Elfman: ACRE Act Will Benefit U.S. Ag

There is a lot of legislation on the books affecting agriculture every day, whether at the federal or state level.  But one piece of D.C. legislation you may not be familiar with is the Accessing Credit for our Rural Economy Act, also known as the ACRE Act.

“It's a tax bill. So, in the context of agriculture, we always think Farm Bill right?" noted Ed Elfmann, senior vice president of agricultural and rural banking for the American Bankers Association. "But in reality, there are a lot of taxes that affect agriculture, the ACRE Act being one of those pieces of legislation that would change the tax code.  So, to break it down, what it will do is it'll change the tax code around agricultural farm real estate lending, rural housing, aquaculture, and fishery.”

The legislation, Elfmann said, would help rural Americans battling high interest rates.

“Essentially, what it does, it becomes a tax pass through to lower interest rates for farmers and ranchers, rural homeowners, aquaculture folks, and all of that.  So, it's something we've been working on for a while at ABA.  The concepts been around for about 30 years, but with tax reform coming up, we thought,  ‘What better time to start talking about potential tax changes to the banking industry that would help farmers and ranchers?’”

While it’s a banking bill, Elfmann says the ACRE Act would impact farmers and ranchers in a variety of ways.

“Interest rates are two things. It's a combination of risk and cost. Risk - make your payments on time, use a USDA guaranteed loan - that can lower your risk, right? On the cost side, we have to pay our employees, keep our businesses, our bank branches open, and pay taxes," Elfmann said.  "So, by removing the tax that we pay on farm real estate lending, we can lower interest rates for farmers and ranchers.  Our analysis shows the rates will lower 50 to 150 basis points, so that's real money when you're paying seven percent interest to get down to 5.5 especially in this type of environment we're in, economic environment we're in?  So, to us, it was a solution to come up with how do we lower costs?  On the other side of the equation, Farm Credit System and some other folks have this in place already, so we're just trying to create the same level playing field for the banking industry as well, which ultimately helps farmers and ranchers.”

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