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How does credit access shape our food and agriculture system? In Episode Three of the Farm Bill Uprooted, hear from IATP’s Dr. Steve Suppan, along with Margaret Krome-Lukens and Ray Jeffers of RAFI-USA, about how the Farm Bill Credit Title both undermines climate resilience by propping up the industrial model of production and reinforces a history of racism in American agriculture.

Learn more about RAFI-USANFFC and the Fair Credit for Farmers Act. Take action and tell Congress to support farm credit reform here.

Missed the first two episodes? Find the full series here. Listen on SpotifyApple Podcasts or wherever you get your podcasts.


This podcast is made possible through the generous support of our listeners. Donate here to support IATP's work.

References and Further Reading


00:00:00 Margaret Krome-Lukens 

Once you create a system in which people with more resources are set up with supports for success and those things are harder for people with fewer resources to access, and you have created, you know, a racial wealth gap, then you have a racist system that runs itself. But I think there also have been many people also willing to run it. 

00:00:35 Lilly Richard 

From the Institute for Agriculture and Trade Policy, I'm Lilly Richard, and this is part three of a six-part podcast series: The Farm Bill Uprooted. This podcast is made possible by the generous support of our listeners. If you'd like to support Uprooted, go to 

Throughout the course of this series, I'm speaking with experts from inside and outside IATP about how the Farm Bill shapes our food and farm system, what's not working and how we can make it better. 

00:01:10 Lilly 

In our first two episodes, we covered how the Commodity Title has transformed over the years to incentivize the overproduction of cheap commodities for export at the expense of rural communities, farmers and the environment. We also learned about how Farm Bill conservation programs that help pay for more resilient, sustainable farming practices are underfunded, and how a good chunk of those conservation funds are misdirected towards industrial practices and factory farms. For this episode, I talked to IATP's Dr. Steve Suppan, as well as Margaret Krome-Lukens and Ray Jeffers of the Rural Advancement Foundation International (RAFI) about another part of the Farm Bill that's not only holding back efforts to create a more climate resilient food system, but that also plays a major role in perpetuating racial inequality in agriculture: the Credit Title. 

00:02:05 Margaret 

My name is Margaret Krome-Lukens. I am the policy director at RAFI-USA and the quick version of my job is that I try to make laws work better for farmers. 

00:02:15 Ray Jeffers 

Hi, I'm Ray Jeffers. I'm the Farmer of Color Network Director for RAFI-USA where we operate a farmers of color network throughout the Southeast as well as the U.S. Virgin Islands and Puerto Rico. And I'm also a farmer myself. 

00:02:29 Lilly 

So the first thing you need to understand is that credit is very important for farmers. Generally, farmers don't earn most of their income until late in the season, after they've harvested and sold their crops. But there are lots of operational expenses that need to be covered before that revenue comes in and upfront costs like seeds, inputs and equipment, plus the cost of the land itself, whether they're buying it or renting it from another land-owner. So farmers depend on loans, often annual loans, to operate. 

00:03:01 Ray 

Yeah, absolutely. I mean. From a farmer and the farmers that we, you know, speak to, it's – it could be a lifeline to allow you to continue to grow, or you know the input cost. So many farmers take on those input costs up front, and so to have that ability and have the finances in the beginning to hopefully see a successful year, it's highly important. 

00:03:23 Margaret 

I mean, many farmers operate with an annual, you know, they get an annual operating loan in order to have the funds to start their season. As Ray said, a lot of upfront costs. If you're beginning a farm, if you're looking to buy land either to start farming or to expand your operation, or needing to invest in additional equipment, et cetera. It's just a totally crucial part of farming and being able to farm for most farmers. 

00:03:50 Lilly 

So where do they get those loans? That's where it gets a little complicated. The biggest chunk of farm finance comes from the Farm Credit administration, or FCA, which is a government sponsored enterprise that's financed through selling bonds on Wall Street and actually operates through a variety of lending associations and banks. Stay with me. The FCA mostly loans to the biggest operations, including factory farms or CAFOs. Then there are the FDIC agricultural banks like Farmers’ National, which have a lending portfolio that's at least 25% ag-related. They also typically give loans to large operations as well as finance things like large land purchases and rural broadband. Third, you have large commercial banks, private lenders like Bank of America or Rabobank, which tend to finance – you guessed it – large operations, as well as agribusiness companies directly. 

00:04:50 Lilly 

Finally, there's the Farm Service Agency, the FSA. That's the source of credit covered by the Farm Bill Credit Title. It's administered by the U.S. Department of Agriculture and funded through congressional appropriations, and that's where a lot of small and mid-sized farmers end up getting their loans. The FSA is sometimes called the lender of last resort because it's often the only option available to beginning farmers and those with less means who have limited access to traditional lending markets. They also sometimes grant loans for CAFOs that can't get other financing, using the agency's scarce resources to prop up facilities that are polluting rural communities and forcing out smaller, independent producers. 

00:05:37 Steve Suppan 

OK. My name is Steve Suppan. I'm a senior policy analyst at the Institute for Agriculture and Trade Policy. And so the Credit Title mostly concerns agricultural credit, as provided by the U.S. Department of Agriculture's Farm Services Agency. Although the FSA, relatively speaking, is a small-scale provider of agricultural credit, to small-scale farmers. The Farm Service Agency accounts for somewhere between 6-8% of all agricultural credit. And their borrowers are the small-scale farmers. Some might be medium-scale; let's say in the range of owning 500 at 600 acres of land or renting that much land. So FSA, that is funded through congressional appropriations and that makes the funding of the FSA is very – is pretty volatile both in terms of what Congress appropriates for lending and then the staffing of the FSA itself, you know, in part because Congress keeps reducing the number of FSA agents. 

00:06:53 Steve 

So whereas you used to have a couple of agents for county, now you may have one agent covering four counties and so that that reduces both the agents’ familiarity with the agricultural operations to which the agency’s lending, but it also results in delays, provision of service, lack of proper documentation of service and just, you know, some difficult, difficult meetings between farmers and FSA agents. So there's a lot of controversy about the provision of services to borrowers, and to the history of the U.S. Department of Agriculture’s discrimination against Black, Indigenous, People of Color farmers, BIPOC farmers. 

00:07:43 Lilly 

So the FSA, which is the lender option available to most small and mid-sized farms is government run and publicly funded. In theory this could be a great opportunity for farmers and the public to have a voice in how farms get financed for a fair and sustainable food system. In practice, USDA FSA offices have been notorious sites of racial discrimination. I talked to Margaret and Ray at RAFI-USA about what that discrimination looks like in practice and what they're doing to try to challenge it. But of course, the roots of the problem go back much further than the Farm Bill Credit Title. According to USDA data, only about 4% of farmers in America are people of color, and only about 1% are Black. 62% of farm workers, who tend to be tenuously employed, underpaid and work under dangerous conditions, are people of color. Meanwhile, about 98% of farmland is owned by white people, who also capture about 98% of farm related income. The agriculture system and the wealth generated by it are extremely white-dominated, and this didn't happen by accident. 

00:08:58 Margaret 

I think we start with just the violent, illegal theft of land from Indigenous people on just a huge scale and displacement of people. We then had an agriculture system based in plantation labor, in which the agricultural economy was based on the enslavement of people and the theft of their labor, so that that was sort of the beginning of it. And then we had just many hundreds of years of policies which were, ultimately which were racist and wound up with racist results. You start with inequity and then you just like, perpetuate it as it goes on. 

00:09:42 Margaret 

So like knowing that post-Civil War there was the special field order for newly freed Black families to receive 40 acres and a mule, and that directive was then overturned by President Johnson, which forced a lot of those families into sharecropping, which is a generational debt cycle and not a generational wealth building. And so those were promises broken for people who had built wealth for wealthy, you know, white enslavers who typically got to keep their land. And so we started there and then the Agricultural Adjustment Act of 1933, which a lot of folks would sort of refer to as the beginnings of the Farm Bill. One of the goals of it was to reduce the supply and so paying farmers who were large enough to qualify to reduce supply. And one result of that policy was a lot of sharecroppers got evicted, because their labor was no longer needed. So you know several generations of a debt cycle followed by eviction, you know, with the bill that sort of began the Farm Bill. And that's one of the reasons for the inequity that we're still seeing. 

00:10:50 Lilly 

Although the first Farm Bill was written in a race-neutral way, it was implemented within a racist and already unequal context, which resulted in Black farmers being pushed off the land, a pattern that was repeated again and again over the next century. 

00:11:06 Ray 

Well, I think we’re all aware of the land loss the last 100 years, and you look at some numbers, some say it's 90%, particularly for black farmers over the last 20 years of land loss, especially those that were in ag. And so if you look at a lot of the policies and the Jim Crow era, it's just built throughout. We weren't able to take advantage of some of the loans that the other farmers were able to take advantage of. We weren't able to take take advantage of the insurance and the safety nets that so many of the other farmers were able to take care of. And then of course you know, we went through that era of you had to be big or go home and unfortunately a lot of our farmers of color, particularly Black farmers, BIPOC farmers, were small farmers. And so throughout that, with the consolidation area we saw in America, they weren't able to keep up, and the policies weren't written for them to keep up. 

00:11:57 Margaret 

I think it's important to look at that land loss also in the context of the larger systems that farmers found themselves in. So I know we're going to talk about agricultural policy today, but if you're just looking at a racial wealth gap generally, then I think you have to think about redlining as something that made it really hard for Black families in general to build generational wealth or other laws that weren't specifically ag laws. But things like the Social Security Act or the fair Labor Standards Act, excluding intentionally including both domestic workers and farm labor. And I think you know Ray mentioned the you know ‘get big or get out,’ and once you create a system in which people with more resources are set up with supports for success and those things are harder for people with fewer resources to access, and you have created, you know, a racial wealth gap, then you have a racist system that runs itself. But I think there are also have been many people also willing to run it. 

00:13:01 Lilly 

So that's a little bit of the context. It's easier to get approved for a loan if you already have money and if your farm is large; easier to get support if you already have resources. Generations of structural racism have created a racial wealth gap. So a lot of farmers of color are already at a disadvantage. For different groups there may be different barriers, like a lack of services or materials in languages other than English. Then there's the overt discrimination. 

00:13:32 Margaret 

A lot of the work that we do is related to access to credit at the Farm Service Agency, which historically has been known as quote ‘the lender of last resort.’ We would love for seeing a transition to it being the lender of first opportunity. The interest rates there are the same, but the access historically has not been equitable. And I think that there's multiple points there along the process where inequity or discrimination can show up, it can be in whether the loan officer is encouraging or dismissive and whether they tell you about all of the options available to you or not. It is, once you have applied for the loan, what that process is like. It's a process with a lot of paperwork for anybody applying, but there are so many parts along the process where you can face, delay or push back in ways that are really at the discretion of the loan officer. I mean, one thing that we've heard from farmers is, the sense going into the office that it looked like they were looking for reasons to deny my applications, not reasons to help me or to help me succeed. 

00:14:38 Ray 

Well, I think one thing you would hear from quite a bit of farmers, especially ones in the South was, you know it's a federal program, but it's administered locally and when it's administered locally and you have local folks that are making those decisions and maybe some of those towns, counties, areas of the nation have severe histories of discrimination. It's a little hard for them to go into those offices and trust their neighbors who they can't trust otherwise to administer a program to help. 

00:15:10 Margaret 

You know the Farm Bill matters. It's super important, but the implementation of the Farm Bill also matters hugely. It matters what orientation and administration is taking towards implementing the bill. But then, like ultimately, you're going into that local office. 

00:15:25 Lilly 

Unfair treatment or unnecessary barriers in the loan process can take many forms. There may be outright loan denials or unfairly high interest rates. There may also be over-collateralization. So what is that? Farming is a risky business, where harvests and income can vary widely from year to year, especially with increasing heat, floods and other extreme weather events caused by climate change. This is also why farm credit is tied together with federally backed or subsidized crop insurance. But I'll come back to that later. To protect their investments, farm lenders may require some sort of collateral when granting a loan; in other words, some asset that the farmer will have to surrender if they aren't able to pay back the loan. With over-collateralization, lenders may require assets valued at even more than the loan amount, even things like houses. So if a farmer has a bad year, they risk losing everything. There's also the issue of timing. Farming seasons are short, and when farmers apply for loans, they're often on a tight timeline with only a short window of time where they need to get credit, to make purchases, to get their crops in the ground and get them insured. Delaying loan approvals or fund dispersals until it's too late can be a sneaky way of denying access. 

00:16:49 Margaret 

One of the things that we have always wanted to see from the agency is a comparison of what we call time to funding. So basically, how long did it take from the first visit of the farmer in the office to when the funds were eventually dispersed and we'd like to see that broken down demographically by race and gender. Because one of the easiest tactics for putting a farmer into financial distress or sinking their season is just making their loan take a really long time. There's also deadlines for being able to get crop insurance, where you have to have planted by a certain date. So if you don't get your loan before your planting date, you wouldn't be able to get crop insurance. And there are a lot of mechanisms available to staff to slow down that process. And the appeal mechanisms – which we absolutely make use of – also take a lot of time, and don't always result in justice for the farmer. And I will say that we work really hard on trying to improve the processes at USDA, and sometimes we just hear from farmers where avoidance of USDA entirely has been a survival strategy for their farm for a couple generations of their family farm. Because one of the one of the mechanisms of land loss was unfair lending practices, where farmers didn't have access to all the processes or rights that they should have had access to when they get into financial trouble with their loans. 

00:18:19 Margaret 

Over collateralization is also a practice that we would like to see end. Where basically the loan requires an amount of security that is, to our mind unreasonable and puts more of the farmers assets at risk than it needs to, including their home often. And that's one thing that can also scare farmers away from a loan in the first place, if you go into the office and the loan officer says, well, we can do this, but you'll need to put your house up as collateral. That's a risky thing, and a pretty terrifying thing to do if you're walking into an agency that has a legally proven history of racial discrimination. So it can happen at all of the points along the process, and I understand why farmers have hesitations. And I think our work is to do what we can to narrow the sort of windows of discretion and where we see discrimination happening and to add as many protections as we can for borrowers. 

00:19:18 Ray 

Look, I mean, we talk to farmers all the time and sometimes you wouldn't believe the horror stories. Margaret mentioned over-collateralization. And then we also hear the stories of farmers going into the office early, way before deadline, wanting to apply and kind of being put off or saying they don't, they don't need it right now or you can wait and you can do this. And then coming back to that office, finding that those loan officers have taken off for the week, things like that, and now they have missed that deadline to apply, when they really started the process early enough. Or to our urban farmers being told that they don't need a farm number, and those type of stories that we're hearing from now from the local offices especially down South. Another issue that we see quite a bit too with the ag lenders is, for the farmers that we work with quite a bit, which are smaller farmers, is that those ag lenders have not really learned how to evaluate their business yet. They’ve got it down pat for your large commodity-type farmers but not yet quite for the small farmers to be able to evaluate their business if it's you know viable or not, and determine the size of loan, those type of things. And so I think that's a piece that we have to to remember. 

00:20:24 Margaret 

That's such a good point, Ray. And to me, that's a point that's important for beginning farmers, but I think it's also a racial equity issue because I believe the average farm size for a Black farmer is about ¼ of the average farm size for a white farmer. And so issues of—it's not obviously not the only lens we need to use to address racial justice issues, but it's one of them that I think is important to use. And you know, we see smaller farmers who are doing, and needing to do, more innovative things in terms of marketing or production systems or just products that don't fit sort of the established boxes that a loan officer like already knows what to do with, and like has a bunch of numbers ready for. 

00:21:06 Lilly 

Even though the FSA typically loans to smaller and mid sized farms, their criteria for extending credit tend to reinforce the model of large scale commodity production. When deciding the risk or creditworthiness of loan applicants, our farm credit system favors the industrial model, even though that model is ultimately more vulnerable, less resilient and a bigger risk in the face of worsening climate impacts. Here's Steve again. 

00:21:36 Steve 

The Credit Title is not designed to support sustainability; it's designed to support maximum production for trade. And the kind of the metrics for what are considered credit worthiness are expectations of total production, and expectations of of yield. You don't have any conditionalities that are, you know, environmentally or socially related to get a loan. You can put fertilizer on in winter and have that fertilizer, you know, contaminate your local water sources, and you can treat your land with no cover crops and you know, watch it erode and go down the Mississippi River. That's all okay from a traditional credit perspective, as long as you are producing X number of bushels of corn or Y number of bushels of soy. So that's a, you know that's a real problem, and furthermore, the second largest form of collateral for loan is your crop insurance, crop insurance policy. And every year the farm bill keeps increasing the percentage of the crop insurance premium that’s paid for by taxpayers. So because these crop insurance agencies, many of which are owned by the Farm Bureau, so we kind of like have a self-reinforcing loop, where the crops are considered most insurable are the traditional low crops. 

00:23:10 Lilly 

So farms that receive crop insurance are more eligible for credit. And federal crop insurance, another part of the Farm Bill, is also designed to mainly cover commodity crops, and coverage is based on historical yield. As Steve said, crop insurance and lending create a self-reinforcing loop that incentivizes large conventional commodity farming that maximizes yield – even if income for those types of farms consistently needs to be supported by farm subsidies from the Commodity Title; and even if the dominance of that type of farming is polluting our water and air and weakening rural communities; and even if climate change is threatening the long-term viability of that model. 

00:23:57 Steve 

Both farmers and the rural communities to which farm credit lends are quite vulnerable to not only physical risks of climate change, but to what are called transition risks, in the sense that even with very large subsidies in the Farm Bill and to compensate farmers for various losses, farmers are still quite vulnerable to climate change, to the increasing costs of insurance, to the availability and quality of capital and so on and so forth. In the Farm Bill for a couple of decades, those had what are called ad hoc disaster payments. And Congress has realized, rather belatedly, that without mentioning the words climate change, that when you have, you know, 12 year drought interrupted by bomb cycle of precipitation, that it may be very difficult to plant, that can wipe out crops that have been planted, that what you need is a permanent disaster fund. 

00:25:00 Steve 

So you have permanent disaster fund, which again from the payout for that is acreage and historical yield based. In 2018-2019, 40% of US net farm income came directly from taxpayers. A lot of that, but not all that by any means, was caused by Trump administration policy fiascos. And you know, for me, a big question is: if the viability of your agricultural credit system depends on borrowers who are so heavily subsidized, even though very unevenly subsidized, because most of these subsidies are based on historical yield and acreage, so your largest scale farmers of row-crops – you know, at what point does that that system break down? Because you have failed to act to make your system your production system sustainable by a resilient and to construct a fair and reliable agricultural labor pool? 

00:26:05 Lilly 

When we talk about sustainability, it's not just about being more environmentally friendly. It's truly a question of, how long can we keep doing this? While the current farm credit system continues to prop up an increasingly vulnerable industrial model, beginning farmers, farmers of color, and farmers trying to diversify, go organic or establish local markets for their crops, struggle to obtain credit. Some of this plays out through unfair implementation at local FSA offices and some of it is baked into the Farm Bill Credit Title itself. That's what groups like RAFI-USA are trying to change. Alongside the National Family Farm Coalition, they're currently rallying behind a series of farm credit reforms for the next Farm Bill, under the Fair Credit for Farmers Act, that bill would improve accessibility for farmers facing financial distress, limit over-collateralization on farm loans and reduce interest and excess fees for historically underserved farmers. In the show notes, I'll include links to more information about the bill, RAFI-USA's other work and ways listeners can get involved. 

00:27:16 Lilly 

It may seem straightforward at this point that the Farm Bill needs to be changed, but a lot of these problems keep getting repeated in different versions of the bill. If this system isn't working for so many farmers and communities, why do we keep doing it? On the next Farm Bill Uprooted, we'll take a closer look at some of the forces driving agricultural policy, consolidation and what it means to ‘get big or get out.’ 

00:27:56 Lilly 

If you enjoyed this podcast, please remember to subscribe and rate us on your preferred podcast platform and share the show with your friends. You can also check out our previous podcast series Uprooted: Talking COP27, in the same feed. The Institute for Agriculture and Trade Policy works at the intersection of policy and practice to advance just, sustainable food systems. You can support our work at 

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