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Ag banks say they can’t compete

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When times get tough, ag bankers say they can’t compete with the Farm Credit System.

During Thursday’s Senate Ag Committee hearing on the farm credit system, Gus Barker, president of an Iowa community bank, testified on behalf of Independent Community Bankers of America.  “I cannot compete with the Farm Credit Services, they have a funding structure that is very enviable.”

Doug Stark, President of Farm Credit Services of America & Frontier Farm Credit in Nebraska defended that community banks and farm credit simply have different business models.  “We could compare and contrast our business models for hours here today—the bottom-line is when you look at it over the last 50 years, community banks and commercial banks have 40 percent of the market share, we have 40 percent market share.”

Ranking member Debbie Stabenow of Michigan tells Brownfield there’s always a partnership and a natural tension between the Farm Credit System and community bankers.  “When there’s a downturn, when there’s an area of Michigan or the country where it’s tough to get a private loan, but we need to make sure our farmers have what they need to be successful, Farm Credit makes the difference.”

Leonard Wolfe, President of United Bank and Trust in Kansas and representing the American Bankers Association, told the Committee his biggest threat is Farm Credit and there needs to be a more level playing field.  “There’s a real misconception that banks want to eliminate the Farm Credit System—no—that’s not correct, I’m not an advocate of that, we have to coexist.”

Wolfe testified that the Farm Credit System received $1.3 billion in tax breaks last year and if it were a bank, it would be the ninth largest in the country.

Senate Ag Committee Hearing on Farm Credit System

AUDIO: Interview with Senator Debbie Stabenow

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