As virtually most bankers in the Heartland know all too well, financing the business of food production is getting more and more difficult. Net farm income has steadily declined since 2013 and, as a result, many farmers and ranchers are struggling to keep, find or obtain access to credit.
A bill has been introduced by Sen. Pat Roberts (R-Kan.) that creates a new tax exemption for community banks giving them more room to renegotiate any loans that might help struggling farmers and ranchers. The bill is entitled the Enhancing Credit Opportunities in Rural America Act S. 1641. A companion bill has also been introduced in the House by Rep. Steve Watkins (R-Kan.) (H.R. 1872).
“The point of these two bills is to create an incentive for traditional community banks to help marginal farm borrowers either restructure their debt or obtain access to credit,” OBA President and CEO Roger Beverage said. “The incentive is to end taxation of interest earned from agricultural real estate loans. It will also enable our banks to compete more effectively with the Farm Credit System.
“When it was first introduced, it appeared as if no one was paying attention to what’s happening in rural America. Many (of you) saw the headline in the paper last week about the continuing decline of the nation’s rural economy. This bill promotes greater access to credit for rural communities and reducing costs to borrowers. It’s not the only thing we can do, but it will help.
“Moreover, the bill helps bring greater parity between our member banks and the Farm Credit System without attacking the System directly for its tax-advantaged status. We’ve been doing that and getting the same result – nothing done – for many years. I’m encouraging everyone and anyone to call, email or write to Sen. Inhofe and Sen. Lankford, in particular, to ask them to co-sponsor S. 1641.
Bankers can find some suggested language to use by going to Secure American Opportunity – https://secureamericanopportunity.com/issues/rural-credit-access/?utm_campaign=NEWSBYTES-20191113&utm_medium=email&utm_source=Eloqua – and taking advantage of the ABA’s new grassroots engagement site. It’s simple, it’s easy, it’s quick, and it helps us get the word out to decision makers that we support this idea.”