FCA Calls for Legislative Changes in FCS

Farm Credit Services of America (FCS of America) request to exit the Farm Credit System (FCS) is making Congress step back and evaluate if the mission of the System is being fulfilled to best meet the needs of rural America.

FCS of America appears to be on track to be purchased by Dutch-based Rabobank. Farm Credit Administration Chairwoman Nancy Pellett says that FCS of America has not yet filed the formal papers that would trigger a 60-day period in which FCA would be required to make a decision on termination.

In testimony given on Wednesday to a House agriculture subcommittee several representatives from the Farm Credit System voiced concerns about FCS of America's plan to exit and the flaws with the current system.

Pellett testified that the FCA has developed a 5-year Strategic Plan that addresses the changing structural changes in agriculture and rural areas and the lack of investment equity in many rural areas.

She also told the members that some of the areas FCA has pondered that Congress may wish to consider are:

• Change rural home lending authorities that restrict such lending to towns of 2,500 in population so that such loans can be made in larger rural communities.

• Provide more flexibility for System institutions to engage in syndication lending. In addition, authorize banks to engage in syndication lending.

Jerold Harris CEO of U.S.AgBank urged quick Congressional action to end the ability of Farm Credit System institutions to terminate their System status stating, "We are asking that this Committee repeal the termination authority as soon as possible," he says on behalf of the Farm Credit Council representing the views of the Farm Credit System. Harris says that the termination authority, "allows an institution to abandon its congressionally mandated mission and purpose."

The Farm Credit System is undertaking a comprehensive review of operating limitations imposed on Farm Credit by the Farm Credit Act and regulations issued by the Farm Credit Administration. Harris sees FCS of America's decision to exit to its frustrations with the way the current System is mandated. He hopes a comprehensive review of the System can ensure FCS can continue to fulfill the mission to meet the needs of the 21st century.

John Hansen, President of the Nebraska Farmers Union, requested regional hearings in each of the states affected so that the borrowers/owners of the FCS of America, and the public at large, can fully comprehend and explore the implications of such a takeover. "We strongly urge that these hearings be held well in advance of any steps that might allow the takeover of the FCS of America," he says.

Pellett says because of time constraints, conducting hearings in all four states, Iowa, South Dakota, Nebraska and Wyoming, may be difficult. Earlier this week South Dakota Senators Tom Daschle and Tim Johnson said more time is needed to ensure that the FCA makes the right decision for farmers. They've introduced legislation that calls on the FCA to hold at least one public meeting or hearing in each of the four affected states before approving the exit.