ENFIELD, CONN. – Farm Credit East supports the introduction of legislation (H.R. 874), the Agricultural Credit Expansion Act of 2011 by U.S. Reps. Bill Owens (D-N.Y.), Joseph Courtney (D-Conn.) and Richard Hanna (R-N.Y.) to make more farms eligible for USDA Farm Service Agency (FSA) loan programs. This bill will allow family farms that are organized for business purposes in certain ways to be eligible for FSA loan guarantees and direct loans.
Farm Credit East CEO Bill Lipinski noted, “This legislation will improve credit availability to agriculture because it addresses real limitations of federal loan programs that are intended to help family farms. We hope that Congress will act quickly to approve it.”
Lipinski added, “When working with FSA to obtain guarantees for some farm loans, we increasingly run into situations where a farm is structured in a manner — such as Limited Liability Company (LLC) or entities formed from Family Trusts — that makes the farm business ineligible for those guarantees.”
For example, many families have a farm ownership LLC and farm operating LLC when multiple family members own the farm. This structure helps protect the business from liability and with business transfers between generations. However, the business is not eligible for a FSA farm ownership guarantee because the person operating the farm does not own the farm. This is true even if both LLCs involve just one family farm operation.
Northeast agriculture is important to the economy of the northeastern states and employs hundreds of thousands of citizens on farms or in service, input and processing industries that support agriculture. Northeast farm businesses work more than nine million acres of farmland in the six states the Farm Credit East serves, including New York, New Jersey, New Hampshire, Massachusetts, Connecticut and Rhode Island.
Lipinski concluded, “While farming is a tough business and the economic recession created significant financial stress on farms, thousands of strong farm operations across the Northeast produce a safe food supply. This legislation will help ensure that the FSA loan program effectively supports those businesses.”
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Farm Credit East extends more than $4.3 billion in loans from 19 local offices in its six-state service area. In addition to loans and leases, the organization also offers a full range of agriculturally specific financial services for businesses related to farming, horticulture, forestry and commercial fishing. A 20-person Board of Directors from across the Northeast leads Farm Credit East.
For more information, go to FarmCreditEast.com