▶ 0:15:38>> good morning, welcome. It is my progress to call this hero to order. We have a hearing going on right now, another one that will be called in a little bit, so if you are testifying and somebody gets up and leaves, they are probably coming back. As you all know, you are here in interesting times, just a busy time. Lots going on. Welcome.
▶ 0:16:08It is my privilege to call the hearing to order. I want to think that witnesses today for taking the time from your families, work responsibilities, to share your expertise with our committee today. As a proud arkansan, I note little rock, arkansas on today's panel as well.
▶ 0:16:28This year is a third in a series of this committee which is our committee conducting to examine the current state of america's verbal economy from the perspective of farmers, ranchers, lenders, and rural leaders. Having time to reflect on what we've heard in the previous two hearings, it's clear to me a common theme has emerged.
▶ 0:16:50If we expect current and future generations of producers to not only survive but thrive, we need to pass a strong five-year farm bill this year that strengthens the farm safety net and revitalizes rural communities, many of which are struggling to retain an adequate workforce to feed, fuel, and claude the next generation of americans.
▶ 0:17:15More than 70% of all americans -- farms in this county are rural. A large majority of those are rural areas. While there are numerous valuable rural development programs in the farm bill that many of us on this committee championed, the most potent mechanisms for rural development are the risk management tools that our producers utilize to secure the financing necessary to grow and expand their
▶ 0:17:46Operations which in turn support the communities they call home. The economic activity generated by agriculture's sector supports everything from retail operations to supply, seed, fertilizer, and fuel to the grain mills, cotton gin's, or other processing facilities that provide direct employment opportunities for local residents.
▶ 0:18:15Local governments count on that tax base to provide critical services and infrastructure needed to keep communities healthy and vibrant. Unfortunately, every member of this committee has heard directly from farmers in the state about the very difficult conditions that have endured over the past several years and are likely to face in the future if things continue the way that they are.
▶ 0:18:41While many of us have heard from ag groups for years now about the importance of getting a farm bill signed into law, I notice a distinct change in tone beginning last summer as I visited with not just producers, but also their lenders. One banker in arkansas estimated that producers could struggle to secure financing, planting 20% of the acres in my home state.
▶ 0:19:14Unfortunately, tough times are nothing new for our nation's farmer. They have endured many challenges before. We have entered a scenario in which many economic indicators of the health for the agriculture sector, especially for row crops, are headed in the wrong direction, and had been doing so for some time now. The $10 million in economic assistance provided at the end of last year is a critical bridge for many farmers to secure 2025 operating loans.
▶ 0:19:46I appreciate the work of many members of this committee in securing this assistance, and look forward to swift implementation by secretary rollins and the department. Necessary to ensure many farms in states for the upcoming year, this economic assistance should not in any way be considered a subsidy for a five-year farm bill.
▶ 0:20:12When you look at rising levels of farm debt, delinquency rates, or the percent of row crop farmers that need to refinance debt to cash flow, it is clear congress needs to act quickly to strengthen the farm bill programs.
▶ 0:20:28The suite of risk management tool should provide a critical backstop for producers and assure adequate credit access for all generations of farmers, but especially our young and beginning farmers, who we are counting on to carry on the honorable work of feeding the world.
▶ 0:20:50I look forward to hearing from our witnesses here today and putting their advice into action as we continue our work on the farm bill this congress. Ranking member klobuchar will be joining us momentarily. I will now proceed with the witness introductions. Following introductions, the ranking member will deliver her opening statement. Leading off our panel today is Mrs. tara durbin.
▶ 0:21:21Senator mcconnell is unable to be with us at this moment but he is very proud to have Ms. durbin here before the committee today. Submitting senator mcconnell's remarks regarding tara into the record. Without objection, so ordered. Ms. durbin served as chief lending officer for agriculture, farm credit mid-america, headquartered in louisville, kentucky, member of the organization's executive committee.
▶ 0:21:49She helps to strategize operations across farm credit mid-america footprint which serves residents of kentucky, tennessee, ohio, indiana, missouri, and my home state of arkansas Ms. durbin understands the challenges producers are facing as she works alongside her husband on the farm. I look forward to listening to your testimony, Ms. durbin. Thank you so much for being here.
▶ 0:22:25Mrs. dalynn hoch. Did I get that right?
▶ 0:22:30Ms. Hoch: Close enough.
▶ 0:22:33Chair Boozman: I did not get it right. [laughter] we are very pleased to have you. Ms. hoch serves as the head a rural community insurance services. She also serves as executive member of the crop insurance and reinsurance bureau, member of the national crop insurance services board of directors, member of the american association of crop insurance, and her family farms in the home
▶ 0:23:04Chair Boozman: State of our ranking member. Ms. hook brings valuable insight to our hearing through her leadership with rcis, intimate understanding of how crop insurance impacts farmers in the communities in which they live. Ms. hoch, thank you for being here, look forward to your testimony. I believe senator ernst will introduce our next witness.
▶ 0:23:34Sen. Ernst: Thank you, Mr. chair for the opportunity to introduce my constituent, caleb hopkins, who hails from alberta, iowa, which is a tiny, tiny town in carroll county which is west central iowa. If you go up highway 71 from my neck of the woods, you will end up fairly close to where caleb and his family live. Mr.
▶ 0:24:00Sen. Ernst: Hopkins is a loan production officer for dakota mac and serves as the chair for the american bankers association as a general lenders committee which he represents here today Mr. hopkins received his bachelor's in agricultural business from the greatest university in the united states, iowa state university. Go cyclones. Later obtained an advanced degree from the graduate school of banking in madison, wisconsin.
▶ 0:24:32Sen. Ernst: In addition to his work as a loan officer, Mr. hopkins is an active farmer with his wife and three children, raising purebred herford cattle. I am a fan myself. When I show for the governor's charity steer auction, it is always a herford. Thank you. We are all very grateful you can make it here today.
▶ 0:24:55Sen. Ernst: We look forward to your valuable testimony on how congress can better serve, protect, and support our ranchers, farmers, and rural communities. Thanks for being here, caleb. We appreciate you. Thank you, Mr. chair.
▶ 0:25:09Chair Boozman: Thank you. Now it's my pleasure to introduce a great arkansan from a small community in the heart of the delta, Mr. ben noble. Grown up surrounded by agriculture, done well to serve the industry for many years. Upon his graduation from university of arkansas, then made his way to washington, D.C. working as a staffer for about senator bunkers and lynching of arkansas. -- lynch of arkansas.
▶ 0:25:39Chair Boozman: She is making sure that you and I behave. We often hear about the mass exodus from rural america that when young people leave, new ideas and innovation leave with them. Ben is the exemplary example of what can happen when those people return to their rural communities. Ben uses his experience to guide new ideas through a service at the arkansas hunger relief line, chamber of the board of directors, commissioner of the arkansas heritage commission, and through his work in public affairs.
▶ 0:26:11Chair Boozman: Ben now serves as the executive vice president, chief operating officer for riceland foods based instacart, arkansas. Rice land is the world's largest miller and marketer of rice, major soybean processor in the midsouth, stable for farmers and rural communities alike. Thank you for being here. We look forward to your testimony. Mr. sedrick rowe.
▶ 0:26:42Chair Boozman: I'm pleased to introduce Mr. sedrick rowe. Cedric is a first-generation organic peanut farmer from albany, georgia. Sedrick owns and operates rowe organic farms where he grows peanuts, sunflowers, and hemp. He's a founding member of the georgia organic peanut association, where he helped create markets for value-added agriculture products and supports small and medium-sized farmers in the southeast.
▶ 0:27:14Chair Boozman: He attended fort valley state university where he earned a bachelor in plant science with a concentration in horticulture, as well as a masters of public health with a concentration in environmental health. He is currently a candidate for a phd at tuskegee university for integrated bioscience. Sedrick, thank you so much for being here, we look forward to your testimony.
▶ 0:27:44Chair Boozman: Again, thank you all for being here. Ms. durbin, you are now recognized for your statement.
▶ 0:27:53Ms. Durbin: Chair bozeman, ranking member klobuchar, members of the committee, thank you for inviting me to testify here today. My name is tara durbin and on a lifelong advocate for agriculture. My husband dusty and I run a cash drain operation and for more than two decades I have also worked with farm credit mid-america's customers and various lending roles.
▶ 0:28:21Ms. Durbin: Today, I serve as farm credit mid-america's chief lending officer where I oversee the agricultural lending activities. Farm credit mid-america is a customer owned lending cooperative and a proud part of the farm credit system. We serve more than 145,000 customers in arkansas, indiana, kentucky, missouri, ohio, and tennessee.
▶ 0:28:48Ms. Durbin: Together with 55 other farm credit associations, we are committed to serving rural communities and agriculture with reliable, consistent credit. Over the past several months, this committee has heard from producers and industry experts about the challenges and emerging in the agriculture economy. It is important for me to highlight that we are, in fact, seeing a tale of two worlds when it comes to the financial health of american agriculture.
▶ 0:29:19Ms. Durbin: The factors mostly, determine which farm economy is being felt include geographic region, commodity produced, farm diversification, and financial position. I provided more in my written testimony, so I will just briefly describe the financial conditions that we are seeing. Row crop producers are facing headwinds.
▶ 0:29:46Ms. Durbin: However, those in corn, soybean, and wheat have benefited from several years of being able to build liquidity and reinforce their financial positions. Our cotton and rice producers, particularly our arkansas customers, have faced multiple years of price volatility, quality concerns, and yield challenges, leading to more rapid liquidity erosion.
▶ 0:30:13Ms. Durbin: The protein sector is a bit of a bright spot as it benefits from strong demand, limited supply, and lower feed costs. We are committed to working with our customers as current conditions are placing financial strain on many farmers regardless of age or experience in farming. Like other farm credit associations, we utilize several practices to work with producers through challenging cycles.
▶ 0:30:41Ms. Durbin: These include proactively restructuring debt to support cash flow concerns, providing financial coaching and education, and using federal programs like crop insurance and the fsa loan guarantee program to mitigate risk. Before I discuss the farm bill, I would like to recognize the importance of the assistance provided and the american relief act that was enacted late last year and championed by many on this committee.
▶ 0:31:10Ms. Durbin: As we look to the future, american farmers must have certainty and predictability of a strong five-year farm bill with additional federal investment that reflects today's market reality. My written testimony identifies a detailed list of farm credit priorities in supporting the next farm bill, and I would briefly like to mention two that are particularly relevant for this hearing.
▶ 0:31:39Ms. Durbin: First, crop insurance is the cornerstone of the farm safety net, and one of the most important risk mitigation tools available to our farmers. We support the strongest possible crop insurance program and we applaud the committee for exploring ways to enhance this vital tool to improve affordability and coverage. Second, the fsa loan guarantee program allows lenders to make loans to farmers who may not qualify for traditional credit.
▶ 0:32:07Ms. Durbin: This tool is not only important for lenders when financial conditions and agricultural economy become more challenging, but also helpful when working with young and beginning producers. We thank him ranking member klobuchar and senator hoeven for their work on the pace act would provide critical updates to the fsa program by allotting the current cost of operating a farm with the loan limits.
▶ 0:32:34Ms. Durbin: The future of agriculture relies on the success of our young, beginning, and small farmers. Every farm credit association offers a uniquely tailored program designed to meet the needs of their young, beginning, and small farmers. Farm credit mid-america's program is called rolling forward would provide special underwriting standards and tear when interest rates along with personal and business education programs.
▶ 0:33:00Ms. Durbin: These customers are expected to create business plans and to work with our loan officers to receive financial coaching and make sure they are on track to accomplish their goals and support the operations liability. Going forward supports young producers like jordan brewer from kentucky. In 2021, he took over his grandfathers operation by balancing school and working full-time as a nurse. With the help of growing forward, state and federal programs and hardware, he has grown his150-head.
▶ 0:33:35Ms. Durbin: Growing forward was critical resource that help jordan access the capital needed to secure his family farming legacy. In conclusion, thank you very much, chairman boozman, ranking member klobuchar for allowing me to testify today. Farm credit is committing to fulfilling our 109-year-old mission and we look forward to working with you as you reauthorize the song -- the farm bill.
▶ 0:33:59Chair Boozman: Thank you, Ms. durbin. Ms. hoch.
▶ 0:34:04Ms. Hoch: Chairman bozeman, ranking member klobuchar, other distinct members of the committee, a key for allowing me the privilege and the opportunity to testify today on the importance of crop insurance and the vital role that it plays in providing risk management to farmers across the country, and facilitating capital flow to the rural american economy.
▶ 0:34:29Ms. Hoch: My name is dalynn hoch, and I'm the head of a real community insurance services, rcis which operate as one of the 12 approved insurance providers, aip's. Rcis delivers crop insurance nationally so we are proud to serve farmers in each state represented on this committee. I'm a proud farmer's daughter, and I now also farm with my husband and brother in the great state of minnesota. I learned a lot of lessons on the farm.
▶ 0:35:01Ms. Hoch: I learned the importance of generational values, honesty, integrity, faith, hard work. I also learned that sometimes we faced terrible losses that came with large hail, flooding rains, and weeks of drought. In 2016, I was the cfo for zurich north america when we acquired rcis. It was one of the proudest moments in my career when I was able to call my dad and tell him we had just bought a crop insurance company.
▶ 0:35:33Ms. Hoch: And now this last year, I've had the privilege to become the head of rcis. So this conversation today is personal for me. Not just as the head of an insurance provider, but as a farm owner and operator, and perhaps most importantly, as a farm girl who saw how crop insurance protected us, allowed us to continue to farm when it mattered most.
▶ 0:36:00Ms. Hoch: I do thank those of you on the committee and other policymakers who have worked hard to continually improve our farmers' most important risk management tool. Crop insurance is an economic driver in rural america. It is critical to the flow of capital for our farmers as it secures the operating loans they need with the banks. Imagine if we had to pay all of our expenses at the beginning of the year, before we get a paycheck.
▶ 0:36:30Ms. Hoch: That is exactly what our farmers have to do every year with all of their input costs. Crop insurance not only secures loans and protects the farmers when they suffer a loss, it also spills over into the local economy, empowering ag retailers and other local businesses, often the first line of the secured debt to the farmer. The last several years have seen a drastic increase in ad hoc disaster payments to rural america.
▶ 0:36:58Ms. Hoch: It is only prudent for this body to be looking at ways in the next farm bill to plug these gaps and the safety net. We ask that you consider crop insurance as the primary tool to help fill these gaps. We discourage the creation of any disaster program that would this incentivize farmers from purchasing crop insurance. Request recognition that companies do incur cost for it administering aid outside the purview of the federal crop insurance program.
▶ 0:37:28Ms. Hoch: And we would oppose the creation of any disaster package that is funded by cuts to crop insurance. For crop insurance to function as designed it must be affordable, widely available for purchase across the country, and economically viable for the private sector to deliver and sustain the long-term commitment of their capital. Both dollars and talent to this great industry. With the growth of the program has come challenges.
▶ 0:37:55Ms. Hoch: Aip's expenses have grown significantly as the cost of market, service, and adjust claims have expanded. Education costs are increasing and investments are constantly made to improve the tools and technologies that are needed to provide exceptional service to america's farmers. The effects of inflation have been felt throughout our industry.
▶ 0:38:17Ms. Hoch: The administrative and operating payments provided by the usda to help cover these delivery costs have not kept pace with either inflation or the rising price or complexity of delivering modern-day crop insurance. The inflation factor adjustment that was built into calculations was unfortunately removed in 2015. These shortfalls come out of insurer's income, dragged on the real rate of return for the industry, to levels that are just marginally better than the risk-free U.S. treasuries.
▶ 0:38:49Ms. Hoch: We want to see farmers and ranchers succeed. As private businesses, we must also earn an adequate return to ensure that our investors keep this capital invested in the agricultural industry long-term. Crop insurance is the premier risk management tool for the american farmer. The public-private partnership that we enjoy delivers it in an efficient and effective way.
▶ 0:39:14Ms. Hoch: These crop insurance benefits have cap families on their farms , and americans clothed, fueled, and fed. Thank you for inviting me to speak today and for your continued support of the crop insurance program. I look forward to answering any questions you have.
▶ 0:39:32Chair Boozman: Thank you. Mr. hopkins.
▶ 0:39:35Mr. Hopkins: German bozeman, wrecking member klobuchar, members of the committee, my name is caleb hopkins. I'm the current chairman of the american bankers association agricultural and rural bankers committee, and testifying in that capacity today. I worked in agriculture banking for 13 years including the past two years as a loan production officer for dakota mac, a subsidiary of first dakota national bank. Before first dakota national bank, I worked at a small community bank helping to lead their agricultural lending.
▶ 0:40:06Mr. Hopkins: Agricultural bankers have a deep appreciation for the important role producers play in our economy and the unique challenges they face. Like many ag bankers, my passion for agriculture goes beyond the bank. I have a herd of cattle, proud for its debt, and I have a crop insurance business with my wife. Our passion for the next generation of producers goes beyond the program or clinic. Fostering the next generation of producers is what we do every day. I appreciate the opportunity to present the views of the bankers at this hearing.
▶ 0:40:35Mr. Hopkins: Banks continue to be one of the first places that farmers and ranchers use when looking for agricultural loans, and over 80% of the banks in the united states have agricultural in their portfolio. Bankers finance all types of agriculture in every part of the country. Agricultural lending is a good business and we work with our customers to improve their business, both in the short and long-term. I would like to start today by highlighting the current state of the agricultural economy. I was personally involved in congressional meetings to get economic assistance for farmers and ranchers.
▶ 0:41:07Mr. Hopkins: The economic assistance passed by congress will provide some relief to our customers but it still will not be enough for many. For example, soybean acres are expected to have a payment of $30 per acre, but estimates in my area show farmers being shorted $300 per acre or soybean ground. This is a trend across most upon these. Usda has predicted an increase in farm income of 29% due to economic assistance but input prices are still high due to inflation. At the same time commodity commodity prices are expected to drop this year.
▶ 0:41:38Mr. Hopkins: Every region will be affected differently but it's becoming increasingly apparent that economic assistance will not be enough to cover the shortfalls this year, or enhance the long-term health of balance sheets to weather another economically challenging year. This is why bankers are so supportive of a long-term farm bill. Our customers need the certainty that comes with a farm bill, and lenders must operate on unknowns, not projections. A long-term farm bill provides certainty to agriculture would provide for long-term planning.
▶ 0:42:08Mr. Hopkins: We look forward to working with the senate and culture committee to develop a new farm bill. We have a list of priorities that bankers would like to see in the next farm bill that I've highlighted my written testimony. This includes increasing fsa guaranteed and loan programs. We think senators hoban and klobuchar or the pace act which creates a model for how this can be achieved. Additionally, changes to eligibility for beginning farmers and ranchers is vital to bring in the next generation of farmers and ranchers.
▶ 0:42:36Mr. Hopkins: Bankers are supportive of modernized prices and protecting and enhancing crop, livestock, and dairy insurance programs. Lastly, farmer mac is a tremendous partner to the banking industry and we support efforts to modernize farmer mac to meet the modern needs of american agriculture. Beyond the farm bill, aba is looking forward to the tax reform process that is playing out in congress. Our customers rely on keeping a current estate tax exemptions and capital gain exemptions.
▶ 0:43:09Mr. Hopkins: The access to credit for our rural economy act, better known as the acre act, his tax legislation that would create a level playing field for all lenders in agriculture. Aba analysis has shown the acre act would reduce the effective interest rate by up to 1% for qualified borrowers. We think senators moran, king, turberville, gallego, marshall, and kramer for sponsoring this final piece of legislation. The acre act will increase credit availability to rural america while driving down the cost for our borrowers.
▶ 0:43:39Mr. Hopkins: We believe this is the right solution to help rural america during these tough economic times as well as in the long term. Farm banks are healthy and continued to be forward-looking, growing capital and increasing reserves. Bankers are proud of the work we do to support our nation's farmers and ranchers. The ag economy is a critical part of our economy and america's banks remain committed to serve it through good times and bad. Thank you. I would be happy to answer any questions you have.
▶ 0:44:07Chair Boozman: Thank you. Mr. noble. . Noble: good afternoon, chairman bozeman, ricky member klobuchar, members of the committee. It is truly an honor to be before you today. As senator bozeman shared earlier, many years ago I sat as a staffer in this room for senator blanche lincoln of arkansas. She eventually served as chairman of this committee and it brings back a lot of memories seeing her portrait on the wall today.
▶ 0:44:35Chair Boozman: Nearly 30 years later, our own john bozeman now holds the gavel and I cannot think of a betterment to this committee. Forgive me for taking a moment here but this is truly a special moment for a boy from arkansas. I am ben noble, executive vice president, chief operating officer for riceland foods, but I'm also the son of buddy noble, the brother of andrew noble, who owned and managed noble farms.
▶ 0:44:58Chair Boozman: As we discuss the state of the farm economy today, my story unfortunately mirrors what is happening across the countryside in rural america due to high input cost and lack of profitability over a multiyear period in the low probability for profitable returns this year, my family is pulling the record. 2025 will be the first year since 1890, 135 years, that a noble has not actively farmed in east arkansas. We are selling our equipment at an auction this friday.
▶ 0:45:30Chair Boozman: Our experiences unfortunately are not unique, as lenders and farmers across the midsouth face tough decisions with the prospect of low commodity prices, high input cost, and extreme uncertainty and volatility. This situation has profound and far-reaching effects across the economy and the likelihood of rural america. Riceland foods is a farmer owned cooperative that has been in business since 1921. We are the largest miller and marketer of rice in the united states and we also serve as the largest marketer of soybeans in the midsouth.
▶ 0:46:01Chair Boozman: Our membership consists of 55 hundred members across america and our farmer patrons are concentrated in arkansas and missouri. We directly employ over 1700 people, and indirectly support hundreds of jobs in rural america. For decades, our business model has been to provide marketing option for our members rice and soybeans, process the grain, and sell and distribute the finished goods through domestic and international channels.
▶ 0:46:28Chair Boozman: This activity generates well over a billion dollars annually and is turned over multiple times in our region of the mississippi delta. The key in the aforementioned business model is the ability of the farmer to secure financing and produce a crop on an annual basis. Also key in this equation is a strong economy that allows farmers to remain profitable. Without our former members, all that economic activity that riceland foods generates and the jobs we support disappear, leaving economic deserts in many areas of east arkansas and the boot hill of missouri.
▶ 0:46:59Chair Boozman: Financial institutions work diligently and creatively to keep farmers on the farm this growing season, but a shadow of uncertainty remains across the entire system. Planting decisions and see purchases are often made months before now, as final assessments are made, productive farm bill it will remin aloe. Ultimately this could reduce the production of rice, soybean, corn, and possibly other commodities in our growing region.
▶ 0:47:30Chair Boozman: Businesses like ours are struggling to plan accordingly to receive and process this year's crop. Our company has 4 million locations across arkansas and missouri. We also have 24 drawing locations across the same footprint. In small rural towns like stewed cart, hazing, poplar bluff, and many more, riceland foods is the largest employer in the main driver of the local economy. When our farmers suffer, we suffer. Ultimately, this impacts the entire region.
▶ 0:48:00Chair Boozman: It is not overstating to say that if riceland foods doesn't operate in many of these small towns, the towns no longer exist. We must take serious and substantial action that resulted in updated reference prices that secure a strong safety net for rice farmers. This means a substantial increase in the plc reference price and the assurance that payment limitations are increased to reflect modern day farming. These enhancements must be effective for the 2025 crop year.
▶ 0:48:28Chair Boozman: Securing a strong safety net for our growing members also provides stability for both farmer owned cooperatives and privates. Along the same lines, I would be remiss if I didn't mention the importance of tax policy on our cooperative. Of particular significance to cooperatives such as rice when section 199a deduction stands out as one of the most crucial tax policies. This provision enables cooperatives to pass tax deductions directly to to their members who then reinvest the funds back into their operations.
▶ 0:48:59Chair Boozman: These are investments in turn strengthen local economies by creating jobs, increasing spending on act production, and fostering growth in communities. I will finish where I began this full circle moment for me. I witnessed firsthand the work congress can do to support american agriculture as both a senate staffer and professional in this industry working on behalf of farmers. Now is the time for farmers to act on a new farm bill and support the industry I've devoted my life to before it's too late.
▶ 0:49:29Chair Boozman: Unfortunately, there are many farmers out there who will not be farming this year, and the outlook is even more granular. I implore you to act. Keep farmers farming. Every american is relying on you and your colleagues in congress to deliver. Thank you for the opportunity. I look forward to answering any questions.
▶ 0:49:46Chair Boozman: Thank you, Mr. noble for sharing your story. Your family have been a powerful force for agriculture since 1890. I think it really highlights how difficult it is right now, the importance of the hearing today, and the importance of getting a farm bill done.
▶ 0:50:12Chair Boozman: I know that your ancestor of 1890 is very proud of you right now. Now, we would like to hear from Mr. rowe.
▶ 0:50:21Mr. Rowe: Mr. chairman, ranking member's to let members of the committee, thank you for the opportunity to be here today. My name is sedrick rowe, young first generational farmer from albany, georgia, owner and operator of a 30-acre farm where I grow organic hemp, peanuts, sunflowers, watermelons. Today I will talk to you about some highlights of my farm experience and talk about access to credit and risk management resources.
▶ 0:50:52Mr. Rowe: I am concerned that without the new farm bill, the safety net would continue to be largely out of reach for us. This committee has the opportunity to promote and pick the policy to help new farmers enter and stay in the agricultural generation. I did not inherit land. I had to build it from the ground up. So without fsa, I was not unable to produce my first land. At this time, at the same time, I have also had some frustrations with fsa.
▶ 0:51:24Mr. Rowe: For example, I was denied a micro loan early on, even though my business plan was clearly sound. Fsa is the go to anc for farmers who cannot find credit from other means. , recently they have been making some improvements.
▶ 0:51:41Mr. Rowe: For example, recent critical updates from fsa loan programs include prioritizing financial stability, offering more flexible terms, emphasizing savings and reserve payment scheduling, and avoiding necessary impacts from balloon payments, and appropriate collateral requirements to reduce borrower risk without increasing the risk of the agency. We need to ensure appropriate staff levels are there, too.
▶ 0:52:10Mr. Rowe: It is important that someone is there to answer the phone at fsa and also other usda offices. Looking to the farm bill, last year, to improve farmers access to credit.
▶ 0:52:26Mr. Rowe: The next farm bill should improve provisions that would increase micro loan limits to 100,000 dollars, match loan limits across programs, including direct farm ownership, down payment loan programs, remove seven-your limits on eligibility for operational loans, support distressed farmers -- borrowers. Pilot program for preapproved, direct farm ownership loans, also a pilot loan programs to help with startup costs.
▶ 0:52:55Mr. Rowe: Credit is only a part of the picture. Farming is a risk that we all know. Sometime no matter how much you prepare there is still uncertainty. The risk management agency and fsa offer important risk management programs and financial relief to farmers and ranchers exposed to loss from events such as drought, hail, flood, and diseases. These farm safety nets must be strengthened and support for young farmers.
▶ 0:53:24Mr. Rowe: Also high-value organic crops are often undervalued by insurance coverage. For me and many other farmers, rma does not offer insurance products that cover what we grow on the small scale. All farm revenue protection is the only insurance program that is designated for small farmers and diverse farms. Only 10 whole farm policies were sold in georgia last year. 83% of the farmers in georgia do not have crop insurance.
▶ 0:53:54Mr. Rowe: I insure -- encourage this committee to incentivize insurance agency to sell crop insurance to small scale and specialty crop farmers like me. I also encourage this committee to consider new insurance products, specifically designated to deal with whether impact. For farmers who cannot access rma programs, fsa offer is disaster programs.
▶ 0:54:18Mr. Rowe: This is important -- this program needs to continue, to support young farmers, by creating a revenue-based option with -- similar to the farm revenue protection. The agency could offer, help farmers transition to whole farm protections once they had required operational history. Getting more farmers enrolled innep early on is the goal.
▶ 0:54:49Mr. Rowe: Keep supporting them with the basic safety net. It also gets them in the door with usda when it comes to loan access. What I really want to emphasize today is that, as a young farmer, we need to be heard. We need to know that our experiences are considered when it comes to the farm bill being put together. We need certainty that congress will fulfill the responsibility and deliver effective farm bill for all farmers.
▶ 0:55:17Mr. Rowe: We also need certainty that usda will continue to support farmers moving forward from surviving to thriving farms. It should not be so difficult for young and beginning farmers such as myself to secure the support we need to innovate and achieve long-term success. Thank you for the opportunity to testify before this committee. I look forward to answering any questions that you may have.
▶ 0:55:38Chair Boozman: Thank, Mr. rowe, very much. I am going to get into line later on. We are going to go right to you, mitch. I know you have lots of stuff going on, you are an important guide. As I was a to them earlier, there is just a whole lot of stuff going on. You are welcome to go ahead and question the witnesses.
▶ 0:56:06Sen. Mcconnell: Tara durbin from my hometown of louisville, kentucky, farm credit, the other witnesses for being here. I've been on this committee my entire time in the senate. It's important to kentucky. We have 70,000 farms, most of them small. Small farms in particular make up the backbone of the agriculture in my state and many others.
▶ 0:56:35Sen. Mcconnell: As my colleagues on the committee know well, farmers face a whole lot of uncertainty in today's economy. Unstable markets, volatile prices, record drops in farm income have made this job which was already difficult, even harder. Kentucky farmers and farmers across the country are grappling with a steady decline in farm hands itself.
▶ 0:57:03Sen. Mcconnell: It's more important than ever that we ensure our farmland remains farmland while providing opportunity for new farmers to get involved in the agricultural economy. So I was pleased to work with the kentucky farm bureau on legislation that would offer retiring farmers a viable path to transition their farmland to the next generation of farmers, protecting american farmers act
▶ 0:57:34Sen. Mcconnell: Would reduce the tax burden on selling farmland and encourage landholders to keep their farmland in the hands of active, young farmers. So, tara, what financial tools would help address the problem of land and capital access that american farmers face?
▶ 0:57:59Ms. Durbin: Thank you, senator, for your question. As you mentioned, that is a very complex issue. As you mentioned, a lot of communities in kentucky specifically are kind of wrestling with trying to solve for that. That is something at farm credit mid-america we have witnessed across our service territory.
▶ 0:58:26Ms. Durbin: Personally, I have witness to that myself, and my husband, about 20 miles from our home farm, a microchip plant has come in. That has driven up the cost of land. Your question and that complex issue hits very close to home to me, as well.
▶ 0:58:45Ms. Durbin: I think, I would challenge you to consider looking for ways that we can incentivize farmland to stay in agriculture production. You mentioned our young beginning farmers. That incentive would really help our young beginning farmers as far as getting into agriculture.
▶ 0:59:12Ms. Durbin: The barriers to entry into agriculture, as sedrick mentioned, are huge, when we talk about land. When we look at ways to incentivize agriculture in production, definitely ways that we can work together to solve that complex issue.
▶ 0:59:29Sen. Mcconnell: I guess I assume congress must have some role in all of this, as it requires changing the law to try to get the outcome that we prefer.
▶ 0:59:42Ms. Durbin: That would be a question that I guess we would have to work on. As I said, that is a complex issue. That would take a lot of work from you all pulling together and working with industry partners, as well, working with kentucky farm bureau and others to help resolve that issue.
▶ 1:00:04Sen. Mcconnell: Thank you, Mr. chairman.
▶ 1:00:07Chair Boozman: Thank you, senator mcconnell. Senator hoeven. Ok. >> thanks to senator hoeven for allowing me to hop ahead. Thank you you, chairman boozman. To our panel of witnesses for being here today. Really do appreciate it. Would like to start with crop insurance.
▶ 1:00:43Chair Boozman: Ms. ho come Mr. hopkins, crop insurance is the most effective and reliable risk management tool available for farmers that must remain affordable and accessible. Over the years, congress has approved multiple rounds of ad hoc disaster payments to help farmers recover from severe weather events. We see these frequently in iowa. Most recently, last december.
▶ 1:01:07Chair Boozman: I am thankful, secretary rounds is moving quickly to disperse to these hurting farmers. While these payments offer relief in times of crisis, they are slow, they are unpredictable, and subject to political gridlock, leaving farmers uncertain about when or if help will actually arrive.
▶ 1:01:28Chair Boozman: I will farmers who have faced multiple natural disasters in recent years have made it clear that they need certainty and protection in real time, not months or years after the damage is done. Ms. hoch, can you explain why federal crop insurance is superior to the ad hoc disaster payments? Second, do you see any improvements that congress needs to make in the next farm bill?
▶ 1:01:56Ms. Hoch: Thank you very much for the question. I made some comments on that in my opening remarks. The disaster payments that have been made in recent years have been significant, and there is true opportunity to look at crop insurance. A number of those have already been developed, could be the products, indexed products made available in the southern part of the state.
▶ 1:02:22Ms. Hoch: There are area-based plans that can e are area-based plans that can additionally sed plans that can additionally help lans that can additionally help aans that can additionally help a ns that can additionally help a farmert to have additional cover beyond their immediate cover. These are important steps that we can take. We can work together through 508h products which allow the opportunity for new products to be brought forward and developed.
▶ 1:02:39Ms. Hoch: We can work creatively together to ensure that we bring what was ad hoc -- and as my dad always told me, hope is not a plan -- ad hoc disaster, that is why that uncertainty -- that certainty that your farmers face and I am a come if the same in minnesota. That certainty is critical to farmers and my banking colleagues as well. The ability to work creatively together, to move those disaster payments into crop insurance where there is a risk sharing.
▶ 1:03:10Ms. Hoch: The farmer takes the risk, the government takes risk, and as entry providers we also take risk. That together creates a very effective and efficient process with competition to bring the best results to our farmers.
▶ 1:03:21Sen. Ernst: Very good. Hope is not a plan. Mr. hopkins, can you expand on this a little bit and explain why crop insurance is a necessary tool for farmers to have when you are making loans to those farmers?
▶ 1:03:36Mr. Hopkins: Thank you, senator. Appreciate the opportunity to discuss this. Yes. Crop insurance is the number one risk management tool for ag lenders. It's a tool that also puts the power back in the producers hands.
▶ 1:03:53Mr. Hopkins: They have the opportunity to look at different coverage levels and make those decisions about their operation, not only on the risk management side, it also creates marketing opportunities for producers when it comes to marketing those crops proactively throughout the year. So that level of certainty helps bankers make that decision as we look at operating lines. Reference prices combined with crop insurance are the two most important tools that bankers have.
▶ 1:04:20Sen. Ernst: Thank you, Mr. chair. I will yield back.
▶ 1:04:24Chair Boozman: Senator smith.
▶ 1:04:29Sen. Smith: , Mr. chair, since I just got here, I will defer to senator tuberville.
▶ 1:04:33Chair Boozman: That is fine.
▶ 1:04:36Sen. Tuberville: Welcome. Glad you are here. Unfortunately, we have been hearing some very bad news. Mr. noble, I have friends in arkansas. You know that I'm hearing from them quite often. Our ag economy is a disaster right now and we have failed to some degree. I don't know where it's failed but it is obviously in a tailspin and we need to help. Mr. noble, what can we do to help?
▶ 1:05:07Sen. Tuberville: You are seeing all of this go on first and. What can we do to help?
▶ 1:05:12Mr. Noble: The main thing is quick action on a farm bill. That is easy to say, hard to accomplish. I think everybody up here said something along the same lines, long-term policy matters. It matters to ag lenders, the farmers, recipients of the loans, but there has to be some certainty.
▶ 1:05:37Mr. Noble: At the risk of spinning off into another aspect, we face in international competition with the commodities that our company trades in. We have always been free traders. Quite frankly, trade has to be fair, and it has not been. There is a lot of challenges and complexities to that.
▶ 1:06:03Mr. Noble: If we are going to ask our domestic producers to compete in a worldwide market, there has got to be stability there, has to be certainty, so the quicker you can provide that, the better.
▶ 1:06:14Sen. Tuberville: Thank you. I hope president trump is right on the situation right now with tariffs. It is our last chance to do something to help this country. Especially our farmers and producers. Mr. durbin, I've been talking about the need to raise of us a guaranteed low limits for some time. I was pleased with chair boozman including this in the framework. Can you discuss the importance of raising guaranteed ownership loans to 3.5 million?
▶ 1:06:43Ms. Durbin: Thank you, senator, for the question. At farm credit, we utilize fsa guarantee program as an important tool for serving our customers. Specifically our young, beginning, and small customers. That tool is extremely important.
▶ 1:07:02Ms. Durbin: That would allow us to loan to more customers, more farmers, help them cut their operations up and going, but also a risk mitigating tool for us to better serve agriculture.
▶ 1:07:15Sen. Tuberville: Thank you. Mr. hopkins, we are trying to save not just the farmers who have been doing it for a long time like Mr. noble but tried to get young farmers involved in this fiasco, as we are looking at why in the world you would do it. I don't know, but hopefully a lot of people that want to get into farming. At our burn, we have a strong ag department that is strong, you see a lot of great activity.
▶ 1:07:42Sen. Tuberville: How do we do get young people involved? We lost 150 thousand farmers and farms in the last few years, a disaster nobody is talking about.
▶ 1:07:53Mr. Hopkins: Thank you for the question, senator. As much negativity as we see surrounding ag, I'm very optimistic. When I look at junk producers we have in our area, on top of management, they are very on top of technology. They are looking for opportunity.
▶ 1:08:12Mr. Hopkins: The question is, what tools do we have to provide them the opportunity as capital expenses are getting to be so high that the barrier to entry into agriculture, like you said yourself, why would you want to do it? But there are still individuals with that passion to be producers in the country. Raising those lending limits to keep pace with that increased capital requirement allows us to provide that capital to producers.
▶ 1:08:34Sen. Tuberville: $1.5 million for a cotton picker. We have lost it. Mr. rowe, tuskegee, alabama. Nice to see somebody from my home state, close to my hometown. I know you are an auburn fan.
▶ 1:08:49Mr. Rowe: Yes, sir.
▶ 1:08:52Sen. Tuberville: Good answer. Being a peanut farmer, tell us how peanuts have weathered the storm. Peanut prices have been pretty good over the last few years. What do you see for the future of peanuts?
▶ 1:09:08Mr. Rowe: Thank you for the question, senator. Personally, my opinion when it comes to the peanut industry, it is growing strong. Peanut is a lagoon that grows in the ground, so a lot of -- leg ume that grows in the ground, so a lot of the weather doesn't affect it. With tariffs being raised, prices go up.
▶ 1:09:37Mr. Rowe: For growers and access to land, it is critical to stay surviving with the rising tariffs. In order for a farmer to survive, they have to plant more acres, and that can be a challenge.
▶ 1:09:46Sen. Tuberville: Thank you, Mr. chairman.
▶ 1:09:53Chair Boozman: Mr. noble, I truly believe there is no greater tool for rural development in many agricultural communities than strong risk management tools. Riceland is an anchor of the community in eastern arkansas. Can you illustrate for the committee the impact a strong farm safety net has on rural communities?
▶ 1:10:16Mr. Noble: Sure, senator. When you think about those but we are talking about with the safety net for farmers, it sometimes gets lost. That is just a transaction with the government and the farmer. I guess in one sense it is.
▶ 1:10:33Mr. Noble: But when you think about how many times that dollar turns over economically in rural communities, whether it is the grocery store, rural health facilities, machinery repair, facilities, machinery repairs, countless other small businesses, rural america ultimately depends on the farmer as the backbone, really the heart of their entire community.
▶ 1:10:59Mr. Noble: I think I shared earlier, for businesses such as ours, when you go to many of these small towns, we are the largest employer. I don't want to say the only, but we are a significant player in some of these small towns. Without a significant safety net, I shudder to think about what would happen to some of those areas.
▶ 1:11:20Chair Boozman: Ms. hoch, you want to add to that?
▶ 1:11:25Ms. Hoch: I think the importance of crop insurance comes into play here, as well. The ability of the committee to continue to deepen coverage levels and the premium support for our farmers through the work that you've done in such areas such as area plans. I will give a personal example.
▶ 1:11:45Ms. Hoch: When you are facing extremely high input costs, the importance of being able to secure that loan, being able to have a sense of certainty around the growth of your crop, can actually be covered in the event of a loss. Today, that coverage for soybeans wouldn't be adequate. Even the highest level, which is what my family takes.
▶ 1:12:08Ms. Hoch: The ability to layer on, for instance, the eco plan out there, providing additional coverage, that allows you to increase that coverage level in the event there is a loss. However, I would make two really critical points around this. The first one is, it is really important with these area plans, that a farmer is well educated by their agent and provider, that it does not supplant their individual coverage for their farm.
▶ 1:12:38Ms. Hoch: They still need to maintain that individual coverage and then can layer on additional area coverage to give them more cover in the event of a loss. It is also important that these products, as they continue to be developed, they are an important tool for our farmers of all sizes. As they continue developed, it is important that they remain actuarially sound.
▶ 1:12:59Chair Boozman: Mr. hopkins, last summer, farmers like herself started sounding the alarm bells, getting financing might be difficult heading into 2025. Can you give us very quickly, something in regard to where we are heading with credit availability in light of the current farm bill issue?
▶ 1:13:28Mr. Hopkins: Thank you for the question, senator. Yes, sitting on america's bankers ag committee, I speak with bankers across the country. It started in your area of arkansas, starting to move its way through the midwest of the country. What we are seeing is continual earned network losses across the board. Talking to lenders across the area, what I'm seeing in the midwest, certain parts of the southeast part of the country are on your two or three or four a losses.
▶ 1:14:00Mr. Hopkins: Bankers are starting to work out plans. Having uncomfortable plans on what is the endgame here. When I look at the midwest coming through season, we were able to get completed this year, but those conversations are what is the burn rate of working capital? It is creeping up on us faster. Last summer I was hearing that across the country and it is sitting home now.
▶ 1:14:20Chair Boozman: Senator smith.
▶ 1:14:24Sen. Smith: Hello to Ms. hoch, my fellow minnesotan. I want to touch on something senator tuberville touched on which is the challenges facing folks just getting into farming. We know the average age of ours is creeping up, like my age is creeping up.
▶ 1:14:52Sen. Smith: As we see this generational transition in agriculture, we know it is harder for new farmers to put the tools together to be able to get going, whether it is access to capital or land or farm safety net programs. Without support, I am concerned that we won't see the transfer of land from one generation to the next, the new producers who may be from the farm themselves or don't have access to land through their families.
▶ 1:15:21Sen. Smith: In minnesota, what happens in that situation, we have developed a beginning armor tax credit -- farmer tax credit that has been a successful tool for young farmers. States like iowa and kentucky and nebraska developed beginning farmer tax credit programs. This incentivizes the sale or rent of farmland to beginning farmers.
▶ 1:15:49Sen. Smith: I'm looking at making this a national program so I will address this to the whole panel. What do you see is the biggest hurdles facing folks as they want to get into farming? What do you think we should be most focused on in congress as we think about the big farm bill that hopefully will get moving? >> one of the things you mentioned was the barrier to entry for young farmers. That is true.
▶ 1:16:18Sen. Smith: So land access used to be a challenge for young farmers. You inquired about what lenders are doing to encourage young farmers to engage in agriculture production. The farm credit system, all farm credit associations have a young beginning small farmer program. Our program is called growing forward.
▶ 1:16:44Sen. Smith: Within the program, we have different underwriting standards for the young beginning and small farmers. Somebody starting out and getting into the ag industry is not expected to chin the bar. Maybe in their early 20's, maybe where their grandparents would when we talk about standards.
▶ 1:17:08Sen. Smith: We have different loan underwriting standards specifically for customers that will get our tier one best interest rate. That is important. It comes with a caveat. That is, they go through educational programming and we divide that educational programming to them. We require them to put a business plan together to ensure the operation --
▶ 1:17:35Sen. Smith: So there is support that goes along with that. I'm sorry, I want to talk to Mr. rowe about this. We know from the national young farmers coalition and farm bureau that getting access to high-quality land is one of the biggest barriers. The average farm real estate value has increased pretty dramatically.
▶ 1:17:58Sen. Smith: Can you talk about how you see this and the impacts of rising land prices on your business and others that want to get into farming?
▶ 1:18:06Mr. Rowe: Thank you for your question. As you know, land access is always a challenge for young farmers or farmers in general. Me personally, to speak on that, I would say the challenge also is that you farmers come from an educational background so they are going school for research and being innovative. That carries over when you get a loan. It is a challenge, a barrier.
▶ 1:18:37Mr. Rowe: Young farmers pursuing their education is a barrier to come up with different ways to grow crops or grow in different environments. The challenge would be having more access to opportunities for young farmers to be able to start up the farm, not based on the history of their education.
▶ 1:18:57Mr. Rowe: I want to thank you for your leadership on this issue and I encourage the committee to support establishing the pilot program through this on local led projects to challenge -- tackle challenges of accessing land in local market. >> senator booker.
▶ 1:19:20Sen. Booker: Thank you for your generosity to the ranking member allowing me to get my questions in. At the last hearing we talked about the crisis, the threat from the illegal freeze of funding imposed by the usda on thousands of side contracts with american farmers.
▶ 1:19:41Sen. Booker: Two weeks have gone by and I'm getting continued frantic calls andy mills from farmers not just in new jersey but across the country who invested money into their farms according to the terms of side contracts with the usda, and who are not receiving reimbursement payments from the usda. Planting season is here and many of these farmers don't have the resources to get crops in the ground in the absence of funding that is owed to them by the usda.
▶ 1:20:10Sen. Booker: It is not just the signed contracts with farmers. It is also the continuing reserve reimbursements to nonprofits and small businesses that provide assistance to those farmers. The nonprofits and small businesses in new jersey and around the country are being forced to lay off staff and stop helping farmers in need. Tim makes matters -- to make matters worse the usda plans to close local offices around the country the farmers rely on.
▶ 1:20:36Sen. Booker: I have a letter drafted, dated march 10 the national young farmers coalition focused on the usda funding worries and I would request consent to have that placed in the record. >> it will be on the record.
▶ 1:20:52Sen. Booker: I think it is important that we highlight the main message of the letter. The abrupt freeze of the usda grant funding has left young farmers nationwide in financial distress. Congress must act swiftly to unfreeze funds and ensure young farmers can access land, capital, and markets.
▶ 1:21:14Sen. Booker: To address this I plan to file an amendment to the resolution this week to lift the usda reason signed contracts -- freeze on signed contracts and encourage the usda to make past due payments on I hope others on the committee will join me. I have a question, Mr. rowe. And you talk about the impact you are seeing from the usda funding freeze on the young farmers you know?
▶ 1:21:38Mr. Rowe: Thank you for your question, senator. The impact that has been found, that is going on in my area, not only me but young farmers, with the freezing, uncertainty is bad for farmers. It is bad for business. Not only that, we don't have anyone to talk to. When we go to a local usda offices.
▶ 1:22:05Mr. Rowe: Having boots on the ground or someone in the office is big for us when it comes to managing different practices we are doing on our farm. Contracts with other usda agencies are on pause and that means a lot of farmers will have to cancel their plans for that year or if they were growing a particular crop, based on the contract, there is a pause.
▶ 1:22:28Mr. Rowe: So with the funding freeze, a lot of opportunities that farmers have like myself to go out and get grant money to be able to make my operation thrive is not there anymore.
▶ 1:22:40Sen. Booker: For farmers who are struggling financially, what does this mean to the financial well-being and stability for farmers you know?
▶ 1:22:49Mr. Rowe: They either have to not farm this year, or cut back. Like I said, it is a challenge when you don't have the support of the federal government.
▶ 1:23:01Sen. Booker: In your testimony you mentioned 83% of farmers in georgia don't have crop insurance. 83 percent uncovered. This is a striking failure of our safety net and you mentioned any of these farmers have never had the option to purchase crop insurance because it is difficult to find agents willing to work with small farmers. I'm seeing similar things in my state.
▶ 1:23:25Sen. Booker: Can you speak to the importance of congress making changes to the upcoming farm get -- bill to ensure crop insurance agents are set -- incentivized to sell crop insurance to small farms like yours?
▶ 1:23:38Mr. Rowe: I encourage the committee to incentivize crop insurance agencies to sell crop insurance to small-scale farmers like myself, because right now, it is a waste of their time dealing with the small farmer like myself. Large crop insurance -- insurers don't focus on young farmers because they don't have any type of risk management.
▶ 1:24:05Sen. Booker: That is enlightening. In the 10 seconds I have left, this is for the permanent senate record, we both played college ball. My press guy -- god listed me as 6'8", 270. Was your press guide equally inaccurate?
▶ 1:24:23Mr. Rowe: Yes, he was.
▶ 1:24:27Sen. Booker: Thank you very much. >> I will not ask anyone else there weight, but thank you, senator booker. I apologize, we had a long leadership meeting as you can imagine, senator booker and I were there. There are two things going on right now and it is in everyone's interest that we resolve that. I know you were introduced, Ms. hope -- Ms. hoch from anoka, minnesota.
▶ 1:24:56Sen. Booker: I am sure you survived without me introducing you. I heard he did a good job so thank you for that. Our farmers are in a challenging environment right now. That includes tariffs, something that is whiplashing farmers back and forth. They are on, then they are paused, then they are doubled as happens today. That is not certainty, it is chaos and farmers are among those that are hit the hardest.
▶ 1:25:26Sen. Booker: So on top of that is input costs. I'm concerned about what is happening right now. It is already a difficult time. One way we can give you that certainty is making sure you have access to affordable and reliable credit. That can mean the difference, I know you know better than me, between economic viability and foreclosure. Farmers rely on usda commercial banks, our farm credit system.
▶ 1:25:56Sen. Booker: Senator hoeven and I have worked together to expand credit opportunities and improve our farm loan programs. I have read many of the members mention this, this is the bill the senator hoeven and I have and I'm looking forward to working with the chairman as we work on a farm bill to increase loan limits and improve access to credit.
▶ 1:26:21Sen. Booker: The bill includes new authority to allow farmers who have fallen into distress, to refinance usda guaranteed loans into direct loans. In addition to credit access, farmers need strong and reliable crop insurance and we know since 2018, the farm bill, more farmers have been able to purchase crop insurance but there are gaps in risk management options and access for farmers.
▶ 1:26:49Sen. Booker: Many small producers face challenges buying crop insurance, particularly cost. That is why the majority leader, who remained on this committee, I have worked on legislation to make insurance policies more affordable for beginning farmers and ranchers. I want to start with you, Ms.
▶ 1:27:10Sen. Booker: Hoch, and ask you, the crop insurance groups you represent today have endorsed the crop insurance for future farmers act, the bill I just mentioned and will reintroduce. Can you talk about those unique challenges for beginning farmers and why this legislation will help you better manage risk?
▶ 1:27:32Ms. Hoch: Thank you and great to be from the great state of minnesota. Thank you for the question. It is challenging. We have heard the discussion already for a new farmer. A young farmer, a beginning farmer, you don't all -- only have to start farming young. I know personally, there are significant investments you need to make. Glad we discussed but also, equipment. The cost of equipment has become significant.
▶ 1:28:03Ms. Hoch: You need to buy your seed, fertilizer, all before you know what the prices will be that you will receive at the point you harvest and if you will have a harvest. Crop insurance especially for the beginning farmer gives them that certainty, the certainty that we have said is critical and important, providing the premium support to those beginning farmers. I endorse that.
▶ 1:28:28Ms. Hoch: Unhappy and supportive of that because it also brings -- I'm happy and supportive of that because it also brings education and get them into the program.
▶ 1:28:37Sen. Klobuchar: Senator hoeven just walked in. We have partnered for years on legislation to improve access to credit by modernizing loan limits for usda loan programs. New and beginning farmers are old -- are often dizzying -- deemed risky. Costs can be prohibitive for new farmers. I would ask you, misses durbin and Mr.
▶ 1:29:05Sen. Klobuchar: Hopkins, can you speak to the importance of updating farm loan limitations in the next farm bill from your perspective as a lender? Are there other improvements we should consider making?
▶ 1:29:17Mr. Hopkins: Like you mentioned, increase in capital expenses along with your normal operating costs have grown substantially over the last five years. When you look at land costs, the guarantee limits have not kept pace. That would allow us as lenders to have tools in our belt to get creative with producers as we work through adverse times.
▶ 1:29:43Mr. Hopkins: Increased lending limits, I talked to my lenders across the country, two years ago they were trying to figure out how to work through some of these losses with customers. Increasing the limits would give us flexibility to work with producers to keep them going.
▶ 1:29:59Sen. Klobuchar: Is durbin?
▶ 1:30:00Ms. Durbin: . Thank you I agree with Mr. hopkins. I would add that given the rising costs of inflation, it is important as we think about the next farm bill to properly index that so we don't have to continue to keep coming back and asking for increases in farm bill's to come.
▶ 1:30:23Sen. Klobuchar: One last question, do the current usda loan programs meet the needs of younger farmers who rely on fsa lending programs? What suggestions do you have to improve access?
▶ 1:30:36Mr. Rowe: Thank you for the question, senator. The programs that are currently there do support norman's indian farmers, but some of the loans -- support farmers and young farmers, but the programs have barriers for young farmers like myself.
▶ 1:30:56Mr. Rowe: To piggy back on that, to focus on more so understanding that young farmers come from a different perspective of farming. More innovative, more hands-on, and it doesn't take a lot of land for a farmer to be diversified.
▶ 1:31:17Sen. Klobuchar: The chairman has returned so I will give him back the gavel. I never actually took it but here it is. I think senator hoeven is next so thank you.
▶ 1:31:27Chair Boozman: She will probably hit me with the gavel.
▶ 1:31:38Sen. Hoeven: Thank you. I want to follow up on a question senator klobuchar brought up. We put in legislation that would raise limits on both direct operating and guaranteed ownership loans as well as the guarantee programs. We have done that before and that has been part of the farm bill as we authorize the farm bill. We hope to do that again this time.
▶ 1:32:07Sen. Hoeven: I would guess, or I would ask probably both Ms. durbin and also hopkins, I will give you the changes we made and let you react to them and see if you have thoughts in regard to it. The direct operating we increased from 400,000 700-2000. -- to 750,000.
▶ 1:32:36Sen. Hoeven: We increased direct ownership from 600,000 to 850,000. The guaranteed ownership from 2.5 million -- 2.2 5 million to 2.3 million. We increased limits for fsa microloans to 100,000. I would like you to react to that, starting with Ms.
▶ 1:33:00Sen. Hoeven: Durbin, and particularly in regards to some of our beginning farmers, a big challenge meeting younger folks in farming and ranching.
▶ 1:33:11Ms. Durbin: Thank you for continuing to raise this important issue. As we have been sharing today, the input costs continue to rise and it is important for us to be able to work more closely with our customers and help more farmers by using those increased loan limits. In line with more modernized agriculture. We appreciate your efforts in working towards that.
▶ 1:33:42Ms. Durbin: Specifically regarding young beginning farmers, we work with young, beginning on small farmers to have different underwriting standards that they have a different bar to chin, it is not as high as what we would expect someone who has been farming for 40 or 50 years to try to chin when we think about experience and building a financial position. That is one way we work with young, beginning in small farmers.
▶ 1:34:09Ms. Durbin: We put them through a different educational opportunity over their journey as a customer with us. Allowing them the opportunity to understand their financials, understand different decisions they make and how that impacts their operation, not only today but in years to come. That is something we work closely with young, beginning in small farm customers at farm credit mid-america.
▶ 1:34:36Sen. Hoeven: Senator welsch and senator smith and I introduced the farm ownership improvement act, which would allow fsa to provide a prequalification so the borrower, if they are going to acquire farmland or whatever it is, they can get pre-qualified so they don't miss out it would go to an auction or some type of estate sale or
▶ 1:35:09Sen. Hoeven: Something like that. Bring that into the discussion. I'm looking for any ways that we can enhance the program, both for establishing and particularly for new and beginning farmers.
▶ 1:35:26Ms. Durbin: I think opportunities like what you are suggesting are important to young beginning farmers. The more ways we can look for ways to encourage and incentivize them to get into agriculture is important, specifically for farm credit as we think about our mission to serve customers in good and challenging times. Those are great opportunities that I think we need to further consider.
▶ 1:35:53Sen. Hoeven: Mr. hopkins or Mr. rowe, thoughts about enhancements?
▶ 1:35:59Mr. Hopkins: I would like to elaborate on the last part a little more stuff enhancements on prequalification would undoubtedly -- not only increase efficiency but allow us to get capital to beginning farmers quicker. Proactive education is our best tool to help young and beginning farmers as we look to the future. Prequalification allows them to start conversations earlier.
▶ 1:36:27Mr. Hopkins: I hear time and time again that young producers, once an opportunity comes, in most instances you have 4-6 weeks. You are seeing most of these farms go through auction sale, not private sale and that is not enough time to get through the process. Prequalification would greatly improve that for young and beginning farmers to make sure they can be proactive on that.
▶ 1:36:53Sen. Hoeven: Mr. rowe?
▶ 1:36:55Mr. Rowe: Thank you. I support this legislation. Thank you taking the lead on it.
▶ 1:37:04Sen. Hoeven: We appreciate you being here with us. >> thank you.
▶ 1:37:12Sen. Warnock: I want to recognize alone this incredible panel of folks testifying I'm glad we have a georgian, Mr. rowe is a farmer and graduate of one of our universities, land grant institutions and in hbcu. Thank you Mr. rowe for being here.
▶ 1:37:43Sen. Warnock: Underserved farmers including historically marginalized farmers, those with limited resources and folks who served in the armed forces face many structural barriers starting and running farms. One of those is access to credit.
▶ 1:38:02Sen. Warnock: Usda's farm service agency or fsa is frequently called the lender of last resort because it provides credit to folks like underserved farmers who are not eligible for traditional loans. Mr. rowe, did you inherit your land?
▶ 1:38:20Mr. Rowe: No, sir.
▶ 1:38:23Sen. Warnock: What role did fsa play in helping you start your operation?
▶ 1:38:27Mr. Rowe: Fsa played a vital role when it came to purchasing my farm. They helped me when it came to understanding the value of land, understanding how production can be operated on that land. Fsa, without them it would be hard for me to purchase my first land.
▶ 1:38:49Sen. Warnock: So it is critical for you getting started.
▶ 1:38:50Mr. Rowe: Yes, sir.
▶ 1:38:53Sen. Warnock: Many underserved farmers didn't inherit land and can't afford to buy it which is why loan programs are critical. Historically, usda has not equitably administer these programs.
▶ 1:39:09Sen. Warnock: Many black farmers in georgia and across the country experienced blatant discrimination at the hands of fsa and that is why I'm glad to fight to secure financial assistance for farmers who experienced discrimination at the hands of fsa and the inflation reduction act. I'm glad the biden administration was able to get the money out to those farmers.
▶ 1:39:35Sen. Warnock: In addition to acknowledging past wrongs we need to make sure lending programs work for today and tomorrow's underserved farmers. Mr. rowe, what changes to fsa's lending programs would you recommend so these programs work better for underserved farmers?
▶ 1:39:52Mr. Rowe: Thank you for your question, senator. As stated in my testimony I think usda should carry on what they started by prioritizing financial stability for farmers, offering more flexibility for terms, emphasizing saving and reserve payment schedules, avoid unnecessary impacts to loan payments and also appropriate collateral requirements.
▶ 1:40:20Mr. Rowe: That is a big issue when it comes to getting a loan, collateral.
▶ 1:40:25Sen. Warnock: You have seen this up close. This is your story. And what it meant for you, it was helpful for you. This is important for all of us, the average age of the american farmer is reaching 60.
▶ 1:40:44Sen. Warnock: So it is in our enlightened self-interest to make sure we provide a path for all of our motivated young people who have the grit, the work ethic, the skills to farm, but need a path. That is the case in a number of sectors, aviation is another, but that is for another committee. It is such an important issue.
▶ 1:41:11Sen. Warnock: Farmers today are experiencing an overall lack of certainty. They are dealing with high input costs like fuel and fertilizer as well as changing weather patterns and a stronger hurricane season brought on by climate change.
▶ 1:41:29Sen. Warnock: Usda programs aimed at helping farmers manage risk like commodity support programs, crop insurance and disaster assistance programs have not been updated to reflect everything that has changed since the last bill was enacted in 2018. Mr. hopkins, will uncertainty in the farm economy help or hurt your ability to provide credit?
▶ 1:41:48Mr. Hopkins: Uncertainty always provides added risk. Crop insurance is the number one tool ag that ag ag lenders have to minute -- mitigate risk. The other is the increased prices. Ag lenders that I have talked to, we look at those as a one-two punch. You have --
▶ 1:42:12Sen. Warnock: The folks you are helping, they are planning for the upcoming season. In the last two months president trump threatened and rolled back tariffs on our largest trading partners which farmers rely on for inputs critical -- imports critical to their lives as well as exports. Which farmers do you think are hurt worse by uncertainty from tariffs, the giant operations or small farmers?
▶ 1:42:39Mr. Rowe: All farmers are bitten by tariffs, but small and beginning farmers are still out of the picture when it comes to the.
▶ 1:42:50Sen. Warnock: Thank you for your testimony.
▶ 1:42:54Chair Boozman: Senator marshall.
▶ 1:42:58Sen. Marshall: My first question will be for Ms. durbin. You probably know this but we lose more farmers to suicide than we do from farming accidents. We are losing 1, 2, three farmers per day to suicide. It is said the rate of suicide and farmers is multiple compared to other professions. The reasons to me are somewhat obvious. The stress is real.
▶ 1:43:29Sen. Marshall: I bet the suicide rate in farmers is proportionate to their debt and net income as well. In the added stress for a farmer, this isn't just a business I started, I am a fifth generation farm kid, my children would be the sixth and my grandchildren would be the seventh.
▶ 1:43:52Sen. Marshall: All of her kansas, sixth and ranchers are feeling -- sixth and seventh generation ranchers and farmers are feeling better. Farmers suicide is real and not often talked about will stop farm but it -- farm credit is trying to help farmers be a good neighbor. Maybe you could share a little bit about your program.
▶ 1:44:16Sen. Marshall: No one knows, a good farm loan agent, knows their customer and they know when the stress is real. Maybe you can talk about what you are doing to try to address the farmers suicide rate.
▶ 1:44:29Ms. Durbin: Thank you for raising that question today. What you shared is real. I think we could all agree that if we look back over history, farmers are no stranger to challenge. Our farmers are resilient, and I know some of this firsthand. I am a farmer myself.
▶ 1:44:58Ms. Durbin: My husband and I have a farming operation and I understand the stress that comes with that. Farmers have the most faith of anyone I know. When you think about that, there is so much out of their control. They can't control the weather, they can't control prices. There is a lot of stress that comes with that, so when you think about the current economic environment and I alter, the stress is compounded.
▶ 1:45:29Ms. Durbin: One of the things I continue to be extremely proud of, not only as a farmer but working for the farm credit system, specifically farm credit mid america and the ways we are partnering with industry partners to help our customers experiencing stress. One of the things we have done is a system that partners with the american farm bureau, the national farmers union, on the resilience program.
▶ 1:45:58Ms. Durbin: That is a free program for online help and coaching to farmers, farm families experiencing that stress, helping them work for about stress and how to do that that helps them thrive on the other side.
▶ 1:46:16Ms. Durbin: For me, working for an organization in the farm credit system that truly keeps the customer at heart, our 109-year-old mission is to serve all of agriculture and to be there for customers in good and challenging times, providing reliable credit to farmers. That is something I'm extremely proud of and I appreciate that you raised the question.
▶ 1:46:43Sen. Marshall: I think the number is 988, the number you can call if you are having suicidal thoughts. Maybe it is your neighbor. You recognize something about your neighbor, they are not sleeping well or going to the high school basketball games this time of year, not going to church. You might recognize something. You could say let's get a cup of coffee or if it's really bad, let's call 988. Ms.
▶ 1:47:12Sen. Marshall: Hoch, you deal with crop insurance every day. I want to make sure I understand why crop insurance is increasing so much. Is it input costs? Mother nature? Why are insurance rates going up?
▶ 1:47:29Ms. Hoch: Crop insurance creates certainty and if I can comment on your previous question, we are passionate around the mental health and wellness of our farmers. It is a topic we have been trying to raise to the forefront so I love that you raise that. As crop insurance, our adjusters are out there on the front lines in the moment when the loss occurs and having been there myself, it is extreme stress.
▶ 1:48:00Ms. Hoch: You are thinking about the loan you have to pay off, thinking about your family and education for your kids and you are facing a loss and unsure what is going to happen will stop crop insurance agent, we created training for them to be aware when they are interacting with a farmer in the field in that law suggesting moment. There are many moments we can take to be good neighbors, to be careful and thoughtful about the mental health and wellness of those around us. I wanted to add that. I think it is important.
▶ 1:48:29Sen. Marshall: You need to make sure your own employees get some tlc after those events as well because it is traumatic to them as well. No one likes to go in and have a metal shed cell. Nobody likes to do that. It is tough on your employees.
▶ 1:48:54Ms. Hoch: Agreed. Crop insurance is an important tool. The availability of data all farmers across the country is critical to this program. Ensuring that it is affordable, widely available, that it serves our farmers across all crops and important to the program itself, but is actually very -- actuarially sound that we understand the products to make
▶ 1:49:24Ms. Hoch: Sure they are available to serve farmers when they need it.
▶ 1:49:27Sen. Marshall: When I ask people, why is flood insurance going up? There are more floods and storms. His crop insurance a reflection of rising input costs and interest rates? I assume there are reasons.
▶ 1:49:41Ms. Hoch: The cost of crop insurance will be driven by two things, the yield that come out, which can be impacted by weather or a farmer's choice around cedar input they put into the crop and it would be impacted by the commodity price.
▶ 1:49:58Sen. Marshall: I yield back.
▶ 1:50:01Chair Boozman: Thank you, that was an important line of thought and questioning. Senator moran. Several moran thank you --
▶ 1:50:15Senator Moran: Thank you. This opportunity is extended for beginning and veteran farmers to benefit crop insurance for the first five years and extends that to 10. Can someone tell me the value of that? I think Mr. rowe, maybe you are a beneficiary of the program. 5-10 years, does that make a difference in what we are trying to accomplish?
▶ 1:50:44Mr. Rowe: Yes, five or 10 years. That is a reasonable time based on my experience.
▶ 1:50:50Sen. Moran: What kind of benefit does this crop insurance, what does the benefit look like to you?
▶ 1:50:59Mr. Rowe: There is a risk, so with crop insurance it gives me a sign of relief that no matter what happens I have something that will not take care of the death I may have to face, but give me a starting point to move forward.
▶ 1:51:17Sen. Moran: In the absence of crop insurance, what would your circumstance have been in starting your operation? What would, how would your relationship have been with your banker if you could have gotten the relationship with the banker?
▶ 1:51:31Mr. Rowe: The banker would have left that a lot, knowing that I could take care of my loan. Crop insurance for me personally, it helped me when it comes to knowing the impact and knowing I'm covered no matter what type of payment I may have. The crop insurance is taking a big risk.
▶ 1:51:52Sen. Moran: In your world, crop insurance is working well on those crops?
▶ 1:51:58Mr. Rowe: No, sir. The crops grow don't all have crop insurance, like hemp. That is a fairly new crop in the state of georgia and a lot of crop insurers don't want to take the risk when it comes to that crop.
▶ 1:52:14Sen. Moran: I think you testified, I can hardly read my notes but Ms. hoch, you cautioned about disaster insurance that threatens the viability of crop insurance, that if you have a disaster program that diminishes the desire of farmers to purchase crop insurance and spread risks among producers.
▶ 1:52:37Sen. Moran: My question is, what about the disaster assistance that we provide in january, december, is that an impediment to crop insurance?
▶ 1:52:47Ms. Hoch: The disaster, thank you for the question. The disaster relief provided, these are critical sources of funds to farmers and they will help particularly as they look to pay down operating loans when there have been multiple years. My point around it is, crop insurance, we can't cover every gap. We are not here for every situation so there are moments when disaster aid is incredibly important.
▶ 1:53:13Ms. Hoch: My hope is that we can continue to work together to find more opportunities, to find more products that can work, that can be actuarially sound and help cover those gaps so it is distributed out in a fair and equal way through an efficient session -- system. And it gets those payments to a farmer in a very efficient, fast and effective way.
▶ 1:53:38Sen. Moran: Are the circumstances in which actuarially sound incurs, are those increasing or decreasing?
▶ 1:53:46Ms. Hoch: Could you repeat that?
▶ 1:53:48Sen. Moran: Crop insurance is becoming more or less available because of the wire meant actuarially sound? Can we get more crops covered and be actuarially sound or is it becoming come are the gaps increasing or decreasing?
▶ 1:54:03Ms. Hoch: I think the gaps are decreasing and we would like to see them continue to decrease. The importance is obtaining data underneath on the products using the 508 h process that the act allows for to be able to bring forth the data and get the actuarial soundness so you can provide crop insurance to the product.
▶ 1:54:23Sen. Moran: The process, does it , is it used to provide new insurance products or modify existing or both?
▶ 1:54:31Ms. Hoch: Both.
▶ 1:54:35Sen. Moran: Those are my questions. Mr. noble. I'm saddened to hear the story you told. I'm sorry that you went through that personal circumstance and it is a primary reason I asked kansans to give me the chance to represent them here, to make sure rural america is alive and well.
▶ 1:54:57Sen. Moran: I don't know your families operation will but it has a reputation of being solid, pillars of the community and the loss is economic as well as leadership within the community. The future of the places most of us come from is determined on whether people like you and your family are in business. I'm saddened by what you described.
▶ 1:55:22Mr. Noble: Thank you. I appreciate that. We have been able to work together on that policy for a long time and it is great to see you and I appreciate your comments. I will pass them along to your family.
▶ 1:55:35Chair Boozman: Thank you. .
▶ 1:55:40Sen. Moran: It is a long way from you to me and I don't like it.
▶ 1:55:46Chair Boozman: Thank you again for being here. The hearing today was really outstanding and we got a lot of good information that, along with our other hearings, reinforces each other about the need to get a good strong farm bill in the programs you described, the need to improve on those, which again we are willing to do.
▶ 1:56:18Chair Boozman: This is how you do it, listening to the people literally out in the fields every day trying to make a living. The answers need to come from the bottom up. Thank you for being here. The record will remain open for five days. Today's hearing is now adjourned.