— On Oct. 20, the Campaign for Family Farms and the Environment delivered a petition with more than 25,000 signatures from individuals around the country to U.S. Department of Agriculture Secretary Tom Vilsack demanding that the agency immediately suspend the practice of providing guaranteed and direct loans for new and expanding specialized hog and poultry facilities. More than a month has passed and there has been no response from Vilsack about this pressing issue.
Hog farmers are hurting as low prices have persisted for many months — even years. Everyone is saying that there is a surplus of hogs and that herd sizes should be reduced. Despite the current overproduction situation and subsequent oversupply, the USDA’s Farm Service Agency continues to provide loans for new and expanding specialized hog and poultry facilities, which increase production and depress prices.
Based on USDA data, FSA direct and guaranteed loans for new hog and poultry building construction for FY 2008 and 2009 totaled $264,466,341. At the same time, the USDA is using taxpayer dollars for bonus pork and poultry buys, ostensibly in an attempt to stabilize prices resulting from the overproduction that the USDA is facilitating through direct and guaranteed loans.
On March 31, the USDA committed to a $25 million bonus pork buy; on Sept. 3, another $30 million; and on Nov. 10, the USDA committed to an additional $50 million pork buy. On Dec. 23, 2008, the USDA announced an emergency purchase of more than 60 million pounds of chicken products, at a cost of more than $42 million, in an attempt to create a market for surplus product.
When similar oversupply situations occurred in the past, the USDA suspended the use of loan programs for the construction of these specialized facilities to ensure that the agency did not continue to contribute to the detrimental impacts of severe overproduction. Specifically, on Jan. 8, 1999, the USDA issued a directive suspending all direct and guaranteed loan financing for the construction of specialized hog facilities, citing concerns that FSA loans could exacerbate the crisis of oversupply and low prices affecting the hog industry.
The January 1999 Federal Register stated “It is inconsistent with USDA policies for FSA to continue to finance construction of additional production facilities through direct loans and loan guarantees while other agencies within USDA expend resources to ameliorate over-supply conditions.”
This same action and leadership is needed from the USDA now. We are facing a time when credit needs are high in farm country and resources should be aimed at helping existing farmers weather these tough times. The last thing we need is federal farm loans that create more factory farms, more hogs and longer periods of low prices.
Apparently industrial livestock operations are considered “too big to fail” given that our tax dollars are being funneled through government-subsidized and protected loans that serve as tools for expansion. These loans benefit the integrators at the expense of farm families and their communities. Our analysis of past cycles supports our current concern that these loans will be used by lenders and big operators to expand and seize market share — driving more independent family farmers out of business.
For these reasons, we call for Vilsack to suspend immediately all direct or guaranteed farm ownership or operating loans for the construction or expansion of specialized hog or poultry production facilities. The continuation of public resources for this purpose at this time hurts farm families and rural communities, and is a wasteful and risky use of American taxpayers’ dollars.
This commentary was submitted by Paul Sobocinski, Frank Jones and Ron Perry. Sobocinski is a member of the Land Stewardship Project and a hog farmer from Wabasso. Jones is a board member of Iowa Citizens for Community Improvement and a farmer from Davis County, Iowa. Perry is a member of the Missouri Rural Crisis Center and a hog farmer from Livingston County, Mo.
