The members of the second panel year in the process of having three votes on the floor of the senate and to accommodate all members in a way to be consistent with the time constraints that i will introduce executive privilege and by that time the distinguished Ranking Member will be here until somebody comes back but at any rate will introduce mr. Wolf and then get your statement when introduced we will let the senator know what the order is. With follow the famous black squirrel. [laughter] i know this is the home of the famous black squirrel because the gentleman dresses up as the blacks girl black squirrel i turned around to discover a lifesize black squirrel. I hope fish and game to not this that is being endangered a 600 million case in these northeast communities in the Bakers Association and to serve as the American Bankers Association with no small task a graduate of Southwestern College he began his banking career in 1979 to become president and ceo at the young age of 28 i really appreciate you being here to represent our great state and thanks to the witnesses for appearing and basically we will rotate back and forth. Share roberts and the Ranking Member and the president and ceo chairman of the board of the biggest trust the largest commercial Agricultural Lender in kansas with the farm Credit System i appreciate the opportunity to pursue it to present the view of the availability and roll america this is very timely that is the best in history no question is this going into straits near historical lows to have the liquidity the farmers and ranchers managed turbulence in the economy and with the farm bill in place they have certainty about future agricultural policy. In 2015 a farm bank with any more than 15point 5 now provides over 100 billion of total farm loans and Small Farmers rely on the banks for funding that hold 40 billion of small farm loans and micro small farm loans and are healthy and theyre looking forward with growing capital and increasing reserves. To manage risk with a downturn in the air cultural sector and by keeping congress the to make additional credit available with the farm loan programs and all and thus subject i believe Congress Needs to consider reforms specifically to raise the cap due to the rising cost of agriculture along with modernizing the programs. Usda Farm Service Agencies allow them to access credit from banks like mine from farmers across the country we remain concerned with the credit market the farm Credit System over the years from the intended mission with the unwarranted risk to taxpayers as a government sponsored enterprise represents a risk to taxpayers in the same way as fannie mae and freddie mac. To ensure that young beginning Small Farmers and ranchers with access to credit is not of focus today it has grown into an enormous system offering complex Financial Services if the system were a bank was the ninth largest in the United States and larger than 99. 9 . The farm Credit System benefits from tax breaks valued at 1. 3 billion giving a significant edge over private sector competitors. With a 10 billion line of credit. It is shocking that nearly half of the portfolio a beach more than 1 million. And it has large established organizations that does not need subsidized credit and it is clear the system has become too large and focused to subsidize a large bar hours per barrel and to ensure the charter is being followed and banks like mine are proud to support the farmers and ranchers in americas banks remain committed through good times and bad. I am happy to answer any questions. Just a moment. I have to say some others wonderful things on your behalf. [laughter] growing up on a small grain and livestock farm always having the jury to take over the operation with escalating cost beginning his speaking career in the 70s serving in Senior Management positions in Community Banks ever since he now serves as a delegate for the northern half of violent for the independent Community Bankers banks for testifying we welcome your statement. Dash as you stated unprecedented in a sea of Community Bank the of oldline uelwein i want providing products they need while treating them like friends and family measured by the relationships and individualized hands on service located in northeast iowa serving those of livestock soybeans and corn. The Community Banks in the rural areas with virtually every small town to an outstanding job with credit in good times and bad. Role committee banks provide more than one half of all credit from the banking sector. Most barbers at best are breaking even and only if they have low debt levels the most threatened are the youngest and small if they have no financing backgrounds those are the most times but the continuation of low farm prices will cause many farmers to exit including those better strong and we do urge senators so they dont overreact my testimony makes recommendations on usda farm loan programs to keep the farmers and business. Regarding ses ending 2015 total assets was three 1 4 billion dollars and 86 increase from 10 years earlier of 163 billion. Fcs gross loans is 92 increase from a decade earlier. Fcs net income for put 6 billion in the tax rate is 4 by comparison my bank is tax dash 34 at almost 40 total tax 36 more than and fcs it is a huge a vintage to enable the cherry picking a also has retained earnings with a tax benefit to have tremendous growth over the last decade as a Lobby Congress and its regulator for expanded powers and inappropriately received those for the complex set regulator requested their obtaining that ted Million Dollar line of credit at and fcs has an Insurance Fund to protect lenders but we do note the allowance is only 54 basis points by contrast the bank is 186 basis points perhaps if fcs had the higher reserve they would not have to go to the treasury for line of credit with no congressional involvement as was recommended by the Brookings Institution report. Why did fcs act in secret . We have surveyed bankers and every geographical region in recent years all bankers are alarmed by the cherry picking to undercut the loan rates to ignore the less creditworthy borrowers. Along with those two losable as operations to less since the credit choices in the availability for Rural America the regulator wants to make non farm loans they want to cherry pick the very best non farm loans from those portfolios not authorized by law. The proposed Mission Related investment regulation would allow lenders to have the approval label them as investments. Loans for manufacturing would be eligible for writein is located in the eric city and london. This is not rule iowa or american or authorized by statute and under that provision of the act not credible not intended to allow those nonfarm loans of hundreds of millions in the Worlds Largest cities. Will have her next witness, will save a little time as senator usually repeats the constitution of the United States before he answers questions. Is the president and cvo of frontier farm credit. Hes been with the system for 35 years. Having years. Having served in several capacities beginning as an assistant loan officer during his career, he also also worked for the Farm Credit Administration in spokane washington for two years as an examiner and supervisor. Mr. Start, thank you for joining us today and hopefully we will turn to our distinguished Ranking Member for the next witness, if not i will try to do the best job possible. Please go ahead with your statement. Thank you mr. Chairman. Ranking member stab in on members of the committee, i appreciate the opportunity to testify on behalf of the farm Credit System. My name is doug start, i am president and ceo of Farm Services of america frontier farm headquartered in nebraska and kansas. Thank you very much for being the cosponsors of the congressional resolution congratulating farm credit 100th anniversary. Were part of that so many of your colleagues on this committee are also resolution cosponsors. As a turn the pages, got them stuck together, we and our colleagues in the baking industry come before you today with good news. The commercial Banking Industry recently announced record profits of the farm Credit System is a financial strong as it has ever been. Given the challenges facing farmers and ranchers today and the extraordinary Capital Requirement of this industry, our nations Agricultural Producers need the farm Credit System and the commercial Banking Industry to be viable and strong. The farm Credit System is here for this morning is made up of 78 individually and cooperatively owned and governed institutions. All have separate boards of directors elected by their customer owners. There are no federal funds or taxpayer dollars appropriated for the Ongoing Operations of the farm Credit System. As a cooperative net income in farm credit goes to one of two places, it is either retained within the institution to build financial strength to serve customers, or it is paid out to customers in the form of patronage dividends. As one of the directors wrote in the letter, quote the board believes a collaborative lending system allows us to bring a unique and important Value Proposition to the market. We want start stockholder capital to be held as close to the farm as possible. That is the beauty of the farm Credit System that congress had to foresight to create 1916. Farm credit operative Business Model is fundamentally different. By design. And healthy farm Credit System and a healthy commercial Banking Industry bring greater stability and competition to the credit market. If we lose the business to commercial banks, and we do, that means the lending market is working for producers. If we. If we partner with a commercial blank to meet the credit needs of an enterprise serving rule america, and we do that means lending market is working for those communities. Of a local bank cannot take on the risk of a beginning operation and refers young farmer took farm credit, and it happens that means the lending market is working for producers. We know competition makes all of us in the lending work hard each day to be more efficient and customer centric. We focused our our time and energy on better serving producers versus asking for the elimination of competitors. There is room in the market for both commercial banks and farm credit. Producers that need us both. And farm Credit Associations we have been proactive in helping customers prepare for the challenges of the current cycle. We we counseled around the importance of working capital and have worked restructured that were appropriate. We are committed to working with our customers through tough times. Strong earnings have allowed farm credit to build equally Strong Capital levels to protect against loan quality. We have sophisticated stress testing procedures and are examined by federal regulator an issue transparence, audited financial statements. The farm Credit System does not pose a risk into u. S. Tax payers. In in fact the system has never been stronger. I personally take particular pride in the support we provide to our young and beginning small producers. It is an important part of what we do every day. While somewhat have you believe it is the sole reason we exist, our mission is spelled out by congresses to serve all of agriculture, large, small, young and old. In 2015 along the farm Credit System made more than 62,000 loans to young producers, 80 thousands to beginning producers and 150,000 monster small producers. Farm credits mission also expands to supporting role committees five nancy vital infrastructure, helping bring clean water to rural families, Reliable Energy to farms and roll towns, and modern, highspeed telecommunications to connect rule america to the rest of the world. We also help finance entities that are similar to art directly eligible powers as defined by congress, these civil loans are made in partnership with and at the invitation of commercial banks. In summary, i see farmers and ranchers working hard to address the current decline in commodity prices. They take enormous pride in what they do. Many are trying to carve out a way for their sons and daughters to continue a family tradition. We are honored to serve agriculture producers, farmer cooperatives and Rural Infrastructure producers who owned the farm Credit System. They are the farm Credit System. On behalf of our customer owners we look for to the next 100 years of serving rule communities and agriculture. Mr. Chairman, a variety of statements with me from groups representing producers, farmer owned cooperatives and others that i reinforced the importance of farm credits mission. I asked that those statements be made part of the hearing record. Without objection. Thank you. Ill be pleased to respond to your question. Thank you very much and i apologize for the back and forth today. I know you understand about the votes that are occurring and members having to try to be several places at once. We very, very much appreciate all of your testimony and its an important part of our deliberations Going Forward. Im pleased that i made it back in time to introduce mr. Jed welder. As i mentioned earlier he is taking time from a busy planting season to provide a producer perspective today. Mr. Weldon has served in both the u. S. Marine, and the u. S. Army and sever tours in afghanistan, iraq and bosnia before returning to gringo, michigan to start a farm with his wife and children, he is a proud alumni i should say alumnus of Central Michigan university. Not far from where i grew up. He serves on the inaugural board of directors for the michigan chapter of the farmer, veteran coalition. We thank you very much for joining us and i look for to your testimony. Thank you chairman roberts, Ranking Member sabin offer the kind introduction. Thank you to all of the members of the committee to testify today. I am from him inside farm in greenville michigan where my family and i raise corn, soybeans and recently began gray several acres of hops. Before returning home to michigan before to start my career as a farmer i served the United States serving as an officer with some of the greatest men and women in the world. In 2008, my thousand eight, my wife and i made a difficult decision to leave the army after repeated deployments in an ever increasing operational tempo we wanted to start with the family on a farm back in michigan. We love moving to the country and enjoy the challenges of this new profession. We need about land and capital to be able to farm fulltime. Farmers are closeknit group. You cannot just google how to do somethings, you actually ask mentors and experience farmers in the area what has worked on their forms. When i asked older farmers in west michigan about access or credit they said years ago i could go to a local bank and take out and operate in low but that banks dont do that anymore. Even a small farm requires hundreds of thousands of dollars in fee, fertilizer and fuel each year to operate. My small farm uses older equipment but even that cost more than a mortgage most local banks would handle. There is a Greenstone Farm Credit Services office in my county that was recommended by several farmers. Prepared a Business Plan walk through their door. They understood what i wanted to do and what i needed to run my operation. They make good, solid recommendations solid recommendations and overtime became a trusted partner. As my business changed and grew they grew with me. Today far more than 800 acres of land and have been able to continue farming land since the 1960s. The summer is building a grain trying to story system i loan officer came out to see the progress and talk to me. We we construct one of the first half years in county and as we did greenstone walk through the yard to see what hops were. Their offices 20 minutes away, they know how the crops in our area look and what the prospect for harvester because theyre in the business of working with farmers. Last fall and everybody contact me because she wanted to buy land near my farm. She had talked to several banks but she worked in texas at the time and wanted to buy farmland near her family michigan. Every bank said we do not do that anymore. When i put in contact with my Greenstone Office they told her that is what we do, she ended up purchasing the land in last