The farm Credit System is higher capitalized to the Community Banks are higher capitalized going into this. One of the real fundamental differences is Crop Insurance. In the 1980s probably less than 5 of all crops were injured in the United States. That number is reversed and theres 95 that are. That makes a huge difference not only for our industry but for the producers to ensure that they will be around for the next season. We do thank you for that and it is a very critical part of what we do. Thank you. I appreciate that. As we go forward, and i hate to Start Talking about the next farm bill, i get a headache thinking about all the challenges we have, but this would be either import debate. We will need your voices as we are talking about the increased importance of Crop Insurance as a critical Risk Management tool. Mr. Wolfe and mr. Barker, i wanted him a talk on the more, i apologize i was not here for your testimony, but just described what other institutions to support the rule food agriculture business. Its not just farmers but more broadly sort of rural communities, food industry. Could you talk more about that . Locally we have a lot of growers in the Farmers Market type of area. Those are very popular in the state of iowa in our area. We have converted many producers to organic production, and those were some trying times. They are not profitable at first appeared it takes several years to get to the level where they are sustainable as organic farming. Some of the challenges that we face come from other states. I was a part of an egg production facility, and the laws in california required that chickens needed more space in their cages. If theyve met with agriculture they would realize that the more space the chicken has come a more violent they get with each other and actually are hurting those chickens. But it created a much more expensive operation. And so those are the things that we are facing challenges now. Weve had to loan more money to that facility to increase their buildings and the capacity to produce. Thank you. We are located in northcentral northeast and located in northcentral northeast and canada would end up transition between claims and good, dark farm ground. We have we as a primary grow crop in the western part of our trade area, and that transitions to corn, soybeans. We also have a lot of dairies, hog operations, these cattle. So we are very diversified beef cattle. We are the largest tag linda in kansas. Thats not all that large. Probably ranks number 50 in the United States but we do our part to take care of our local producers. Weve been around for a long time, and we relish the opportunity, even the downtimes to be there for our customers. Thank you very much. I am going to step away to vote out and senator thune it just came in. Im going to pass the entire power of the senate agriculture, nutrition and forestry committee. Im a little nervous about this but id be happy to pass it to the senator from south dakota. Well, thank you, madam chair. Yeah, kind of a crazy day. I wouldve liked to bid ask questions we of the Previous Panel but we had the administrator of the tsa. To talk about weight lines at airports. So as i was chairing the meeting. But i appreciate the updated on whats going on in agriculture, particularly with regard to limit. I do want to conclude for the record, since im the only one year i will say this will be included without objection. [laughter] a story from the mitchell Daily Republic in which he talks about a study that looked at farm income. I know its only been mentioned a couple times today but least in my state in 2015 we saw a drop by 100,000 on average last year in which is a 77 decline in net profit in 2015, compared to the year before. So it goes on and elaborate think its that into the specifics and goes down to the numbers a little bit about what that means in terms of our economy. I think it puts a fine point on how important it is that we are focused on agriculture making sure we do everything we can to get our producers through what are some pretty difficult Economic Times and hopefully when we get a better price structure. But i know that we are planted in south dakota. Some of it is still going in, but we are hoping for a big crop crop. We need a big crop at the prices we are dealing with today. I would be tree tuesday not jusm the lenders standpoint. I know that, for example, mr. Barker, youve got a smallscale Community Bank with a portfolio of 35 agricultural loans. Could you talk about what you greatest challenge is today in terms of looking at the outlook for your agricultural borrowers . As far as our borrowers, our biggest challenge is the cash flow coming in. We are in times where the most of our borrowers have equity to survive a year or two year Going Forward, this equity is being used up with the low prices, with production roughly 1 dollar below cost. They are sales price for both corn and beans. It doesnt take long to fit any size at all to get used up in the equity. We are going to need the farm credit, the Rural Development loans guarantees. We would ask the senate to really beef that up, the program, because we really will need those guarantees Going Forward to keep them in business, and patients is virtue in this thing. Many examiners were not around in the 80s when we went through this crisis before. They are young and they are being told that this is maybe a panic situation, and patients will be a virtue in dealing with all of this. I would direct this to you and others on the panel as well, but do you believe that your banks and other aba banks coordinate more closely with the Usda Farm Service agency that does ses to obtain guaranteed loans for someones eligible borrowers . From my personal picks brings the Banking Community does but, in fact, ive had a few local small borrowers come to us because their credit was shut off at Farm Credit Services. And we try to look at getting a guarantee for those folks but our experience is that the loyalty has been to the larger borrowers by the Farm Credit Services, and the smaller folks may be in our area were not taking care of his will because they are a lot of are a lot of are a lot of work but its easier to book a 5 million loan. Any examples of how farm Credit System neglects young, beginning a Small Farmers and ranchers in your area . Personally i dont seek it. I dont see the farm Credit System doing that. I know they talk about that, and from a report 2014 which i could enter into the record if you would like, the numbers show that those young, beginning, Small Farmers are quite stagnant. And one of the photos i thought i wanted was if you qualify under each of those categories they can be counted on each of those categories. So im not sure the numbers relate. I know in theory thats what they would like to do at the regional levels. But on the local level i just dont see it happening. Mr. Welder, you are a farm operator and when youre talking to other local farmers, have you noticed competition in ag lending driving down Interest Rates for borrowers . From my perspective, in my personal operation i have not seen that, senator. We are getting competition from other large corporate farms and maybe have other lending resources, not that my love, no, not at all. Interest rates are staying pretty much constant what we need to do for opera does. And from your perspective operating loans. Farm Credit System and fsa played a role in ensuring that could exist for borrowers . Again i can only give a very bike with respect in my love. But the banks in my area dont deal with farmers as much other than checking and savings. The last farmer that had operating loans with other local citibank was my dad 20 years ago. At this point because 8001000 acres you might be talking a quarter Million Dollars loan for operating loans. Most of that go to the farm Credit System as opposed to going to a banking system. Okay. And, mr. Barker, back to you. Would you say your bank is consistently more competitive loan rates and loans available in, particularly as we talked about earlier some of the younger, smaller, newer borrowers . We could be as much as we can. I cannot compete with the Farm Credit Services as they have a funding structure that is very enviable. For example, on a 1 million loan if i charge 5 , thats 50,000 in interest. I pay my tax bill at about. Inet 30,000. The farm Credit System is its taxexempt can only charge 3 on that single. They dont have to change charged appraisal fees and there are other local thieves in some states that they do. So we tried to stay competitive as much as we can and make use of anything we can as far as federal home loan borrowing, something to that extent. But i just cant seem to touch the whole array of benefits that the Farm Credit Services has. And you indicated 14 of your portfolio consists of loans range from 1000, two to under 40,000 which is 76 of your portfolio by total number of borrowers. And since many of these are likely young beginning to Small Farmers and ranchers, do you believe that your portfolio of borrowers, assuming we have the present state of circumstances in agriculture for the next couple of years is going to be negative impacted much worse than the larger scale to borrowers that you and your portfolio speak with i think they will be hit harder quicker than the larger farmers, yeah, because theyve not had a chance to build up the equity that the other larger farmers have. Senator speak with yes. Mr. Welder brings up a great point because his area is what i foresee if we continue to down the same path, that the local banks cant compete any longer so they have given tha the markt should we do if given a way, quit competing and thats what im afraid we are heading. Just to give an example, mr. Barker used a similar example in iowa but in my state i pay 34 federal income tax and 4. 38 state income tax. So asked mr. Berger says, on a 5 long they can charge 3. 1 about and start at the same place we do. My point is that when we go down that path is the farm credit is not passing if i were a bar work of margaret today i would be angry they are not passing the entire savings along to them because they couldnt in fully taxed and they still, this dont make money like the banks. Thats the point i would like to make. Thanks. Mr. Stark . I delighted to respond to this comment. Its an unfortunate disporting due to allegations by consistent with so many farmer on customers support and feel so strongly about them when they i say what it was all down to the bottom line is whats been laid out at this point is the respective of our business structures when he gets down to the bottom line to the fact of matter is we are just different thats good as imagine opening remarks that was intended as a farmer owned cooperative. We have a different business structure. Frankly, Community Banks enjoyed some of the same or similar accesses and backing by the federal government that the farm Credit System does and the federal deposit insurance them access to the juicy to farmer back and the federal home loan bank, have access to a subchapter s. Corporations. We could compare and contrast our Business Model for hours today. The bottom line is we look at it over the last figures they have 40 market share. We have 40 market share. By the testimony this morning our colleague mr. Burkett did hd the over half of the farm loans in their community. If you look at the data that is present even in their own testimony they grew 7. 9 last year. Uighur 8. 5 when you look at the facts theres no evidence to indicate that the pendulum has swung in favor of our Credit System. Thank you for the opportunity to comment. Could i agree but that . Sorry, mr. Stark but there are a lot of gses at the but on any of the gses that directly compete with me that try to steal my loans. When we are not allowed to make a 5 million real estate loan, for example, thats a big part of my loan portfolio. That goes to the Farm Credit Services no matter what. Is just a way to compete and it will be undercut no matter what great ive quoted come and msha every Community Banks in the nation can say the same thing. That they rates just are not the same. They will pick those. The young farmer that comes in that has a quote from the Farm Credit Services its a rate that is higher. They might get a rate that is six or 8 compared to the 3 rate. So does that really mean you are taking care of those Young Farmers . With high priced below two young farmer that is the same whether a multimillion dollar farmer or they are a young farmer thats really struggling and trying to get out there. We can help them no matter what but we dont get competition from the other gses. I would just say, and i appreciate having to sing things i think thats a important one d its an issue we need to pay close attention to, particularly over the next couple of years because i think as in production agriculture, if we dont see some improvement in the prices for commodities will have more and more stress and it will be a real need on behalf of the Lending Committee to work with borrowers and figure out ways to get into. Im deeply concerned about the young beginning and small borrowers and what this means for them to people perhaps are not as established or dont own the ground and are making kashmir payment from the source of think that its going to be increasing i think difficult given the current price structure which i said i hope it improves but i think that the ability of credit and be able to work with and had all the various people who represent the committee today i think is really good because it gives us an opportunity to explore a little bit more in detail what the various dynamics and who is lending to whom and we are sort out the weak spots or. If theres anything this committee can do in the days and weeks and months ahead, i hope you all will communicate that to us as well because we want to make sure that were being as responsive as possible when it comes to a fair bit of credit for agriculture. Chairman, i think you and i think our panel today for being here. Senator thune, thank you for the excellent statement. I share your concern with new, young, what was the other group . Oh, beginning. Im concerned about the older, established producers who produce most of the food for this country, as well as everybody else. It is another vote pending, i would tell the gentleman very quickly, and about 10 minutes year, so were going to have to a german this. I had a question for the three lenders on the panel, your answer of course is, if this does not occur the question im asking, we will be writing the sequel to the grapes of wrath in farm country. When you are considering whether to issue a formal of how important is the role of federal Crop Insurance program but lets just go down the line. Mr. Barker. Yes, sir. Is a truly important. It is just absolutely critical to the survival of the farmer out of there and stability in financial services. And i think i speak for me as well as the Farm Credit Services. Mr. Stark. Well, we totally agree and we think the committee and to support, mr. Chairman, in what you do to get the last farm bill through as well as the provision of the Crop Insurance program. Its imperative for this industry as we go forward. Mr. Welder . As a producer i maintain Crop Insurance as do most of my peers to its and a portal as we move from a subsidy based to a more marketbased to stay with a cup insurance and i thank you for your support. Center . If you were in service that was always faithful, semper fi and chose to go army strong yes, sir. You could be strong but im not sure always faithful. [laughter] why on earth did you switch speak with sir, i was offered a scholarship and i didnt have money for college and is that i could jump out of perfectly good airplanes like took them up on it. [laughter] wellpoint. Leonard speak with yes. I talked about this earlier, but a question was asked of the first Bill Sublette the major differences as we head into what potentially could be a downturn in ag and the differences compared to the 1980s. The primary difference as far as the producer protection is Crop Insurance. In the 1980s i saw statistics that said less than 5 . I was there, you were there, less than 5 of all crop tortured at that time. Today that number is now 95 and its possible because of actions that this committee and you specifically taken, and i think thats going to be paramount going into any downturn whether this is it or not, our records have been predicting this for seven years so if the final happens i think they are take a certain level of glee from that but we are ready for it. Crop insurance is one of the things that is prepared us for this if we do have it. Thank you spent i appreciate your answer. It is what it is. Every time, we are now doing appropriation bills, which is a very good thing. We are going back to constitutionally congressionally directed funding. And thats a good thing were doing it at record pace. When you open up the bill a selfdeclared secretaries of agriculture wanting to change something. And Crop Insurance