Farmers v Biden: The Breaking Farm Credit Fiasco That Nobody is Prepared For

A lawsuit against President Biden exposes regulatory failures and predatory lending threatening America's farmers and food security.

I'm Breeauna Sagdal of Sagdal Family Farms in South Dakota. I'm the Senior Writer and Research Fellow at the I Am Texas Slim Foundation 501(c)(3).

May 18, 2024

MAY 18, 2024 – America’s farmers, and farmlands are facing a multi-pronged attack from within the governing structures meant to protect the nation’s food supply. The Beef Initiative has worked to outline the economic, regulatory, and private interests that are currently driving rural communities out of business. Now, a developing story helps to piece together another vital component of the total picture.  

Tennessee rancher and agricultural attorney Dustin Kittle, has just filed a lawsuit against President Joseph Biden for alleged failures to execute his duties as POTUS. According to the filing, and Congressional Research Council reports, Biden has failed to appoint two of the three-member board required for the Farm Credit Administration (FCA) to function. 

During the Trump administration, former banking specialist Rodney Brown had been tapped to serve as a member of the FCA Board. The Senate Agriculture Committee sat on Brown’s appointment for two full years, finally returning Brown’s nomination to Donald Trump once Biden took office. 

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Jeff Hall, whom Trump had appointed Brown to replace, is now the longest sitting member in the history of the FCA board, serving a twice expired term under Biden. Without an acting Board the FCA has not conducted proper oversight in over three years.  Unfortunately, this non-functioning regulatory Board is tasked with overseeing the farm credit system and all of its lending institutions across the country.

Unfortunately, this non-functioning regulatory Board is tasked with overseeing the farm credit system and all of its lending institutions across the country. 

According to the allegations, Kittle and other farmers have been extorted by threats to take their farmlands without remedy or oversight from the FCA.

Dustin Kittle represents multiple clients who have loans at the farmer-owned co-op association known as Alabama Farm Credit. As a condition of lending, farmers are required to buy $1,000 dollars in stocks of the Alabama Farm Credit, making them stockholders and co-owners. The Alabama Farm Credit, as an institution, is prohibited from holding deposits, a condition of the federal law that governs the charter. 

Although the loans are often backed by the U.S. government, similar to student loans, farm credit has been allowed to take collateral—a ton of collateral. 

In the late 1990’s, regulators created an ambiguity in the law that allowed farm credit institutions to begin a program called a “voluntary advance conditional funds held account.” Unfortunately, nothing about it was actually voluntary.

This careful use of legal language effectively allowed non-deposit farm credit institutions to condition the underwriting of loans for poultry farmers upon 33 to 65 percent assignments, paid from companies like Tyson or Pilgrim’s Pride (USDA certified poultry tournaments) directly to the lending institution.

On a 50 percent assignment, Tyson would cut two checks; one directly to the farmer for 50%, and the other to Farm Credit for the other half of the proceeds. According to Farm Credit, these forward payments helped to mitigate interest. The reality is likely closer to covering liquidity shortfalls, as the farm credit system appears to have been in financial trouble for some years.  

In 2021, these accounts suddenly disappeared without prior notice. One of Kittle’s clients, a poultry farmer, is paid ahead by more than two years on his loan, yet he cannot access that money.  

Overnight,  Alabama Farm Credit took an estimated 20-40 million dollars and moved that into the bank’s general fund. Farmers, who must make upgrades to their poultry houses in order to remain in compliance with USDA, and now EPA regulations, are unable to access their own money in order to stay in the tournament system.  

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Over A Barrel and Over Collateralized

Farm Credit has now begun offering farmers high interest, variable rate loans at 10 percent or higher,  so long as they pledge their properties as collateral. Unregulated by any banking oversight, or regulatory agency, Alabama Farm Credit has allegedly conducted appraisals in-house, drastically undervalued property, and at times, has cross-collateralized the properties of family members—liening farms owned free and clear. 

According to court filings, during the Covid pandemic, Farm Credit began placing these loans in distressed status, even when a Farmer had never missed a single payment. 

According to FCA criteria, loans or lines of credit, can be placed into distressed status for any number of reasons. Perhaps an avian flu outbreak threatens your ability to pay your loan,  or a fire rips through your herd, like it’s done much of the Texas panhandle. Distressed status is the only option to restructure a loan under FCA regulations. 

Criteria for distressed loans outline two options available for the farmer;

  1. Distressed option to restructure 
  2. Distressed notice of Farm Credit’s option to foreclose in 45 days. 

According to annual stockholder reports, Alabama Farm Credit did not approve a single restructure of a loan from 2020-2022, during the COVID-19 pandemic. Instead, Alabama Farm Credit’s CEO and executive staff, who have given themselves raises,  and six-figure bonuses without approval from farmer stockholders, have now hired the largest law firm in the state with stakeholder dollars to pursue option 2. 

Filings indicate that farmers are sent a notice of distress on their loans, the first step to a Farm Credit foreclosure. Accounts are then turned over to Bradley Arant, the law firm, who is paid hourly with the farmer-stockholders’ own money—including the stolen funds from poultry farmers. The firm is contracted by the Farm Credit executives to negotiate with distressed farmers and take a deed in lieu of foreclosure. 

In that negotiation with the distressed farmer the lawyer demands a release of liability for future legal claims,  and a non-disclosure agreement to keep farmers quiet. 

Essentially, what amounts to the extortion of farmers, has gone completely unchecked by the Farm Credit Administration, due to a non-functioning board, and egregious conflicts of interest. 

Foreign Ownership of US Farmland 

According to the most recent 2022 USDA report on Ag lands, 43.4 million acres of all U.S. farmlands, and 909,000 of non agricultural lands, are now owned by foreign interests.

Since 2017, when things began to go off the rails at the FCA, “foreign holdings have increased an average of nearly 2.9 million acres, ranging from 2.4 million acres to 3.4 acres per year.” Also since 2017, the FCA has not made a single determination in favor of a farmer complaint against a Farm Credit lending institution. 

What began as a simple loan restructuring, may uncover, perhaps, the most egregious and predatory lending scandal this country has yet to fully feel the effects of. All of which, leads back to the FCA, Biden’s failure to appoint a functioning FCA board, and special interests blocking a Trump era appointment in the Senate Agriculture Committee. 

Akin to the 2008 Freddie-Fannie fiasco, the Farm Credit scandal could have resounding impacts on America’s food security, national security, and global commodity markets.

This article is part of a developing story. Make sure to like and subscribe to get updates and,  if you appreciate our work, please consider a monthly donation to the I Am Texas Slim Foundation. Your generous contributions help us to keep farmers and ranchers feeding America. 

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