NFFC Members and Allies Seek Moratoriums on Farm Loan Accelerations and Foreclosures

February 09, 2018

 

The Honorable Sonny Perdue

Secretary

U.S. Department of Agriculture

1400 Independence Avenue

Washington, DC 20002

 

Re: USDA Implementation of 7 U.S.C. Section 1981a.(b): Moratoriums on Farm Loan Accelerations and Foreclosures

Dear Secretary Perdue:

As the 2018 Farm Bill debate moves forward, the family farmers in our member organizations inform us of the impending consequences of the current credit crisis.  Dairy, vegetable and row crop farmers are gravely concerned about the consistent low farm gate prices, a trend that prompts lenders to require excessive collateral in order to fund annual operating loans.  While intentional discrimination and unfair practices and procedures are unfortunate and time-consuming matters, family farmers of all races, genders and marital status face discrimination in the loan making and loan servicing processing.

In today’s agricultural environment of low farm gate prices, which House Agriculture Committee Chair Conaway has called “…the worst economic downturn since the Great Depression,” credit needs for all American farmers will escalate.  Dairy farmers have not recovered from the unprecedented 40  percent collapse in their milk price since the 2014 Farm Bill’s passage, and received an average price $16.71 per hundredweight (.cwt) in 2017 for milk that cost $21.87 per .cwt to produce.  Farmers suffering such severe economic losses should not be further burdened by the intensifying atmosphere of fear stemming from uncertainty about the status of their current loans and their future credit needs, which will remain significant until all farmers receive commodity prices covering their cost of production.

Additionally, as family farmers rely ever more on fair access to credit and loan servicing options as a risk management tool, that tool must remain free of discriminatory animus or policies or procedures that have disparate impact on family farmers of all races, genders and national origin.  Congress intended in the expressed language of 7 U.S.C. Section 1981a.(b) to shield family farmers from the irrevocable consequences of farm loan acceleration and foreclosure that take place under clouds of prohibited acts of discrimination by federal employees.

We are aware of shortcomings in the Department of Agriculture’s implementation of 7 U.S.C. Section 1981a.(b), a statute requiring moratoriums on farm loan accelerations and foreclosures during the investigation of accepted Title VI complaints of discrimination filed by farm loan borrowers.

When a farm loan borrower has presented substantial evidence in a Title VI complainant of discrimination that could lead the Agency or a federal court to conclude that prohibited discrimination played a part in the loan making or servicing process the safe guards of 7 U.S.C. 1981a.(b) should immediately be engaged in order to prohibit  accelerations and foreclosures that take place while complaints of discrimination remain open violate the suspension provisions of Section 331 A of the Consolidated Farm and Rural Development Act (7 U.S.C. 1981a).  Small and limited resource farmers and ranchers play a key role in sustaining rural communities and deserve to the suspension provisions applied in accordance with the law.

7 U.S.C. Section 1981a.(b) states in relevant part:

there shall be in effect a moratorium, with respect to farmer program loans made under subchapter I,II, or III, on all acceleration and foreclosure proceedings instituted by the Department of Agriculture against any farmer or borrower who –

(A)   has pending against the Department a claim of program discrimination that is accepted by the Department as valid; or

(B)   files a claim of program discrimination that is accepted by the Department as valid.

7 U.S.C. Section 1981 a.(b). 

As soon as possible, please provide us with the following data:

(a)   number of Title VI and Equal Credit Opportunity Act program complaints filed against the Farm Service Agency and private guaranteed lenders; and

(b)   number of moratoriums on acceleration and foreclosures currently issued in compliance with 7 U.S.C. Section 1981 a.(b). 

Very truly yours,

 

National Family Farm Coalition

Community Farm Alliance

Family Farm Defenders

Farm Wives United

Federation of Southern Cooperatives/Land Assistance Fund

Food for Maine’s Future

Iowa Citizens for Community Improvement

Land Loss Prevention Project

Midwest Organic Dairy Producers Association

Northeast Organic Farming Association-Connecticut

Northeast Organic Farming Association-Massachusetts

Northeast Organic Farming Association-New York

Northern Plains Resource Council

Progressive Agriculture Organization

Rural Advancement Foundation International-USA

Rural Coalition

Western Colorado Congress

Western Organization of Resource Councils