Rural America and Farm Bill Programs
Agriculture is a vital sector with unique financial needs and risks that community banks must understand. Explore the challenges and lending practices that help support farmers and rural communities.
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Position & Background
The new Farm Bill should continue to provide essential assistance to the farm sector and to rural America. Robust price support programs provide a financial safety net for many producers during times of low commodity prices.
The new Farm Bill should maintain a strong crop insurance program, a successful public-private partnership critical to the ability of farmers and ranchers to survive weather-related disasters and repay farm loans.
USDA farm loan guarantees benefit family farmers and ranchers and allow community banks to better manage the lending risks of producers who would otherwise be unable to obtain commercial credit. These programs should remain primarily financially geared to establishing successful family farm and ranch operations. Program fee levels should not discourage participation by community bank borrowers and should not be set at levels that overfund government collections.
Farmer Mac should continue to focus on its primary mission of improving secondary market access for community banks.
The USDA reports that net farm income has declined sharply since its peak in 2022. As a result of the sharp drop in commodity prices and the rise in input costs, many producers are facing a significant loss of income. Congress has provided critical assistance, but more is needed. ICBA urges Congress to pass a new five-year Farm Bill in 2026 addressing the priorities discussed below.
ICBA strongly opposes expansion of the Farm Credit System into broad-based non-farm lending activities. The FCS is a government sponsored enterprise (GSE) with tax and funding advantage over tax-paying community banks. The role of GSEs is to provide financing to fill credit gaps in markets, not to displace private-sector lenders as the primary lenders in the marketplace.
The Federal Crop Insurance Program (FCIP) plays a prominent role in helping producers manage financial risk, cope with weather related disasters, and repay bank loans. ICBA opposes reducing spending on crop insurance premiums.
USDA's guaranteed loan programs allow community banks to lend to higher-risk borrowers by guaranteeing 90 percent of loan principal. Congress should increase loan limits to $3.5 million to allow banks to work with more family farmers. Funding set-asides should not interfere with expanding the program’s borrower base. ICBA urges Congress to authorize a USDA Express loan program modeled after SBA’s Express loan program but adjusted to fit agriculture’s needs. ICBA and other lender groups have submitted a set of joint proposals for Congress to enhance USDA loan programs.
ICBA calls on Congress to mandate that the Farm Service Agency make guaranteed farm loan program rules and interpretations consistent across all 50 states rather than allowing each state the option to create their own rules.
ICBA is concerned about proposals allowing the USDA Farm Service Agency to convert guaranteed farm loans to direct FSA loans unless tight constraints are applied. Such constraints should include limiting USDA’s authority to convert multiple guaranteed loans from individual banks without their approval and only in the case of producers’ bankruptcy or foreclosure.
ICBA opposes policies that could have adverse or unintended consequences for community banks or the secondary market for USDA guaranteed loans.
Farmer Mac, the secondary market program for agricultural real estate loans, should continue to focus on improving secondary market access for community banks.
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