Family farm organizations Iowa Citizens for Community Improvement, Missouri Rural Crisis Center and the Land Stewardship Project (Minn.), as well as the National Family Farm Coalition (NFFC) and the Rural Advancement Foundation International (RAFI-USA), point to federal loans for new or expanding hog and poultry facilities as contributing to overproduction and low market prices in these livestock sectors.
"We need action now by the Secretary Vilsack and the Obama Administration to turn off the spigot of public dollars which is leading to production facilities in a sector of the economy with too many hogs, too many factory farms and too many months of overproduction and low prices," said Matt Ohloff, rural organizer for Iowa Citizens for Community Improvement.
Based on USDA data, FSA direct and guaranteed loans for new hog and poultry building construction for fiscal years 2008 and 2009 totaled $264,466,341.
The depressed prices in livestock markets is so alarming that USDA over the past 10 months has also employed a strategy of conducting bonus pork and poultry buys in an attempt to stabilize and lift prices. USDA to date has purchased $55 million and $42 million worth of surplus pork and poultry, respectively, in an effort to provide assistance to these stressed livestock markets.
"This cycle of promoting the expansion of corporate livestock production with taxpayer money, then bailing out the industry because of overproduction with taxpayer money is an irresponsible practice and must come to an end," said Rhonda Perry, Howard County, MO, livestock and grain farmer and program director of the Missouri Rural Crisis Center. "You can't justify loans for new operations and more livestock when the current hog farmers are barely treading water or are going out of business all together."
When similar oversupply situations occurred in the past, USDA suspended the use of loan programs for the construction of these specialized facilities. Specifically, USDA issued a directive on January 8, 1999, 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 that were affecting the hog industry. At the time, USDA was quoted in the Jan. 1999 Federal Register as saying:
"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."
"President Bill Clinton suspended guaranteed loans in '99 because hog farmers were devastated by low prices and it made absolutely no sense to provide loans that further fueled consolidation in the industry and kept prices down," said Paul Sobocinski, a Wabasso, Minn., diversified crop and hog farmer and organizer for the Land Stewardship Project. "Farmers I know and work with believe these loans are risky for both producers and the government, and we should not be doling out dollars for expansion when prices are so low. It doesn't make sense."
Family farm and allied organizations say they await a response from USDA and hope the agency will advance changes to lending policy for direct and guarantee loans.
"Advancing a directive to suspend direct and guaranteed loans for specialized hog and poultry facilities is a concrete action USDA can take, and now is the time," said Perry. "Farmers are struggling and this would at least stop taxpayer funds from further contributing to corporate overproduction and low prices and free up funds for farm families who will need to rely on USDA loans this year."