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ICBA Letter to Farm Bill Conferees

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February 27, 2002

The Honorable Larry Combest
Chairman
House Agriculture Committee
U.S. House of Representatives
Washington, D.C. 20515

Dear Chairman Combest:

We are writing to express the views of the Independent Community Bankers of America (ICBA) and our 5,000 community bank members across the United States on various provisions of the House and Senate farm bills being considered by conferees. ICBA is the only national trade association that exclusively represents the views of community banks and our membership includes several thousand banks that lend to agriculture. Commercial banks provide over forty percent of the credit extended to American agriculture and therefore have a vital stake in the outcome of the new farm bill.

First, we want to thank the House and Senate Agriculture Committee members and their staffs for all the hard work and effort that has gone into writing a new farm bill. This is a historic moment and a crucial time for American agriculture's future, which will be greatly impacted by the new farm bill. We are pleased that both farm bills are designed to provide an additional $73.5 billion in spending on farm programs over the next ten years and that both bills include a counter-cyclical payment support mechanism in the form of target prices that will help stabilize farm income during times of extremely low commodity prices. It is important to lock in the full $73.5 billion over the next decade to provide farmers and their lenders with the ability to make long-term financial plans that are not subject to future cutbacks by Congress. We also concur that the new farm bill should be consistent with our nation's international trade obligations as well as provide U.S. farmers and ranchers with the tools necessary to be competitive in a global marketplace. These basic components to strengthening a farm safety net are essential to the long-term economic prosperity of American agriculture and our rural communities and for a safe and stable food supply for America's citizens.

A New Farm Bill Versus Farm Aid Payments: We are hopeful that a new farm bill can be completed and sent to the President before the next congressional recess, scheduled for late March. If a House-Senate farm bill conference is unable to complete work by that time, we believe it will be necessary to consider adopting a separate farm aid package that provides supplemental economic assistance for the 2002 crops and making the new farm bill applicable to the 2003 crops. Many bankers who have worked with producers on their cash flow projections have assumed additional farm income support levels based on last year's government payment levels. But both lenders and their farm customers would like to finalize the future financial landscape so they have adequate information upon which to base their decisions.

We believe that the work that has already gone into writing a new farm bill, in addition to the changes we have recommended in this letter, will significantly improve the farm safety net, make long-term planning decisions easier, help stabilize farm income and greatly improve the credit and rural development titles of the new bill. While there are controversial differences that exist between the House and Senate versions of the farm bill that are not examined in this letter, we are discussing these issues with our banker members. We urge members of Congress to carefully review proposed legislative language to be sure there are not unintended consequences from well meaning provisions that could, if enacted, quickly threaten the viability of farmers, disrupt their existing operations with little time to make necessary adjustments and jeopardize their ability to secure financing and repay their loans.

Our letter also expresses the views of community bankers on a number of other provisions, particularly several items related to USDA credit and rural development programs. Attached you will find a short listing of our recommendations as well as a lengthier explanation of our positions. If you have any questions on these recommendations or we can be of further assistance, please contact Mark Scanlan or Richard Gupton at (202) 659-8111. Thanks for your efforts on behalf of America's farmers and ranchers.

Sincerely,

Ken Guenther
President & CEO, ICBA

CC: House & Senate Agriculture Committee

Attachments:
* ICBA Recommendations on the Farm Credit and Rural Development Titles
* Summary of ICBA Recommendations






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