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Congressional members seek changes in SBA poultry rules

Small Business Administration asked to maintain vital program for family poultry farms.

Jacqui Fatka

November 27, 2018

2 Min Read
Congressional members seek changes in SBA poultry rules
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Members from both the House and Senate are challenging a proposed Small Business Administration (SBA) rule that would deny many family-owned poultry producers access to SBA-sponsored financing.

In a letter to SBA administrator Linda McMahon, Sens. Cindy Hyde-Smith (R., Miss.) and Roger Wicker (R., Miss.) asked that a proposed rule to the SBA 7(a) Loan Program be modified to more accurately reflect the relationship between small growers and large producers, commonly referred to as integrators. The SBA 7(a) Loan Program is a critical source of financing for many Mississippi poultry farmers, the two said.

“These independent poultry farmers are solely responsible for obtaining financing, supervising, managing day-to-day business and paying taxes. In no way are they partners, agents or employees of the integrator. The SBA 7(a) loan program provides essential access to financing for small family farmers,” Hyde-Smith and Wicker wrote.

“Access to capital is essential to the continued success of poultry production in Mississippi, and we respectfully request that you revise the SBA proposed rule so growers are not arbitrarily excluded from the SBA 7(a) loan program,” they said.

The Mississippi senators were sharply critical of a March 6, 2018, SBA Office of the Inspector General (OIG) report, titled “Evaluation of SBA 7(a) Loans Made to Poultry Farmers,” which inaccurately found that large producers, or integrators, maintain control over independent operators and should, therefore, be considered “affiliates” of the larger companies that buy their chickens. As affiliates, small farmers, who are actually independent registered businesses, would be deemed too big to participate in the SBA loan program. The proposed rule is based on the flawed OIG report.

Related:Additional scrutiny made on SBA poultry loans

The letter also stresses the importance of poultry, one of Mississippi’s leading agricultural commodities. In 2017, Mississippi’s 1,430 poultry farms produced 746 million broilers worth more than $2.5 billion in production value.

In a separate letter, Sens. John Boozman (R., Ark.) and Tom Cotton (R., Ark.), along with Reps. Rick Crawford (R., Ark.), French Hill (R., Ark.), Steve Womack (R., Ark.) and Bruce Westerman (R., Ark.), also pressed SBA to reverse the proposed rule.

“Poultry is the largest segment of Arkansas's agricultural industry, creating and supporting over 150,000 jobs, including thousands of family farms. Access to capital is one of the most significant barriers to entry for farming, which is why Congress specifically included agriculture in the SBA's mandate. This proposed rule would jeopardize the livelihood of thousands of small family farms and small businesses across Arkansas,” the lawmakers wrote.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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