Extortion and Foreclosure: How the Farm Credit System Favors Corporations

Dustin Kittle's lawsuit against the Biden administration reveals the harsh realities faced by small farmers. Despite federal rulings against Alabama Farm Credit's illegal practices, the lengthy investigation left Kittle financially devastated, a fate shared by many others in the agricultural community.

A Legal Battle for Farmers’ Rights


An Alabama farmer and attorney has sued President Joe Biden for his failure to appoint members to the Farm Credit Agency Board. The suit itself is just one tentacle of a larger underlying issue within the Farm Credit System that small farmers rely upon.

Dustin Kittle is the plaintiff in the suit and says the government has been behind the death of the family farm in the United States. He has a personal story that started in 2021 involving Alabama Farm Credit (AFC), which he says extorted him out of his home by threatening foreclosure on his farm even though he never missed a single loan payment. The Farm Credit Agency (FCA) ruled that AFC violated federal law, including “1) retaliation in violation of the Equal Credit Opportunity Act; and 2) sending an improper distress notice with a threat of foreclosure in violation of the Farm Credit Act.” The only problem is that the investigation took 655 days to complete. Meanwhile, Kittle had to sell his cattle and his home because AFC was threatening foreclosure, including on his Tennessee farm and his family farm in Alabama.

People are probably not familiar with being threatened with foreclosure for never missing a payment, but farm credit loans have different rules than typical bank loans. The agency is also connected with large corporate meat producers like Tyson. All secured loans have some collateral, usually just the house and/or property. However, farm credit loans ask for additional collateral to ensure the borrower has enough funds to make the next payment. These funds come from the clients of the borrower, which is usually Tyson for poultry farmers. When Tyson writes a check for the chicken provided by the farmer, they send from one-third up to 65% of the total payment directly to the local farm credit chapter, which was AFC for Kittle. This is held in an account as an additional form of collateral to ensure the farmer doesn’t default on the loan. More than a quarter of the farm credit loans are government-insured. That means the loan company has three forms of protection for some loans, including the property collateral, the government insurance, and the assignment agreement.

“The problem is most of these farm credit loans are set up on bi-annual or annual loans,” Kittle said. “They might figure that assignment so high, it’s more than what that payment is going to be. They know they’re not supposed to be holding deposits.”

Kittle said there was a memo in the 1990’s that instructed lenders to deny farmers access to their own money to prevent a surplus of farmers attempting to withdraw their cash when farm credit doesn’t have that cash on hand. The collateral agreement should only collect enough so that farm credit has the funds to cover the farmer’s next loan payment. These agreements hold the borrower’s money, and they often hold enough to cover years’ worth of loan payments without allowing the farmer to withdraw those funds. Kittle is representing other farmers in court who are going through the same AFC extortion process that forced him to sell his family home and cattle. He has a client named Dwight Brooks, who the AFC admitted had $65,000 of his funds in the account that he is unable to access. Brooks said he wanted to retire as a farmer but needed to go back to driving a truck to make ends meet. Another client of Kittle’s has over $100,000 held in that account and is unable to buy groceries.

The lender asks the borrower what they are going to use the money for if the farmer asks to withdraw funds from their collateral account. If the borrower doesn’t provide a “good reason,” then they don’t let them withdraw the funds. Kittle said that farm credit has turned the collateral assignment into an absolute assignment. They have liquidated funds the borrowers provide that are repackaged into loans back to entities like Tyson. Tyson can leverage those funds into expansion efforts while small farmers are extorted for cash and have difficulty buying groceries for their families.

“They turned it into an absolute assignment to where that lender has become a partner with a poultry farmer,” Kittle said. “When the poultry farmer gets paid, the lender gets paid. It doesn’t make a difference if that lender is owed money or not. Somehow a lender, a lawyer, a corporation is taking money that should belong to a farmer, and they’re screwing them out of it.”

Kittle stressed that the farm credit system was intended to help small farmers succeed, but it has instead been used as a tool for corporate conglomerates like Tyson to gain more market share based on the labor of the small farmer. The latest USDA census data compares 2022 data to 2017. In these 5 years, the number of family farms dropped by 141,227, a total of eight percent. In the same time frame, corporate farms increased by 10,808, a total increase of 9.25%. Most farmers must rely on off-farm income to stay in business and pay the bills. In 2017, 56% of farmers had a primary job off-farm, which indicates that small farms are not an advantageous venture for most. Meanwhile, Tyson has continued to expand with multi-million dollar investments, including $58 million in Texas and $83 million in Kentucky

This article is based on a report by Steven Middendorp, originally published on The High Wire.

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