The 2024 Farm Bill contains “great improvements” in credit availability for rural America, but there remain steps that lawmakers can take to help producers receive agricultural credit, Tony Hotchkiss, chairman of the American Bankers Association’s Agricultural and Rural Bankers Committee, told lawmakers today.
Hotchkiss, who recently retired from his position as director of agriculture for Regions Bank in Clayton, Missouri, testified before the House Agriculture Committee for a hearing on financial conditions in farm country. In prepared testimony, he emphasized the critical role banks play in the agricultural economy as a primary source of credit to farmers and ranchers across the U.S. Among other things, he noted more than 3,800 banks in the U.S. had agricultural loans on their books with a total outstanding portfolio of $198.6 billion.
“In 2023, farm banks—banks with more than 14.32% of their loans made to farmers or ranchers—increased lending by 6.7% to meet the rising needs of farmers and ranchers, and now provide $110 billion in total farm loans,” said Hotchkiss. “Farm banks are an essential resource for small farmers, holding more than $44.6 billion in small-farm loans, with $9.2 billion in micro-small farm loans (loans with origination values less than $100,000). Farm banks are healthy, well-capitalized and stand ready to meet the credit demands of our nation’s farmers large and small.”
Hotchkiss pointed to what he said were important improvements to the credit title of the 2024 House Farm Bill, such as the increase in the FSA Guaranteed Farm Ownership Loan Program to $3.5 million and the FSA Guaranteed Farm Operating Loan Program to $3 million. At the same time, he noted ABA’s strong support for a separate bill, H.R. 3139, the Access to Credit for our Rural Economy [ACRE] Act, which would remove the taxation on income earned from interest on agricultural real estate loans, and for loans for rural residences in a population area of less than 2,500 people with a mortgage value of less than $750,000.
“By removing this taxation, banks will be able to lower their interest rates, which helps to lower costs for borrowers,” Hotchkiss said.
