and great thanks to our witnesses for sharing your expertise uh on credit in our agricultural industry and the sacrifices you all made to be be here with us today.
▶ 1:09:27I want to go a little further on with the uh line of questioning my uh colleague Representative Brown was just uh talking about over the next two decades almost 50% of our farmland is expected to uh transfer hands. Uh currently only 9% of farmers are under the age of 35 while ne nearly 40% are over the age of 65.
▶ 1:09:49Um as we think about our farmland in my opinion it it should remain in farmland and not in solar panels uh not be sold to adversaries like China and others and be owned and operated by a local farmer. I mean that's that's what my preference would be. I think that would be the the the most positive road forward. Uh this not only helps the next generations, but it helps all of our rural communities thrive. As a guest in my office earlier put it succinctly, uh succession is success. Um so Mr.
▶ 1:10:20Hood, you you were asked about it. I want to open up to the panel. Um what USDA programs do you you uh folks think have been helpful or productive for beginning farmers who are looking to acquire land and get into the business or take over the the their pre their family business? Um it was uh I I would just say that that uh farm ownership loan for beginning farmers has been very helpful along with the uh you know having access to an operating line.
▶ 1:10:49Um you know those tools that's quite a bit of money you know we're talking about for a young person starting out maybe leasing part of a farm and buying another. Um so those programs there for farm ownership and equipment purchases are really really helpful for young people to get into agriculture and remain there for the succession.
▶ 1:11:11Um at I know we talked about the average age or the demographic of farmers being about 58 and a half. We have the luxury at First National Bank of having a younger uh than than that portfolio. Our average age of our entire portfolio of the farmer is 51 and a half. And there's two things I think that have helped our customer base either enter the market or be younger than the average.
▶ 1:11:37And not that we're trying to age discriminate, but we've all we all know that we have to get the next generation involved. And those two things are livestock and aggra business. We have worked with tirelessly with the USDA to get equip funds, things like that to help our borrowers um mostly young uh build a deep pit cattle barn or or you know or a con hog confinement facility to add revenue to their farms.
▶ 1:12:06Um, and we've also really pushed uh in our area, we're fortunate because uh uh we do have very fertile ground in most of our trade territory, but we've uh we've really pushed the the focus on aggra business, too. Um, a lot of these young farmers have to have uh something besides just the farm um to to help. So, if there's something we could, you know, tie in with that, I think it would be very helpful. And I don't know what that is, but we can get back to you on that. Um,
▶ 1:12:37Okay. Thank you, Miss Mick. Did you have anything you want to add?
▶ 1:12:40I I would just agree what they they have all said. And I would also say that those programs where it's not always, especially for a beginning farmer or somebody that's maybe been farming for a while, but they're experiencing some economic downturns to be able to jump straight from FSA to a full-fledged borrower. And so to have some of those down payment assistance, some of those different stepping stones is uh really important.
▶ 1:13:04And then I think working closely uh having great folks in your FSA offices, they really understand those customers and and want to see them graduate. So I think that that that staff at the FSA office is really important as well.
▶ 1:13:17Okay. Thank you. I didn't want to since this is being recorded, I do want to give my position on the 58 not actually being old. Just just so we're all all we all agree with it. Um, we talked about what programs are helping some, and I don't have a whole lot of time left, but is there something anybody on the panel has in their pocket that they say, "I wish Congress would act on this specific thing.
▶ 1:13:39This would make such a big difference for young farmers for succession of family farms." to your point since this is being recorded and we said it a lot is increasing those FSA loan limits would make a huge difference.
▶ 1:13:51Okay. Thank you. Anybody else?
▶ 1:13:55I'd second that.
▶ 1:13:56Okay, great. Thank you guys. Oh, go ahead, Mr. Hood. The only thing I'll add to that is is I I love any program that'll help a farmer get get started, get on their feet, but we still have to adhere to the banker's creed or the five C's of credit, the the character, the capital, the capacity, the conditions, and the collateral. Specifically, the character, which most of that's in place, but that capacity to repay right now is diminished. It is knocked in the head.
▶ 1:14:24So if you if you can't adhere to those five C's of credit, I'm not sure what uh program could help. So we need help in having the capacity to repay the
▶ 1:14:34Thank you all very much. I yield
▶ 1:14:37Chairman, I recognizes Mr. Harris for five minutes.
▶ 1:14:40Thank you, Mr. Chairman, and uh thanks to all of you for your time and your expertise that that you brought. I uh greatly enjoyed reading through your testimonies uh that were submitted prior and reading through them. And I just had a couple of questions and I think all of us have a lot of the same things on our minds today in this committee. But I did want to ask Mr. Hood in your testimony you specifically mentioned that that raising the limits on guaranteed loans and the down payment assistance program as changes that would greatly help the industry.
▶ 1:15:11Um you also mentioned the need for the Farm Service Agency to have access to new technology. Can you just elaborate more on the need and the value of the new technology you had in mind?
▶ 1:15:25Everybody benefits from new technology, Congressman, and and I love that you brought this up. Uh our our bank is constantly spending dollars on new technology to make us better bankers, but especially in the FSA program. my nextdoor neighbor who was also a cattle and uh pecan farmer. Uh she is a retired FSA loan officer and she and I we get together for drinks and we talk about this all the time if if they had had today's technology back in the 70s and 80s.
▶ 1:15:54She said we could have gotten a lot more done for more farmers. So the the technology piece, you're spot on. I don't know what all it includes. I still have to have a seven-year-old show me how to operate a new phone when I get one, but the need is definitely out there to to bring the technology level
▶ 1:16:11Okay, great. Thank you. And and Mr. Gilbert, you have a great perspective as as both a lender and uh a producer and I imagine most farmers don't go into the business because they have a love of finance. uh but however it's clear that today's farmers have to be savvy on debt and lending while also experts on crops and livestock in the process.
▶ 1:16:34So can you share more about the farmers and bankers program that you mentioned in your testimony and and how education on finance is a key part of the farming
▶ 1:16:45Uh can we push the non-record button here? No, I'm just kidding. Uh the the farmers and bankers program actually was started by our current chief credit officer. um and he was a lender at the time and our it was about I'm going to get this wrong but probably 2016 uh and we were facing some challenges in our area and we had noticed that uh a lot of our customers were just kind of you know they were just kind of going through the motions and they didn't necessarily
▶ 1:17:16understand you know a lot of a lot of what it takes to be profitable or to improve uh improve margins even to get closer to zero maybe sometimes. Uh so he he uh he had developed um uh it's a four or five session uh program and we bring in industry leaders uh from our a advisory board that we have at the bank uh to FSA loan officers to um we bring in tax specialists.
▶ 1:17:46We we do also have a wealth management department. So, we bring them in too for some estate planning to help with that transition. And um as well as I can't remember if I said it, but uh commodity brokers to just coach on break evens and another it's just another set of eyes other than their banker saying, "Hey, you need to uh this is what you need to do." But probably the most instrumental thing that we do there uh is we take them through case studies and we show them, you know, obviously
▶ 1:18:16we change the names, change the numbers, but show them the decisions that we had to make um for farmers that were their age and let them make the decision on whether they would have approved that loan or not. And I would say in the last nine years that we've done that, uh I would say almost every group has said no. and we said yes in both of those case studies and they're both still customers of ours.
▶ 1:18:40So just helps the producer realize that hey there's uh there's more than just go getting up every day going out and doing chores and uh planting the crop and harvesting the crop. It's a lot it's not their dad's farm anymore.
▶ 1:18:54Super. Well, thank you. Thank you so much for sharing that. Mr. Chairman, I yield back.
▶ 1:18:58Thank you, Mr. U. Before we adjourn today, I would like to invite uh ranking member David to share any closing comments she may have.
▶ 1:19:11Thank you, chairman. Uh well, I want to first of all start by thanking all of our witnesses today. Thanks for sharing your time and your expertise and personal experiences. Uh it is I mean it this is a crucial part of uh the work we do here.
▶ 1:19:26The subcommittee definitely needs to understand how producers and farmers are using credit and risk management tools that are available and then of course where where improvements can be made and and the testimony we heard today is absolutely going to help with that. I am I'm certainly committed to strengthening the farm safety net especially for producers and and our rural communities who keep our country and frankly the world fed. Uh so thank you again and chairman I yield back.
▶ 1:19:56Thank you, ranking member. And uh I have already uh checked on some of the things I understand are legislative and we will uh draft legislation hopefully work together to to try to get some simple changes done that help move this in the right direction. Uh I appreciate you all for being here and while lending is a big part of any uh successful operation, ultimately you have to have more dollars coming in than you have uh going out.
▶ 1:20:21Uh the safety net's important for those bad years, but uh but long term, you know, we we got to have a system that works for our farmers u to have more dollars coming in than than they've got going out. Uh that said, uh under the rules of the committee, the record of today's hearing will remain open for 10 calendar days to receive additional materials and supplementary written responses from the witnesses to any questions posed by members. Thank you.
▶ 1:20:48And uh this hearing of the subcommittee on general form commodities and risk management and credit is adjourned.