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Opening Statements

Opening Statement: Subcommittee Chairman Austin Scott: Focus on the Farm Economy: Tightening Credit Conditions

Opening Statement: Chairman Austin Scott Commodity Exchanges, Energy, and Credit Subcommittee Hearing: Focus on the Farm Economy: Tightening Credit Conditions

Remarks as prepared:

Good morning, and welcome to today’s hearing.  This is the second in a series of hearings that each subcommittee is holding on the state of the farm economy.

As we know, the agricultural economy is highly cyclical. Given the recent 56 percent drop in net farm income and the hard times that inevitably come along with that, I believe it is important to hold hearings like the one today to make sure the credit needs of producers are being met and will continue to be met, particularly if current market conditions continue into the future. 

While providing credit to America’s farmers and ranchers is vital, it is a growing challenge for many lenders in the United States.  Perhaps no one knows this better than lenders in cotton country. After a recent period of historic highs, crop prices have plummeted due to various factors which were discussed at last week’s hearing before the General Farm Commodities and Risk Management subcommittee. While input costs have softened, they remain near historic highs, and some of our biggest foreign competitors are sharply increasing their subsidies, tariffs, and non-tariff trade barriers. Unfortunately, the burdensome government regulations have added to the challenges faced by America’s farmers and ranchers, with the EPA continuing to push for new and costly regulations. 

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

In order to sustain an abundant supply of food and fiber well into the future, we must ensure that a responsible farm safety net and sound agricultural credit policies are in place now. To that end, I am pleased to welcome a distinguished group of witnesses and look forward to learning more from them about their perspective on current credit conditions and their outlook for credit conditions in rural America.