The American Bankers Association told the Senate Agriculture Committee that the government-sponsored Farm Credit System, one of the three major sources of credit for farmers and ranchers, ought to narrow its scope. The FCS was created in 1916 as a borrower-owned co-operative farm lender but now provides “many of the same services and products as a commercial bank, while benefiting from a special tax-treatment status,” said Leonard Wolfe, a Kansas banker and head of ABA’s agricultural credit task force.
Bankers “remain concerned that the Farm Credit System now represents an unwarranted risk to taxpayers,” said Wolfe. The USDA, FCS and banks are leading agricultural lenders. Bankers have complained periodically about competition from FCS. The criticism has taken a sharper edge in recent months.
Doug Stark, chief executive of FCS member Farm Credit Services of America, said what looks like an unfair advantage to bankers is really a different business model. Agri-Pulse quoted Stark as saying, “As a farmer-owned cooperative, we have a very different business structure. Frankly, community banks enjoy some of the same or similar access and backing by the federal government that the Farm Credit System does.”
To watch a video of the hearing or to read statements submitted by witnesses, click here.