Sen. Debbie Stabenow (D., Mich.), ranking member of the Senate Agriculture Committee, raised concerns that the government shutdown has delayed the dairy safety net improvements made in the 2018 farm bill, thus jeopardizing dairy farmers’ ability to access loans and credit. In a letter to three regulators who oversee agricultural credit providers, Stabenow urged lenders to estimate the farm bill benefits as they work with farmers to analyze their financial needs for the upcoming year.
As dairy farmers across the country continue to struggle from market instability, the 2018 farm bill dramatically expands support for dairy farmers, providing improved coverage options at affordable rates. Early analysis has shown that the improvements would provide much-needed financial support to dairy farmers, offering significant benefits for all operations and up to five times as much support for the smallest farms.
Many dairy farmers facing difficult financial situations are currently meeting with their lenders to receive operating loans for this year. Due to low farm income, more than half of bankers have increased collateral requirements for farm loans. Because important U.S. Department of Agriculture implementation resources and decision support tools were delayed during the government shutdown, dairy farmers and their lenders might not fully account for the benefits they will receive under the new dairy safety net, which could require farmers to provide more collateral, pay a higher interest rate or be denied financing altogether.
Stabenow urged regulators to be flexible and work with lenders to ensure that farmers are accounting for the benefits they will receive through the new dairy coverage options so they can accurately estimate their income and get the right amount of credit they need.
“It is impossible to predict how markets will look throughout 2019, but it is crucial for dairy farmers and their lenders to understand the new dairy safety net as they discuss financing for the years ahead,” Stabenow wrote. “I am encouraging lenders to take a close look at and take into account the improved safety net as they work with dairy farmers to understand cash flow for their operations and what options are newly available – even though they have been delayed due to the shutdown.”