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.
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.