Tonsager concerned about long-term low prices
March 1, 2017
At the House Agriculture Appropriations Subcommittee's first hearing on the Farm Credit Administration in 19 years, Dallas Tonsanger, the Democratic appointee who chairs the FCA, said he is worried about the impact of long-term low commodity prices on Farm Credit System borrowers, but that the FCA is determined that borrowers will be better advised than they were during the farm crisis of the 1980s.
Though loan officers' discussions with farmers over future plans are sometimes difficult, Tonsager said, "we hope to generate dialogue" within the system of how to assist producers going through stress.
Farm Credit institutions have an obligation to help farmers stay in business, but the 1980s crisis showed that farmers were willing to borrow to the max to stay in business – and they lost all equity, Tonsager added.
In his testimony, Tonsager noted that FCA does not receive a federal appropriation and pays its administrative expenses from funds that are assessed and collected annually from the institutions it regulates. Congress provides oversight of the administrative expenses and sets an annual cap on expenses.
For fiscal year (FY) 2017, FCA's budget request was for $70.4 million, but has been operating under the cap established by Congress in FY 2016 of $65.6 million.
"As a result of the cap, we have had to delay hiring actions, reduce travel and relocations, and delay the execution of information technology projects," Tonsager said. "These items allow us to more fully meet our mission in FY 2017, so we would like to respectfully request that the cap be increased to $68 million. This will allow us to move forward with targeted IT investments and to meet pressing human capital needs."
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In his opening statement, House Agriculture Appropriations Subcommittee Chairman Robert Aderholt, R-Ala., noted, "What you failed to mention is that the FCA accumulated excess funding totaling $16 million in carryover balances as recently as 2013. The subcommittee has kept the limitation relatively flat in order to require the FCA to spend the carryover. In addition, the FCA has a special provision that many agencies would be very envious of – the ability to increase its funding by 10 percent with a simple letter to Congress.
"There has been no intention of Congress trying to limit the FCA's funding," Aderholt added. "This subcommittee has simply been making sure responsible fiscal practices are carried out. With that said, I will be sure to examine your request for an increase in your limitation for the remainder of the year now that those excess funds have been expended."