The members of the second panel year in the process of having three votes on the floor of the senate and to accommodate all members in a way to be consistent with the time constraints that i will introduce executive privilege and by that time the distinguished Ranking Member will be here until somebody comes back but at any rate will introduce mr. Wolf and then get your statement when introduced we will let the senator know what the order is. With follow the famous black squirrel. [laughter] i know this is the home of the famous black squirrel because the gentleman dresses up as the blacks girl black squirrel i turned around to discover a lifesize black squirrel. I hope fish and game to not this that is being endangered a 600 million case in these northeast communities in the Bakers Association and to serve as the American Bankers Association with no small task a graduate of Southwestern College he began his banking career in 1979 to become president and ceo at the young age of 28 i really appreciate you being here to represent our great state and thanks to the witnesses for appearing and basically we will rotate back and forth. Share roberts and the Ranking Member and the president and ceo chairman of the board of the biggest trust the largest commercial Agricultural Lender in kansas with the farm Credit System i appreciate the opportunity to pursue it to present the view of the availability and roll america this is very timely that is the best in history no question is this going into straits near historical lows to have the liquidity the farmers and ranchers managed turbulence in the economy and with the farm bill in place they have certainty about future agricultural policy. In 2015 a farm bank with any more than 15point 5 now provides over 100 billion of total farm loans and Small Farmers rely on the banks for funding that hold 40 billion of small farm loans and micro small farm loans and are healthy and theyre looking forward with growing capital and increasing reserves. To manage risk with a downturn in the air cultural sector and by keeping congress the to make additional credit available with the farm loan programs and all and thus subject i believe Congress Needs to consider reforms specifically to raise the cap due to the rising cost of agriculture along with modernizing the programs. Usda Farm Service Agencies allow them to access credit from banks like mine from farmers across the country we remain concerned with the credit market the farm Credit System over the years from the intended mission with the unwarranted risk to taxpayers as a government sponsored enterprise represents a risk to taxpayers in the same way as fannie mae and freddie mac. To ensure that young beginning Small Farmers and ranchers with access to credit is not of focus today it has grown into an enormous system offering complex Financial Services if the system were a bank was the ninth largest in the United States and larger than 99. 9 . The farm Credit System benefits from tax breaks valued at 1. 3 billion giving a significant edge over private sector competitors. With a 10 billion line of credit. It is shocking that nearly half of the portfolio a beach more than 1 million. And it has large established organizations that does not need subsidized credit and it is clear the system has become too large and focused to subsidize a large bar hours per barrel and to ensure the charter is being followed and banks like mine are proud to support the farmers and ranchers in americas banks remain committed through good times and bad. I am happy to answer any questions. Just a moment. I have to say some others wonderful things on your behalf. [laughter] growing up on a small grain and livestock farm always having the jury to take over the operation with escalating cost beginning his speaking career in the 70s serving in Senior Management positions in Community Banks ever since he now serves as a delegate for the northern half of violent for the independent Community Bankers banks for testifying we welcome your statement. Dash as you stated unprecedented in a sea of Community Bank the of oldline uelwein i want providing products they need while treating them like friends and family measured by the relationships and individualized hands on service located in northeast iowa serving those of livestock soybeans and corn. The Community Banks in the rural areas with virtually every small town to an outstanding job with credit in good times and bad. Role committee banks provide more than one half of all credit from the banking sector. Most barbers at best are breaking even and only if they have low debt levels the most threatened are the youngest and small if they have no financing backgrounds those are the most times but the continuation of low farm prices will cause many farmers to exit including those better strong and we do urge senators so they dont overreact my testimony makes recommendations on usda farm loan programs to keep the farmers and business. Regarding ses ending 2015 total assets was three 1 4 billion dollars and 86 increase from 10 years earlier of 163 billion. Fcs gross loans is 92 increase from a decade earlier. Fcs net income for put 6 billion in the tax rate is 4 by comparison my bank is tax dash 34 at almost 40 total tax 36 more than and fcs it is a huge a vintage to enable the cherry picking a also has retained earnings with a tax benefit to have tremendous growth over the last decade as a Lobby Congress and its regulator for expanded powers and inappropriately received those for the complex set regulator requested their obtaining that ted Million Dollar line of credit at and fcs has an Insurance Fund to protect lenders but we do note the allowance is only 54 basis points by contrast the bank is 186 basis points perhaps if fcs had the higher reserve they would not have to go to the treasury for line of credit with no congressional involvement as was recommended by the Brookings Institution report. Why did fcs act in secret . We have surveyed bankers and every geographical region in recent years all bankers are alarmed by the cherry picking to undercut the loan rates to ignore the less creditworthy borrowers. Along with those two losable as operations to less since the credit choices in the availability for Rural America the regulator wants to make non farm loans they want to cherry pick the very best non farm loans from those portfolios not authorized by law. The proposed Mission Related investment regulation would allow lenders to have the approval label them as investments. Loans for manufacturing would be eligible for writein is located in the eric city and london. This is not rule iowa or american or authorized by statute and under that provision of the act not credible not intended to allow those nonfarm loans of hundreds of millions in the Worlds Largest cities. Will have her next witness, will save a little time as senator usually repeats the constitution of the United States before he answers questions. Is the president and cvo of frontier farm credit. Hes been with the system for 35 years. Having years. Having served in several capacities beginning as an assistant loan officer during his career, he also also worked for the Farm Credit Administration in spokane washington for two years as an examiner and supervisor. Mr. Start, thank you for joining us today and hopefully we will turn to our distinguished Ranking Member for the next witness, if not i will try to do the best job possible. Please go ahead with your statement. Thank you mr. Chairman. Ranking member stab in on members of the committee, i appreciate the opportunity to testify on behalf of the farm Credit System. My name is doug start, i am president and ceo of Farm Services of america frontier farm headquartered in nebraska and kansas. Thank you very much for being the cosponsors of the congressional resolution congratulating farm credit 100th anniversary. Were part of that so many of your colleagues on this committee are also resolution cosponsors. As a turn the pages, got them stuck together, we and our colleagues in the baking industry come before you today with good news. The commercial Banking Industry recently announced record profits of the farm Credit System is a financial strong as it has ever been. Given the challenges facing farmers and ranchers today and the extraordinary Capital Requirement of this industry, our nations Agricultural Producers need the farm Credit System and the commercial Banking Industry to be viable and strong. The farm Credit System is here for this morning is made up of 78 individually and cooperatively owned and governed institutions. All have separate boards of directors elected by their customer owners. There are no federal funds or taxpayer dollars appropriated for the Ongoing Operations of the farm Credit System. As a cooperative net income in farm credit goes to one of two places, it is either retained within the institution to build financial strength to serve customers, or it is paid out to customers in the form of patronage dividends. As one of the directors wrote in the letter, quote the board believes a collaborative lending system allows us to bring a unique and important Value Proposition to the market. We want start stockholder capital to be held as close to the farm as possible. That is the beauty of the farm Credit System that congress had to foresight to create 1916. Farm credit operative Business Model is fundamentally different. By design. And healthy farm Credit System and a healthy commercial Banking Industry bring greater stability and competition to the credit market. If we lose the business to commercial banks, and we do, that means the lending market is working for producers. If we. If we partner with a commercial blank to meet the credit needs of an enterprise serving rule america, and we do that means lending market is working for those communities. Of a local bank cannot take on the risk of a beginning operation and refers young farmer took farm credit, and it happens that means the lending market is working for producers. We know competition makes all of us in the lending work hard each day to be more efficient and customer centric. We focused our our time and energy on better serving producers versus asking for the elimination of competitors. There is room in the market for both commercial banks and farm credit. Producers that need us both. And farm Credit Associations we have been proactive in helping customers prepare for the challenges of the current cycle. We we counseled around the importance of working capital and have worked restructured that were appropriate. We are committed to working with our customers through tough times. Strong earnings have allowed farm credit to build equally Strong Capital levels to protect against loan quality. We have sophisticated stress testing procedures and are examined by federal regulator an issue transparence, audited financial statements. The farm Credit System does not pose a risk into u. S. Tax payers. In in fact the system has never been stronger. I personally take particular pride in the support we provide to our young and beginning small producers. It is an important part of what we do every day. While somewhat have you believe it is the sole reason we exist, our mission is spelled out by congresses to serve all of agriculture, large, small, young and old. In 2015 along the farm Credit System made more than 62,000 loans to young producers, 80 thousands to beginning producers and 150,000 monster small producers. Farm credits mission also expands to supporting role committees five nancy vital infrastructure, helping bring clean water to rural families, Reliable Energy to farms and roll towns, and modern, highspeed telecommunications to connect rule america to the rest of the world. We also help finance entities that are similar to art directly eligible powers as defined by congress, these civil loans are made in partnership with and at the invitation of commercial banks. In summary, i see farmers and ranchers working hard to address the current decline in commodity prices. They take enormous pride in what they do. Many are trying to carve out a way for their sons and daughters to continue a family tradition. We are honored to serve agriculture producers, farmer cooperatives and Rural Infrastructure producers who owned the farm Credit System. They are the farm Credit System. On behalf of our customer owners we look for to the next 100 years of serving rule communities and agriculture. Mr. Chairman, a variety of statements with me from groups representing producers, farmer owned cooperatives and others that i reinforced the importance of farm credits mission. I asked that those statements be made part of the hearing record. Without objection. Thank you. Ill be pleased to respond to your question. Thank you very much and i apologize for the back and forth today. I know you understand about the votes that are occurring and members having to try to be several places at once. We very, very much appreciate all of your testimony and its an important part of our deliberations Going Forward. Im pleased that i made it back in time to introduce mr. Jed welder. As i mentioned earlier he is taking time from a busy planting season to provide a producer perspective today. Mr. Weldon has served in both the u. S. Marine, and the u. S. Army and sever tours in afghanistan, iraq and bosnia before returning to gringo, michigan to start a farm with his wife and children, he is a proud alumni i should say alumnus of Central Michigan university. Not far from where i grew up. He serves on the inaugural board of directors for the michigan chapter of the farmer, veteran coalition. We thank you very much for joining us and i look for to your testimony. Thank you chairman roberts, Ranking Member sabin offer the kind introduction. Thank you to all of the members of the committee to testify today. I am from him inside farm in greenville michigan where my family and i raise corn, soybeans and recently began gray several acres of hops. Before returning home to michigan before to start my career as a farmer i served the United States serving as an officer with some of the greatest men and women in the world. In 2008, my thousand eight, my wife and i made a difficult decision to leave the army after repeated deployments in an ever increasing operational tempo we wanted to start with the family on a farm back in michigan. We love moving to the country and enjoy the challenges of this new profession. We need about land and capital to be able to farm fulltime. Farmers are closeknit group. You cannot just google how to do somethings, you actually ask mentors and experience farmers in the area what has worked on their forms. When i asked older farmers in west michigan about access or credit they said years ago i could go to a local bank and take out and operate in low but that banks dont do that anymore. Even a small farm requires hundreds of thousands of dollars in fee, fertilizer and fuel each year to operate. My small farm uses older equipment but even that cost more than a mortgage most local banks would handle. There is a Greenstone Farm Credit Services office in my county that was recommended by several farmers. Prepared a Business Plan walk through their door. They understood what i wanted to do and what i needed to run my operation. They make good, solid recommendations solid recommendations and overtime became a trusted partner. As my business changed and grew they grew with me. Today far more than 800 acres of land and have been able to continue farming land since the 1960s. The summer is building a grain trying to story system i loan officer came out to see the progress and talk to me. We we construct one of the first half years in county and as we did greenstone walk through the yard to see what hops were. Their offices 20 minutes away, they know how the crops in our area look and what the prospect for harvester because theyre in the business of working with farmers. Last fall and everybody contact me because she wanted to buy land near my farm. She had talked to several banks but she worked in texas at the time and wanted to buy farmland near her family michigan. Every bank said we do not do that anymore. When i put in contact with my Greenstone Office they told her that is what we do, she ended up purchasing the land in last friday, my daughter and i planted that farm for corn. This fall when we harvest that she will realize surgery even as my family expands its own operation. This is a challenging time for farmers like me across the country. Right. Right now were planting corn and soybeans with prices barely breaking even. Many of us have second fulltime jobs to having come to stand the farm. Theres an exciting revolutionary that will help us be more efficient but at the same time the cost of farming increase every year. Please understand, farmers like veterans are not victims, were, were not looking for free ride, just a better deal. Having a lender that works with me, that is my farm and the challenges i face is more important than ever. Theres an old saying on the form, if any broke, dont fix it. Farm Credit System is not broke, it is fulfilling its mission to serve farmers like me. Please dont break it now. Id like to leave you with an idea of how this important issue that it is to me. Were currently in the middle of planting system of a season of major crops. We have a short window of time to get her seeds planted planted for maximum yield. We know that theyre not at afterschool activities or crops before it gets in. That means that one had the opportunity to testify i part my equipment came out because its important to my family the families of all farmers. Thank you, id be happy to answer any questions you might have. Thank you very much. Again and thank much. Again and thank you to all of you. Let me start mr. Welder, if you could talk a little little bit more about how greenstone farm credit has helped you both in looking to expand operations even diversifying your firm, we talked earlier about how hops is a growing new industry in michigan, know across the country, talk a little bit more about greenstone farm credit and their role in helping you be able to do that. Yes maam, greenstone has provided educational things and allowed producers to use their facilities for getting together for conferences, they have also provided my local loan officer has provided input in our business to doing custom work for other farmers. As we looked to increase new equipment they provided suggestions. When we traded in my 37yearold combine two years ago i bought a slightly newer piece of equipment, that was something we financed through greenstone. They financed through greenstone. They have been with us every step of the way. Michigan is on the cutting edge of new crap with hops, hops is something entirely new so it was gratifying to me when they came out and walked through the yard and took a look and learn what they were and what the challenges were as and what we faced for challenges. I wondering and ill ask you and anyone else wants to respond, because in 2014 in the farm belt we created several new opportunities for veterans coming home to either go back to the farm or go into a farm including support for the new and beginning farmer and Rancher Development programs. In 2015 the National Farmer veteran coalition received funds from the farm bill to expand agriculture production, development and and business developments skills and so on. Mr. Walter, your board member of the michigan chapter of the farm veteran coalition, can you describe some of the ways that the coalition is working to support our military veterans in michigan . The michigan chapter is in its first year. It is very exciting what were doing working with veterans in all different areas of agriculture. I have friends that i have developed to the michigan Farmer Veteran Coalition that are raising grass of fred pigs that are working in poultry, that are raising hobson road crops. All across the state, the Farmer Veteran Coalition is working to provide grants as well as Educational Opportunities in both the upper and lower peninsula. We just held in cooperation as well conservation class. Weve had grant writing classes that weve held that with who want to become farmers. Some of the best friends and peers i have been agriculture are now through the veteran farmer coalition. Thank you. When anybody else want to respond to any programs, initiatives or or benefits, either working with veteran farmers or veterans anywhere working in the food system . Senator, just as simply that we have supported the efforts that you described and that were just described here both financially and with our resources personally. As you may recall last summer the farm Credit System help sponsor here in washington a homegrown heroes. We are trying to feature the products that are raised by our veterans and make them more visible to the general public so they can be featured and distributed and help them be successful. Ranking member, just wanted that we do not have special programs for veterans because we have honored them are entire careers in the Community Banks. That would include rate concessions, terms that would maybe be unusual in a normal situation to try to stimulate them. I appreciate mr. Welders office of farm credit up there, he there, he sounds like a Community Bankers that i know. Let me ask and again i will start of course the 2014 farmville made a number of reforms to the farm safety net ten we strengthen and expand the Crop Insurance, for specialty crops and hops as any specialty crops as we expand i think it will be interesting to see what other opportunities there are. Also to provide incentives for beginning farmers. When producers approach your institution for loans, how do you take the safety net programs into account and how important are things like Crop Insurance, particularly for beginning farmers when youre looking at potential borrowers. That has been a key topic of focus about this committee and of congress here through the last two years. Were very pleased to get a farm belt last year that included a strong Crop Insurance program. Ice really think its one thing that the banks and ourselves can agree upon. It is vitally important to the producers out there and particularly the future that has revenue coverage for many of these producers because thats a critical issue we have out here. Most are the producers in the marketplace today carry some level of Crop Insurance. They make their own choices around that. Certainly we take that into strong consideration especially so if they would decide not to consider it, in that case we would require significant improvements and liquidity in order to continue their finances for young producers its essential and we counsel them a lot regarding the level of coverage they make carrie and the risk in the capacity they have to undertake, primarily as a result of the fact that most of them do not have working capital, if in fact something should happen to their Crop Production year. Thank you for your support of Crop Insurance, we would appreciate that continued support as we go forward. As we move from subsidies to Risk Management to Crop Insurance as well as conservation practices and other Risk Management tools, think it is really important that we keep a strong system. Im also anxious to see Going Forward how the opportunities we have created through fruits and vegetable growers, specialty crop, pull farm policy for fall growers since farmers and so on, how how we can continue to expand those opportunities for small as well as large farms so that they have that Risk Management tool. I think thats very important. Could i respond to that as well. The first panel was asked what are some of the differences and going into a potential crisis, this time compared to the 1980s, i became a banker in 1979 and that was my first experience, as in a good lender but that is one of the primary differences. There are some real differences the producers are much higher capitalized and lower leverage than they were going into the 1980s. The farm Credit System is higher capitalized, the Community Banks are higher capitalized going into this. But one of the fundamental differences is Crop Insurance. In the 1980s, probably less than 5 of all crops were insured in the United States. That numbers reef verse now and is theres 95 that are. That makes a huge difference not only for industry but for the producers to ensure that there will be around for the next season. We do thank you for that and it is a very critical part of what we do. Thank thank you. I appreciate that. As we go forward and i had to Start Talking about the next farmville it and thinking about all the challenges we have. This is going to be very important debate. Were going to need your voices here as we talk about the increased importance of Crop Insurance as a critical Risk Management tool. I wonder if you might talk more, i apologize i was not here for your testimony, but described the work of your institutions to support the rural food and agriculture business. Not just farmers but more broadly of rural communities. Could. Could you talk more about that . Locally, we have a lot of growers and the Farmers Market type of area, those, those are very popular in the state of iowa. In our area, we have converted many of producers to organic production and those were some trying times. They are profitable at first, take several years to get the level to where they are sustainable as organic farming. Some of the challenges that we face come from other states. I was part of an egg Production Facility and the laws in california required that chickens needed more space than their cages. If theyre familiar with agriculture, they would realize that the more space it chicken has the more violent they get with each other. Theyre actually hurting those chickens. But it created a much more extensive operation. So those are the things that we are facing challenges now, weve had to low more money to that facility to increase their buildings and capacity to produce. Thank you. Did you want to respond . We are located north central, northeastern kansas and we are in the transition between planes and good, dark farm ground. We have a weed to as a primary grow crop in the western part of our trade area and that transitions to corn, soybeans and we have a lot of dairy, hog operations, beef cattle. So we are very diversified. Well we are the largest egg lender in kansas. Thats just not all that large, probably ranks number 50 in the United States. We do our part to take care of our local producers. We been around for a long time. We relish the opportunity, even in the downtimes to be there for our customers. Thank you thank you very much. That going to step away to vote. Senator soon just came in, im going to pass the entire power of the ascended agriculture committee. Im a little nervous about this, but ill be happy to pass it to the senator from south dakota. Thank you madam chair. Its kind of a crazy day. I i wanted to ask questions earlier with the Previous Panel but we had the administrator of the tsa appeared to talk about weight lines at airports. So as i was chair in that meeting. I appreciate the update today on what is going on in agriculture particularly whats going on with lending. I do want to include for the record, and since im the only one here ill say this will be included without objection,. [laughter] a story from the mitchell daily republican which it talks about a study that look at farm income. I know it has been mentioned a couple of times today but at least in my state, in 2015 we saw a drop by 100,000 on average last year. Thats a 77 decline in net profit in 2015 compared to the year before. So, it goes on and gets down to the specific interest on the numbers a little bit about what that means in terms of our economy. I think it just put the fine points on how important it is that we are really focused on agriculture and making sure we do everything we can to enter producers through some difficult Economic Times and hopefully onto a better price structure. In our planting in south dakota, some of its and, some of its still going in, but were hoping for a big crop at the prices that were dealing with today. Curious to know just from the lender standpoint, i know for example mr. Barker you have a smaller scale Community Bank with a portfolio of 35 agricultural loans. Could you talk a little bit little bit about what your greatest challenges today in terms of looking at the outlook for your agricultural borrowers . As far as our borrowers are Biggest Challenges the cash flow coming in. We are in times where most of our borrowers have equity to survive a year or two. Going for this equity is being used up with the low prices, with production roughly 1 dollar below cost through sales prices are both beads, doesnt take long to use of the equity. Were going to need the farm credit, the Rural Development loans, guarantees, we would ask the senate to really beat that up. The program because because we really will need those guarantees Going Forward. Just to keep them business. Patience is a virtue of this thing. Many examiners were not around in the 80s when we went through this a crisis before. They are young, they are being told this is maybe a panic situation the patients will be a virtue in dealing with all of this. And i would direct this to you and others on the panel as well, do you believe that your banks and other banks corneille work closely with the Farm Service Agency than the fcs to obtain guaranteed loans for some of the eligible borrowers . For my personal experience the Banking Community does. In fact i have had a few local small borrowers come to us because their credit was shut off a Farm Credit Services. We tried to look at give you a guarantee for those folks but our experience is that the loyalty has been to the larger borrowers by the Farm Credit Services. The smaller folks may be in our area are not taken care of as well because they are a lot of work. Its easier to book one5 milliondollar loan. Do any of you have examples of how farm Credit System neglects young, beginning in Small Farmers and ranchers in the area . Personally i dont see it. I dont see the farm Credit System during that. I know they talk about that from a reported from 2014 which i could enter into the record if youd like, the numbers show that those young, beginning, Small Farmers are quite stagnant. One of the footnotes i thought was ironic was if they qualify under each of those categories they can be counted under each of those categories. So. So im not sure how the numbers relate. I know in theory that is what they would like to do, at the regional levels but on the local level, just dont see it happening. Mr. Wilder, you are farm operator. When you are talking to other local farmers, have you noticed competition in a lending driving down Interest Rates for borrowers . Have you seen evidence of that . For my perspective and my operation ive not seen it. We are getting competition from other large corporate farms that maybe have other lending resources. And my level, no, not at all. The Interest Rates are staying pretty much constant for what we need to do for operating loan. And from your perspective, to what extent do private banks, commercial banks, farm Credit System, and others play a role to make sure that the credit exists. How do you exists. How do you see that interaction working . In the different entities. Again i can only give a micro perspective at my level. The banks in my area do not deal with farmers as much other than checking and savings. The last farmer that had an operating loan with our local citibank was my dad 20 years ago. At this point, because with 800 1000 acres you might be talking about a quarter Million Dollar loan. Most of that will go to the farm Credit System as opposed to going to the banking system. And mr. Barker, back to you, would you say your bank is consistently more competitive with loan rates . In loan availability to particularly as we talked about earlier some of the younger, smaller, newer borrowers . We compete as much as we can. I cannot compete with the farm Farm Credit Services, they have a funding structure that is very enviable, for example in 1,000,000 a Million Dollar loan if i charge 5 , that is a 50,000 in interest, i pay my tax bill out of that come i net 30,000 dollars. The Farm Credit Services is taxexempt and can only charge 3 on that same loan. They do not have to charge appraisal fees which i have to do. Theres other local fees in some states that they do. We try to stay competitive as much as we can and make use of anything we can as far as home loan borrowings or something to that extent. I just cannot seem to touch the array of benefits that the Farm Credit Services has. And, you indicated your testimony that 14 of your portfolio consists of loans ranging from a thousand to 49000 which is 76 of your total borrowers. Since many of these are lucky likely, young ranchers, do you believe that your portfolio of borrowers, assuming that we have this present state of circumstances of agriculture for the next couple years is going to be negatively impacted more so than the larger scale type borrowers in your portfolio . I think theyll be hit harder, quicker than the larger farmers. They have not had a chance to build up the equity that the other larger farmers have. The he brings up a great point because his areas what i for see is if we continue to go down the same path that were going that the local banks cant compete any longer so there given that market share away. Theyve given it away and quit competing. And thats where im afraid were heading. Just to give you an example, mrr example and i will but in my state i pay 34 federal income tax and 4. 3 state income tax so as mr. Barker says 5 loan they can start three and a quarter and start at the same place we do. My point is that when we go down that path the farm credit is not passing. If i were borrower farm credit today i be angry that theyre not passing that entire savings along to them. They couldve been fully taxed and they still make more money than banks with the last two years. Thats the point i would like to make. Thank you. Thank you. I would be delighted to respond to those comments. It is unfortunate disappointing to hear allegation against the system was so many customers feel so strongly about. One thing i can stay when it boils down to the bottom line is what is been laid out here this morning is irrespective of our business structures, when it gets to the bottom line the fact that the matter is we are different Business Models. That that is clearly is a mention my business remarks. We have a a very different business structure, frankly, Community Banks enjoy some of the same or maybe i should say similar accesses in backing by the federal government that the farm Credit System does. The access to the goc to the farmer mike and online bank. Access to chapter s corporations. We could compare and contrast for hours today. The bottom line is, when you look over the last 50 years, Community Banks and commercial banks have 40 market share, we are for deployment market share. By testimony here today. Mr. Barker indicated they have over half of the farmlands in our in our community. If you look at the data that was presented in their own testimony they grew 7. 9 last year, we gray. 5 . When you look at the facts, there is no evidence to indicate that the pendulum has swung in favor of the farm Credit System. Thank you. Thank you. Could i rebuff that just a bit. Im sorry. There are a lot of gses out there but i dont have any of the gses that directly compete with me and try to steal my loans. When we are not allowed to make a 5 milliondollar real estate loan for example, that is a big part of my loan portfolio. That goes to the Farm Credit Services no matter what. There is there is just no way to compete. It will be undercut and no matter what rate ive quoted nine sure every Community Banker in the nation can say the same thing, that their rates just are not the same. Theyre going to pick those. The young farmer that comes and that has in that has a quote from the Farm Credit Services gets a rate that is higher. They might get a rate that is six or 8 compared to the 3 rate. So does that really mean that theyre taking care of those Young Farmers . When i price alone too young farmer is the same whether they are a multiMillion Dollar farmer or a young farmer that is really struggling and trying to get out there. Were going to help them no matter what. But we dont get competition from the other gses. Mr. Chairman, just say and i appreciate you having this hearing because i think it is an important one and one that we need to pay close attention to, particularly over particularly over the next few years because i think as production agriculture if we dont see some improvement in the prices are commodities we are going to have more and more stress. Theres going to be a real need on behalf of the Lending Community to be able to work with borrowers and figure out ways to get them through. Im particularly concerned about the on, beginning, and small borrowers. And what this means for them. People who are not establish or dont on their ground or making cash payments, those sorts of things. Its going to be difficult given the current price structure which i hope improves. I think availability of credit being able to work and having all the various people who represent that community here today is really good too. It gives us an opportunity to explore a little more in detail what the various dynamics and who is lending to whom and where the weak spots are. If if theres anything this committee can do in the days it, weeks, months ahead, i hope that you will all communicate that to us as well. We want to make sure that were being as responsive as possible when it comes to availability and credit for agriculture. Gemma, thank you and i think our panelists today for being here. Senator,. Senator, thank you for that excellent statement. I share your concern with new, young, what was the other group, oh, beginning. Im concerned about the older, established, big producers who produce most of the proof of this country as well as everybody else. There is another vote pending and i would tell the gentleman very quickly in about ten minutes here so we are going have to adjourn this. I have a question for the panel. Your answer of course is if this is not accrued the question that im asking we will be writing the sequel to the grapes of wrath in farm country. When when youre considering whether not to issue a farmland how important is the role of federal Crop Insurance program . Mr. Barker. Its is extremely important. Its absolutely critical to the farmer out there the stability of Financial Services. I speak for me as well as the Farm Credit Services on the. We totally agree. We think the committee and your support mr. Chairman and what you have done to get the last farm bill through as well as the provision of Crop Insurance. Its imperative for this industry as we go for. Thank you sir, mr. Wilder . As a producer, i maintain Crop Insurance as do most of my peers. Its Important Role as we move from a subsidy base to more marketbased to stay with that Crop Insurance. I think every support, sir. Senator . If youre in the service that was always and then chose to go army strong. Yes, sir. You could be strong but im not sure is faithful laughmac. Why on a did you switch . Ive been offered in the army rotc scholarship and did have money for college. They said i could jump on a good airplanes i took him up on it. Well put. [laughter] yes, i talked about this earlier but the question was asked of the first panel of some of the major differences as we head into what potentially could be a downturn in a and the differences compared to the 1980s. The primary difference as far as the producer protection is Crop Insurance in the 1980s and i saw statistics that said less than five percent. I was there, youre there, less than 5 of all crops were insured at that time. Today that numbers reversed and is now 95 percent. Its possible because of actions that this possible because of actions that this committee and the specifically have taken. I think it is going to be paramount going into any downturn whether this is our regulators have been predicting this for seven years. If it finally happens i think there taken a certain level of glee from that. We are ready for. Crop insurance is one of the things that are prepared us for this. I appreciate your answer. It is what it is. We are now doing our appropriation bills which is a very good thing. Were going back to constitutionally congressionally directed funding thats a good thing you were doing it at a record pace. We always have a self declared secretaries agriculture wanting to change something. Crop insurance is usually a target. Each one of you and everyone of your organizations has a point to that with a megaphone and the value of Crop Insurance today means whether you make it or not. Especially with all of the Climate Change that we are experiencing. Let let me just ask all of you, i note somewhat different of opinion with regards to what the farm Credit System has as its disposal as opposed to what our Community Banks have, more especially dodd frank. Which that was not supposed to touch you. It was the big banks. Obviously i dont know whether its a test, massage or what it is. Its not good. If, especially the three folks that are representing our Community Banks, if there is one piece of legislation that could address your concerns and that would probably fall to the finance committee having to be on the finance committee. What would that be . Let me serve the mr. Barker. I know that you want a whole series of thing, but what is the one thing that we could do to make life easier . Boy, that list is endless. Dodd frank is a huge thing for us right now. I think our topic here today is a big concern for me locally and for all of the Community Banks that i have on the farm Credit System, both of those topics are extremely important to us right now. Dodd frank is a mess. A mess. Sorry. Dont be sorry, i agree with you. Quite a few people now agree with you. I meant to give you an opportunity to i dont want to leave you out. I think even though we are not subject to the same Regulatory Impact as a counterparts here under dodd frank, the farm Credit System does whatever it can to comply with the spirit of those laws because for the most part they make good financial sense. The first panel talked about that specifically with regard to the credit, or the Capital Requirements and the farm Credit System and through that they have adopted the Regulatory Guidance and implemented, nonetheless the answer to your question is continuation of the Crop Insurance program would be first and foremost as we are from Rural Cooperative we are on behalf of our former owners and that is first and foremost on those their mind. Consistency and predictability around their business it is critical as we can imagine. And i would do more than anything. The second would be trade and as you well know and we have talked about, thats a critical item for producers, depending on commodity a majority of a big majority of crops and a big percentage of crop Center Segments is traded overseas, the agriculture system is extremely efficient and we need trade on behalf of our producer customer. I thank you for your comments on trade, most especially teaching up into epp. Today, unfortunately well its just been this way as long as ive had the privileged, all trade agreements are over criticize, there oversold. But theyre absolutely essential. I thank you for that. Lets just keep going down the line. , mr. Walter. The one thing for my perspective would be certainty. Farmers do not like change the most really dont like change from washington if we can help it. I go to the local fsa office and ask about the farm bill or whats upcoming for Crop Insurance, generally they have no idea. If the more certainty we can have at my level for the farm bill and Crop Insurance, the better off we are going to be. Let me just interrupt by say that we are not going to open up youll have that stability, like the poc program and more especially Crop Insurance. Im not saying that is going to be an easy job, theres always folks who want to do that. By providing consistency and stability i think is is paramount. Leonard, what you think . Will since he cant do anything about the weather, because that is a big area and. I brought you the rainman. Now you need to make it stop. [laughter]. Frank is just a monster hanging over Community Banks today. Its threatening our model, a lot of things threaten our model but as mr. Barker says, frankly in my bank the biggest threat to me seriously is farm credit. If we could somehow and mr. Walter mentioned a fair deal, thats all hes looking for is a fair deal. If. If we could just get to the point, theres a real misconception that banks want to eliminate farm Credit System, no, thats not correct, im not an advocate for that. We have to coexist. We have to coexist. We have to find a way to do that. I think its funny that you mention appropriations because i have to take this opportunity to talk a little bit about last fall when we used a tax on bank to pay for the highway bill, we have something right here hanging in front of us that us that is a 1,300,000,000 . 3 billion tax preferential treatment thats given to farm credit that could be used to pay for some other critical elements of agriculture which Crop Insurance and things of that nature. This this can be done in many different ways. There is more than one way to do this. Rather rather than text them we could also eliminate taxes on all agriculture real estate loans whether they originated by banks, the individuals, by insurance companies, or even farm credit, you could just level the Playing Field that way, we all have different models, even banks have different models as mr. Stark points out. We recognize the difference between us and the farm credit but there is a great deal of differences across the board. Thank you for the opportunity. I want to thank all seven of our witnesses. My staff told me i have four minutes to make the final vote. Thank you for taking the time and your willingness to testify here. I know youre very busy people. The. The testimony provided is timely and very important for us to hear firsthand. I would ask that any additional questions that you may have be submitted for the record. And submitting we have five Business Days today or by may may 26. Mr. Barker, i have have to say that mr. Grassley, senator grassley, my senior colleague basically his question was with regard to dodd frank. I think you have covered it. Yes sir, i i want the record to show that i asked the question, is is a very timely response more especially from his constituent and with that the committee stands adjourned. Thank you. [inaudible] ,. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] coming up on cspan2, the administrator Charles Bolden on the commercial space travel. After that betterment versus montana, the case related to the sixth amendment right to a speedy trial. Later, an update later, an update on the role farm credit program. Friday, scholars and diplomats on the role of diplomacy and Regional Partnership in strengthening your pink security. You can see the event live from the Atlantic Council at 11 30 a. M. Eastern on cspan