We were joined by FSA Administrator Zach Ducheneaux at NAFB Convention’s Trade Talk.
Q: Let’s start with the farm loan reforms. Give folks kind of an update and a background there on some of the work you guys have been doing.
ZD: So the update that I’ve got today is it’s starting to work. We’ve got producers calling with happy stories and talking about how this is going to benefit them in the long run. And that’s replacing stories that were confused and frustrated from early in our term.
So the farm loan rule that we announced in August that became effective on September 25 really has three key changes. First, we’re not going to take everything that you have as security. We will take not more than 125%. We’ve done the analysis. That’s all we need to protect the taxpayers investment in your operation.
Another key component is we’re going to adjust our terms to fit your needs. We’re not going to shorten the term of the loan so that you don’t have any money left at the end of the year. We want to make sure that after you sell your production, we’ve structured our loan so that it looks like we’re investing in your operation, and you’ve got money left to go to a bank and start a relationship on different terms. Having producers have money in their pocket at the end of the production year because of the terms that we offer them is a fundamental change in approach that we think should be emulated across the lending industry.
One of the challenges we’ve seen in finance over the last 40 years is every commodity we’ve got has a cycle. The loans don’t match the cycle, and they certainly don’t span across it. So we need to set up the terms of our loans so they span beyond commodity cycles so people can get in the same way they got out.
What happens too often is let’s take the cattle cycle, the 9-to-11-year cattle cycle. You get a loan. Right now, when we’re at the peak of the cattle cycle three or four years from now, we’re going to be going down in those prices and your lender is going to start to get nervous instead of going longer with you, knowing that the cycle is going to turn. Lenders get nervous. They restrict capital. The producer has got to take a job pretty quick. He doesn’t have time to manage his cowherd. We’re addressing that with our farm loan rule.
We’re putting flexibility first, offering producers terms that we can defer principal payments at the beginning of the relationship. Now we can release security after three years of good payment. There’s so much opportunity here if we can make sure producers have finance terms that meet their actual needs.
Q: What about on the disaster side? Obviously, we’ve seen plenty of issues there this year alone. What are some of the things that FSA has been doing on disaster?
ZD: Very early in the administration, we were coming into the throes of the pandemic, and the secretary gave us guidance: Get out there with your stakeholders and listen to them. So, we did. And one of the things that we heard loud and clear, especially in the livestock segment that I came from, the livestock programs are behind the crop programs.
We don’t have the same robust safety net on the livestock side. So, we went to work trying to improve those programs: the ELAP program, the Livestock Forage Disaster Program and the Livestock Indemnity Program. We have really done a lot of work to enhance our ability to help producers in the countryside in a timelier manner with more meaningful assistance, and we hope to see that work continue. Our staff have been very enthusiastic about being able to extend these opportunities to producers because they have seen the need and seen our programs not meet it.
It’s important to note that we did this with existing flexibility. This is something that could have been done. What this administration brought to the table is folks that knew the challenges that the programs, as they were administered, created and brought people to town that had the capacity to change it. And we’re really proud of the work that we’ve been able to do in these disaster programs. And in many cases, we’ve been out there in the countryside.
For example, the panhandle fires of Texas. We were there before the smoke cleared, talking with producers and sharing with them: We’re ready when you are. Come into your timeframe and we’re going to be flexible and we’re going to take the documentation that you’ve got.
People had their houses burnt up. People had their entire place wash away in a flood in North Carolina. They might not have the documentation, but we can work with them to construct that so that we can still do these programs with the integrity that our taxpayers deserve.
Q: Conservation is another area I want to ask you about. Just some thoughts there and updates on some of the work that has been done when it comes to conservation.
ZD: Our team has knocked it out of the park with our producers on conservation. We’ve stood up dozens of conservation reserve enhancement program agreements with stakeholders across the country, including Indian country. We just renewed one in Indiana. We’ve got one with Republican River in Colorado. A lot of work really at the forefront of conservation, really emphasizing that we do locally led voluntary conservation programs with more and more emphasis on working lands conservation.
We’ve increased our enrollment in the Grasslands CRP program to almost 8 million acres. And that’s the essence of a working lands conservation program. A producer can come in, receive a rental payment and get the assistance they need in the form of a cost share to implement a more robust grazing practice that not only promotes societal benefits by improving environmental concerns, mitigating environmental concerns, enhancing soil health, but also increases their bottom line because their soil is more productive. Really proud of the work we’ve done in conservation. We look forward to seeing that continue. We’ve always saw that 27-million-acre cap as a target, and we nearly hit it.
Q: I should add too, I believe I saw county committee elections. I believe that is open right now? Talk about that.
ZD: County committee elections are open, and this is a unique opportunity that producers have that you really don’t see anywhere else in the federal family. Citizen stakeholders have a voice in how these programs are implemented and they can come in and represent their interests and their neighbors’ interests in the implementation of these programs.
Those ballots are going out now. Get out there and vote and keep your eye open for the opportunity to nominate your friend, your neighbor or yourself to serve. One of the important things that we’ve done in this administration is take a look at the makeup of these county committees and in cases where there are underrepresented populations like women, minorities, veterans, we have put people on those county committees to represent those interests so that there is a diversity of approach and we can continue to push our programs out there to all citizens where they’re at and what production they’re doing.
Q: I’m sure if folks have any questions about county committee elections, FSA programs in general, et cetera, (they can visit) their local service center and online? A lot of great ways to learn more, right Zach?
ZD: A lot of great ways to learn more. Farmers.gov has great resources. We just did a revamp of a lot of that, so our fact sheets are easier to get at. Local office loves to see you but understand that they are stretched about as thin as they can. We would like to have more people out there, that’s not within our control.
In all my travels across the countryside, I have never heard a producer say, “I sure wish you would get rid of some of the people in my local office,” to a man, woman, and child. They want more resources out there. That’s important. So, when you get out to that local office, thank them on my behalf and in exchange for that for another 67 days, you’ve got access to my email and my phone number on the website.
