The American Bankers Association through its chairman-elect testified this week before the Subcommittee on Department Operations, Oversight, and Credit of the House Committee on Agriculture. He offered recommendations to preserve and improve access to agriculture credit in the upcoming farm bill.

ABA Chairman-Elect Matthew Williams recommended that term limits on loans guaranteed by the USDA’s Farm Service Agency be repealed to expand access to credit for small and beginning farmers. Williams also said Federal Crop Insurance should be preserved as it is a broadly used tool that allows farmers and bankers to manage the risk presented by weather and volatile agriculture conditions.

Williams is the chairman and president of Gothenburg State Bank, which has its headquarters in Gothenburg, Neb. The bank was founded by Williams’ grandfather in 1902 and has since been family-operated with a focus on agriculture lending.

“As a result of term limits on loans guaranteed by the USDA Farm Service Agency, an increasing number of farmers and ranchers are no longer eligible for additional credit under the program, which could make access to credit in the future very difficult, if not impossible, for these producers,” Williams said. “For this reason, the American Bankers Association and many other lender and farm organizations recommend the repeal of term limits on the USDA Farm Service Agency Guaranteed Loan Program.”

Williams noted that over 35,000 agriculture producers use the guaranteed loan program for credit, yet the practical application of term limits has caused hardships for producers that can least weather a financial setback.

Williams testified that given the volatile nature of the agricultural economy, Federal Crop Insurance is a key risk management tool used to protect against unpredictable weather and potential catastrophic losses.

“Federal Crop Insurance provides my customers with the certainty they need to make responsible planting decisions and provides my bank with the confidence we need to extend credit to our customers,” Williams said. “The program is widely accepted by farmers as a key element of a solid risk management plan that they can take to the bank.”

For a copy of Williams’ full testimony, click here.