Washington, D.C. – A report released today by the Congressional Oversight Panel (COP) for the Troubled Asset Relief Program (TARP) confirmed the concerns of U.S. Senators Russ Feingold (D-WI) and Kirsten Gillibrand (D-NY) about the impact the economy is having on farmers. The report, which was required by legislation authored by Feingold and Gillibrand, revealed that the worsening farm credit situation is making it increasingly difficult for farm families to stay on their farms and in their homes. With net farm income declining by 20 percent in 2009 and demand for operating loans from the USDA as lender of last resort increasing by 81 percent, the report found “trends and projections in farm lending are troubling” and that “some parts of the agricultural economy, most notably dairy are in crisis.” The report outlines different methods that could be used to help farmers and ranchers restructure their loans as an alternative to foreclosure either through a mandatory program or a voluntary program that could be opened up to more than just TARP recipients. The report validated the effort by Feingold and Gillibrand in a March letter, cosigned by 17 other senators, calling on the U.S. Department of Agriculture and Treasury Department to consider a foreclosure mitigation program that includes loan restructuring for farmers, as they have already done for home loans.
Read the COP Report.
“Today’s report makes it more clear than ever that the USDA and Treasury Department should work together and use their authority to put in place guidelines for when and how commercial lenders should restructure farm loans,” Feingold said. “Farms are both homes and businesses for many families in Wisconsin and it is critical that these families receive the resources they need. I will redouble my efforts to encourage firms that have received a federal bailout to work with farmers to restructure farm loans to avoid foreclosure. Family farms are the foundation of communities across Wisconsin, so this effort will also help provide a firewall against further blows to the rural economy.”
“New York’s farmers are a critical part of our economy and we must ensure their success,” Senator Gillibrand said. “In this economic crisis, we can’t afford to let our farm families be pushed any farther to the brink. If we’re going to rebuild this economy, we need to keep families on their farms. I will continue working with Senator Feingold to make sure our farmers have the opportunity they deserve to restructure their loans so they are on track to succeed and grow for the long term.”
The oversight report also highlights the impact of low prices, relatively high costs and the drying up of available farm credit facing farmers, especially dairy producers. As Agriculture Secretary Vilsack learned during his Rural Tour, there are stories from across the country of farmers being forced to pull funds out of retirement accounts and other emergency actions just to pay the feed bills or put crops in the ground this spring after normal lines of credit were not available. For hard hit sectors like dairy, the report also points out that Congress and the Obama administration can do a lot to indirectly help farmers qualify for credit. Along these lines, last week Feingold and Gillibrand joined with other dairy leaders in the Senate including Senators Kohl (D-WI) and Leahy (D-VT) calling on the USDA to take emergency action to increase dairy product support prices.
“While taking steps to provide alternatives to foreclosure is important, this report also reveals that it is critically important to improve farmers’ income in hard hit areas like dairy, which will indirectly help them qualify for credit and afford the loans they might already have,” Feingold said. “I am working with my colleagues to encourage the Obama administration to boost the dairy floor price, so that we attack this problem from multiple angles.”
The report also found a striking lack of available data on farm loans and strongly recommended regulators collect and make more information publicly available to help policymakers, farmers and lenders make better informed decisions.