Testifying on behalf of the American Bankers Association today at a hearing before the House Agriculture Committee’s Commodity Exchanges, Energy and Credit Subcommittee, banker Nate Franzen outlined several changes ABA is seeking in the upcoming Farm Bill. Franzen is president of agri-business at First Dakota National Bank in Yankton, S.D., and past chairman of ABA’s Agricultural and Rural Bankers Committee.
Highlighting the successes of the previous Farm Bill — in particular, the bill’s improvement of crop insurance, the Conservation Reserve Program and removal of borrower term limits for the Farm Service Agency’s guaranteed loan programs — Franzen noted that the new bill must make “substantial changes” to keep pace with the changing agricultural landscape. Specifically, he advocated for increasing the current loan limit on FSA guaranteed loans, noting that the formula for indexing the programs has not kept up with the rising costs of agriculture. ABA has endorsed legislation introduced by Rep. Mike Bost (R-Ill.) that would increase the cap from $1.4 million to $3.5 million and double the size of direct operating and ownership loans from $300,000 to $600,000.
Additionally, Franzen encouraged lawmakers to take steps to modernize technology and address staffing needs at FSA to create a more efficient operation and avoid “knowledge gaps” that result from the turnover of experienced staff, ultimately hindering the lending process. He also urged Congress to use the Farm Bill as a vehicle to improve Farmer Mac, calling for removal of the current 1,000-acre limitation. He added that Congress should have “a serious discussion about Farmer Mac being able to buy all guaranteed loans from USDA. This flexibility would encourage more banks to be involved in guaranteed loan programs across USDA.”