While the Obama Administration begins to implement the Homeowner Affordability and Stability Program, Farm Aid and farm, rural and housing advocates from across the country have joined to urge Treasury Secretary Timothy Geithner and Agriculture Secretary Tom Vilsack to ensure that family farmers also have the ability to restructure their loans to avoid foreclosure.
More than 50 organizations, representing farmers and ranchers, rural communities, communities of faith, and anti-hunger advocates, signed a letter to the Treasury and Agriculture Secretaries urging that banks and other financial institutions that have accepted federal bailout funds be required to work with farmers to restructure farm loans to keep farmers on the land and in their homes. A similar letter was sent from nineteen Senators, led by Russ Feingold (D-WI), Herb Kohl (D-WI), Kirsten Gillibrand (D-NY), and Sherrod Brown (D-OH).
While many Americans are feeling the impact of the current economic crisis, farmers face volatile commodity prices, rising production costs and tightening credit markets, resulting in a serious cash flow and credit crisis. Farmers depend on credit to cover the up-front costs of planting and harvesting their crops, for which they may not receive payment until the end of the year. These farm loans are essential to farmers but in today’s uncertain economy they are also a tremendous risk. Because farmers are often required to place their family home as security against their farm loan, many farmers are in danger of losing not just their business but also their family home if they fall behind in their farm loans.
The farm loan restructuring plan mirrors requirements that are already in place on farm loans supported by the USDA Farm Service Agency and the requirements being developed for home loans under the Homeowner Affordability and Stability Program. It is similar to the 1987 Farm Credit Act, which had the support of Farm Aid and many of the organizations who support the current plan, and which kept thousands of farmers on their farms during the farm crisis of the 1980s. This plan requires no additional funds from the federal government, and will in fact result in savings for taxpayers and the banks that hold these farm loans by preventing foreclosure. In addition, the plan will keep farmers on the land, protecting our food supply and the local and national economies that farmers support.
“The United States is re-laying the groundwork of its economic stability, and family farmers are the key to a strong foundation,” said Farm Aid board member Neil Young. “It’s time… to recognize the unmatched abiliity of family farmers to strengthen local economies. We can all learn from the ingenuity and innovation that family farmers demonstrate time and time again in the face of challenge.”
In 2008, the agriculture sector is projected to have contributed more than $130 billion[1] to the U.S. economy; estimates indicate that it employs 14 percent of the total workforce and accounts for nearly 5 percent of the total U.S. gross domestic product.[2] As important as the financial contribution family farmers make at the national level are the investments they make in their local communities.
To view the sign on letter from farm and rural organizations, go to: farmaid.org/farmloans.
To view the Senate letter, go to: http://feingold.senate.gov/pdf/usda_treasury_030509.pdf
[1] “Agriculture Outlook: Statistical Indicators.” Economic Research Service, December 2008. [2] “Visions of the Rural Milieu: United States.” Dabson, B. Rural Policy Research Institute, July 2008.
