Opening Statements

Remarks as prepared for delivery:

Good morning, and welcome to today’s hearing. Providing credit to America’s farmers and ranchers is a necessary and serious challenge for many lenders in the United States. After a recent period of historic highs, crop prices have declined due to record plantings and strong production, input costs have risen, and some of our biggest foreign competitors are sharply increasing their subsidies, tariffs, and non-tariff barriers to trade.

Meanwhile, farmland values are on a downward trend, and while livestock producers are rebounding on the balance sheet with lower feed costs, our western producers are struggling with consecutive years of drought.

Unfortunately, the U.S. government has added to the challenges faced by America’s farmers and ranchers. The EPA continues to push for new and costly regulations, and then there are those standing in the way of critical tax relief, ranging from a permanent section 179 and bonus depreciation to repeal of the death tax. It is in times like these that our farmers and ranchers are most in need of reliable sources of credit at competitive rates. Thankfully we have a network of commercial and community banks, USDA loan programs, and the Farm Credit System that each play a crucial role in providing that access.

The importance of the Farm Credit System is largely unknown to those outside the agricultural community, often leaving it prone to political attacks. So I am thankful that we have an opportunity today to highlight the System and its century-long mission of providing credit to agriculture and rural America during the good times and the bad, as well the role of the Farm Credit Administration in ensuring the soundness of the System and its lending practices.

While Congress has generally outlined the authority by which the Farm Credit System may fulfill its ultimate mission of ensuring a dependable source of credit for agriculture and rural America, I realize that authority is not necessarily delineated with bright line rules. Therefore we largely rely on FCA as the regulator to ensure that System banks are doing their part to stay within the bounds of the Farm Credit Act. In that vein, there has been much scrutiny of System bank financing deals with major telecommunications networks. I am sure a number of my colleagues will be eager to discuss that topic again today, and I look forward to a healthy discussion of “similar entity lending authority” that provides greater clarity for all involved.

On the whole, I believe that the Farm Credit system is fundamentally safe and sound and in a position to weather the challenges that it is likely to face in the times ahead. Together with the commercial banks, community banks, and the Farm Service Agency, the Farm Credit System will continue to play a crucial role in maintaining the success story of American agriculture.

Today we will hear from the Farm Credit Administration, the regulator of the Farm Credit System. Before we begin, I would like to thank our witness, Mr. Ken Spearman, for being here today. Mr. Spearman recently had a medical procedure, which is the reason for his wearing a hat during today’s hearing. We are very happy to hear that he is recovering well and I appreciate you making time to appear before the committee.