In the Know: Potential Farm Bill Extension
The 2018 Farm Bill received an extension to September 30, 2024, though recent reports have legislators predicting that the current bill will be extended yet again rather than passing a new version.
The Farm Bill includes legislation covering various agricultural and food-related programs, including commodity price supports, crop insurance, conservation programs, and rural development initiatives. It has a significant role in shaping the overall economic environment for agricultural businesses—and, therefore, impacts ag lenders.
Whether there will be a new bill or an extension, understanding the Farm Bill and how it affects borrowers is crucial for effective risk management and long-term strategic planning. For some, it could mean maintaining the status quo with existing programs; for others, it could create uncertainty within lending decisions.
Some key benefits and drawbacks to keep top of mind:
- Continued stability: An extension would maintain the existing structure of farm programs, offering stability that allows lenders to continue offering loans based on current programs and policies, which helps reduce near-term disruption.
- Delayed decision-making: If the current Farm Bill is extended again, lenders may feel uncertain about future policies and their timing. This can impact near-term lending decisions, particularly those associated with emerging sectors (e.g., renewable energy or specialty crops), for example.
It would also impact farmers and agribusinesses, who may delay long-term investments or expansions if they are still determining future policy changes. Borrowers might wait for more precise guidance on what the next Farm Bill will bring, and lenders could see a slowdown in loan applications for large projects that require multi-year commitments.
- Stalled opportunities: A Farm Bill extension could delay the introduction of new programs and support for growing sectors like organic farming and renewable energy. Lenders who were positioning themselves to finance emerging markets could experience slower loan growth, and any new lending products tailored to these sectors might also be delayed.
- Market uncertainty: Another extension for the Farm Bill is a sign of political challenges, which can create uncertainty within agriculture policy and the market. As such, borrowers may adopt a more cautious approach to investments and hesitate to make long-term financial commitments.
As Farm Bill uncertainty continues, the most important thing lenders can do is serve as a reliable, trusted resource for their borrowers. The good news is that the Agri-Access team is here to provide resources for you.
Reach out today to connect with a relationship manager and discuss any questions or concerns you may have regarding the Farm Bill so you can navigate borrower conversations with ease.
