What Worries Ag Lenders with the Farm Bill?

What Worries Ag Lenders with the Farm Bill?

Top of the list on congressional priorities is, unsurprisingly, the 2023 Farm Bill. Being seriously impactful to everything agriculture, all corners of the industry keep a close watch on the developments. The ag lending community is no exception.

Ed Elfmann Sr. Vice President for Ag and Rural Banking Policy for the American Bankers Association in Washington, D.C. says they will watch the Farm Bill debate, if nothing else, to understand how the new legislation will impact farm loans.

Some have expressed concerns that future assistance won’t be available because of the large amounts of Ad hoc payments over the recent years, such as the inflation assistance, Covid-19 supplemental payments, supply chain disruption support…

Elfmann says moving away from Ad hoc doesn't concern him.

“You can't determine an ad hoc payment, right? So, farmer suddenly gets a check for $64,000 or whatever, you can't write that into your cash flow. It just comes out of nowhere. All you can do is help manage that you know asset acquisition and make sure that it fits into the overall plan. So, what we're watching more is what the overall programs look like, right.”

When it comes to the actual government payments popping in and out, Elfmann says since they are Ad hoc, bankers don’t rely on them or follow them too much.

“I think lending has changed a quite a bit since the 2018 Farm Bill went in place, because we had to adhere to the kind of these new rules. And then banking regulations require us not to just pick a number and hope it works right we've got to work through that process. Are we watching? Are we worried? In a way I'd probably say we're more worried about if there are any potential cuts to crop insurance.”

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