Ag Bankers Worry About “Cliff” Without Farm Bill

Ag bankers fear an economic cliff in farm country without a new Farm Bill.  That’s according to one longtime Ag banker who recently testified before the House Agriculture Committee.  Tony Hotchkiss has spent the last 41 years in Ag banking and now chairs the Agriculture and Rural Bankers Committee of the American Bankers Association. 

“With rising input costs and lower commodity prices, farmers and ranchers have worked through the liquidity and working capital the last few years and are now beginning to leverage equity through refinancing debt,” Hotchkiss told lawmakers.

And that has bankers nervous he noted.

"This has made agricultural bankers feel like they are looking over the cliff in regards to the agricultural economy.”

Hotchkiss, who grew up on farms in Iowa, says some farmers are starting to refinance debt, which is a risky practice.

“The challenge with refinancing is that with low commodity prices, the cash flow is challenged to even meet the new payment requirements of the refinanced debt,” Hotchkiss said.

And USDA is forecasting a net farm income to drop some 25% this year. 

“Based on this, the trend of refinancing debt may become more commonplace and more challenging as lenders and producers work together to bridge the low prices we’re experiencing in ag commodities,” he continued.

Thus, the urgent need, Hotchkiss argued, for the languishing House Farm Bill with its improvements to reference prices, FSA guaranteed loan limits, crop insurance, dairy supports, and beginning farmer and rancher programs.

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