Increased loan limits positive for young farmers
Recently, an opinion column written by Erik Tryggestad appeared in this publication (Agweek, June 26, 2017). Mr. Tryggestad criticized Senator Amy Klobuchar's support of a bill that would increase limits for Farm Service Agency direct and guarant...
Recently, an opinion column written by Erik Tryggestad appeared in this publication (Agweek, June 26, 2017). Mr. Tryggestad criticized Senator Amy Klobuchar's support of a bill that would increase limits for Farm Service Agency direct and guaranteed loans. He expressed surprise that Senator Klobuchar would co-sponsor a bill that he claims favors big farms and big banks. I disagree.
An increase in the loan limits would help locally owned community banks fund farm loans to all types of farmers in their communities. In other words, locally owned banks fund locally owned farms!
By today's standards, a 1,000-acre crop farm is not considered a mega-farm. In fact, if new farmers are going to have a successful farming operation that is profitable and can support their family, they need access to increasing amounts of capital to create a viable farm business.
If a young farmer buys land in southern Minnesota at $8,000 per acre, it only takes about 175 acres to hit the current guaranteed loan limit. They will also need to fund operating costs, then add in farm machinery, grain facilities or any livestock production, and the cost of funding their business only grows. So, it should be easy to see how a small, beginning farmer could easily exceed the current loan limits.
The best plan for farmers of any size is the support of FSA funding and the continued support of legislators like Senator Amy Klobuchar, who fight for the interests of agriculture in Minnesota.
Editor's note: Amundson is president & CEO of the Independent Community Bankers of Minnesota in Bloomington, Minn.