Archive for July, 2012

House considers 1-year Farm Bill extension

With the 2012 Farm Bill stalled in the House of Representatives, and with drought devastating farms across the mid-west, the U.S. House of Representatives is considering a 1- year extension of the current farm bill, coupled with disaster relief for drought-stricken areas. The U.S. Senate has already passed its version of the 2012 Farm Bill, but progress has stalled in the House. The current farm bill will expire at the end of September.

Farm groups have come out against the idea of an extension, saying that it would only create more uncertainty for farmers. Bob Stallman, President of the American Farm Bureau, is quoted saying, “A one-year extension offers our farm and ranch families nothing in the way of long-term policy certainty. Farmers and ranchers always face decisions that carry very serious financial ramifications, such as planting a crop, buying land or building a herd, and we need clear and confident signals from our lawmakers.”  Senators have also said they would be opposed to an extension. Senator Debbie Stabenow, chair of the Senate agriculture committee said that, “If Congress does what Congress always does and kicks the can down the road with a short-term extension, there will be no reform, direct payments will continue, we’ll lose the opportunity for major deficit reduction and we’ll deliver a real blow to our economic recovery.” Although the extension would not include the proposed cuts to the SNAP program (aka, food stamps), advocates are also opposing the extension. They’d rather see a new farm bill with reforms and with SNAP funding maintained.

With all this opposition, it will be difficult for the House to pass the extension– but disaster relief and the September 30 expiration are looming.  Without a new farm bill, some programs will revert back to even older policies. And direct payments would be eliminated all together. Politics appear to be, again, getting in the way of progress. Without the will to compromise, the fate of farmers and the agriculture industry remain stuck in limbo and many programs will be threatened. The National Sustainable Agriculture Coalition sums it up succinctly:

What is being offered is a political ploy aimed at trying to pass a highly controversial bill with no debate on the way out of town for a month long summer recess and then cynically blaming the other body and the other party for not following suit.  This would rank as just more political gamesmanship were it not for the real drought and real lives and livelihoods they are playing with, and were it not for the fact that if this bill passes, the 2012 Farm Bill dies.  For a farm bill process which has been relatively speaking marked by bicameral and bipartisan cooperation, this latest move is revolting, and as a result, we hope the rank and file of both parties will therefore revolt.

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July 31, 2012 at 3:49 pm

National Credit Union Administration establishes new exam office

Debbie Matz, Chairman of the National Credit Union Administration (NCUA) announced a new Office of National Examinations that will focus on examining the largest credit unions starting in 2013.  In an address to the National Association of Federal Credit Unions, Matz said that a disproportionate amount of NCUA’s resources are devoted to small credit unions, while the largest credit unions need more scrutiny.  She also said that the office will be evaluating the threshold that is currently used to define “small” credit unions (assets less than $10 million). Moving forward, these credit unions will only be subjected to a 40-hour examination.

The timing of this announcement raises questions about the NCUA’s role in evaluating state-chartered credit unions. In North Carolina, the NCUA began performing examinations of state-chartered credit unions this year, when in years past the state regulatory agency, the North Carolina Credit Union Division (NCCUD), performed the evaluations and NCUA only stepped in when deemed necessary. Now, the state’s credit unions must face two examinations– from the NCUA and NCCUD– which, particularly for the smaller credit unions, has been a significant burden. The amount of time that credit unions have to devote to these examinations has impacted their ability to serve their members.

Reorganization of the NCUA’s regulatory offices is a step toward properly assesing the unique needs, challenges, and strengths of credit unions of different sizes. However, at least in North Carolina, the NCUA seems to be creating inefficiencies instead. NCUA’s decision to perform their own exam ignores the impact of dual exams on the state’s credit unions. The reorganization and refocus on credit unions of different sizes is a step forward for credit unions overall, but will mean little in North Carolina until the issue of dual examinations is resolved.

July 30, 2012 at 3:25 pm 1 comment

Severe impacts of Midwest drought could speed passage of Farm Bill

More than half of the land in the U.S. and Puerto Rico is now in moderate to exceptional drought conditions and farmers, businesses, and ultimately consumers are feeling the severe impacts. With grasses drying out and lack of water to irrigate crops, farmers are struggling to keep their crops and livestock alive.

 

 

National Public Radio’s Talk of the Nation did an extensive piece last week looking at the impacts of the drought on farmers. Here is just one story of a farmer in Kansas:

Nathan Pike is a guy who was born in the Dust Bowl and has lived on this ranch with his closest neighbor being two miles away, which he considers pretty close, for most of – he’s lived in the area his entire life and on this ranch all his adult life. And he has had to cull his cattle herd significantly because he doesn’t have feed. He doesn’t have food for them. His grass that never dies, his buffalo grass, his native short grass, prairie grass, has died, most of it has died. (more…)

July 27, 2012 at 12:28 pm 1 comment

SBA Report Shows Small Business Lending Declines from 2010-2011

The Small Business Administration Office of Advocacy released a report looking at small business lending between 2010 and 2011. Not surprisingly, the analysis shows that small business lending by large banks and depository institutions declined during that time period. In particular, lending by the largest institutions has seen a steep decline, as shown in the chart below. The most dramatic increase and decline between 2005 and 2011 occurred with lenders with $50 billion or more in assets. These “megabanks” accounted for 51 percent of the decline in small  business loans.

Small business loans overall decreased by 6.9 percent between 2010 and 2011. The number of large lenders (assets over $10 billion) also decreased; however, their share of assets held by large lenders increased at the same time.

These findings further corroborate what has already been known about small business lending in recent years. As large banks pull back from small business lending, fewer borrowers are able to access capital. It appears also that as the number of lenders declines, resources are not diminishing but instead being consolidated into the hands of fewer large banks.

Until this picture changes, there will continue to be a lack of access to capital for many small businesses. The capital is there, but it is not getting to the people who need it.

July 26, 2012 at 2:40 pm 2 comments

Americans’ Trust in Credit Unions and Local Banks Increases

The Kellogg School of Management at Northwestern University and the University of Chicago School of Business yesterday released the results of their latest survey in the Chicago Booth/Kellogg School Financial Trust Index.  The index was established to monitor Americans’ confidence in financial institutions and large corporations quarterly, to see the impact of investors’ decisions.

Over the last quarter, trust in credit unions increased from 58% to 63% and trust in local banks increased from 51% to 55%.  At the same time, Americans confidence in national banks and banks in general declined.  The researchers and others speculate that this may be due to the fact that the survey this quarter was conducted at the same time as the House Financial Services Committee’s hearings on the “London Whale” scandal.  However, as one of the author’s said, “there is still a relatively high level of trust in banks at the community level.

Below is a figure created by the authors demonstrating the changes in the percentage of people trusting different financial institutions.

The Financial Trust Index also shows that these results are part of a larger trend.  Their results published since December 2009 consistently report Americans have higher confidence in local banks and credit unions than national banks. ”  Hopefully the survey in the future will look into why Americans consistently trust credit unions and local banks more than national banks.

July 25, 2012 at 3:32 pm

Triangle Company Innovates New Way to Distribute Wholesale Fresh Foods

The start-up small business Mint Market is launching an online marketplace on July 29th to help connect farmers and chefs in the Triangle.  The marketplace will offer farmers a central online database where they can freely market their goods to local chefs.  Chefs in turn will have a one stop website where they can see and order available local produce even before the farmer harvests it.

This set distribution system could be a great aid to local farmers. Due to a set schedule that will process the sale before the farmer harvests the product, farmers will be able to minimize their losses.  The test farmers also report that this system saves them a lot of time and administrative stress as they no longer need to call chefs individually to pitch products or track down payments.

There are benefits for the chef’s to use Mint Market as well.  Currently, chefs that want to offer local food at their restaurants are forced to call individual farms to check on what crops are being harvested and place separate orders with each farm.  Mint Market will make it easier for chef’s to order from local farmers by providing a central and updated database of available local produce where chefs can order from multiple participating farms at one time.

Mint Market is a great example of a new innovation from a start-up small business that could be used to help bring more local and healthy foods into new markets.  One of the major issues facing our healthy food network is trying to get the demand for produce to meet the harvested supply.  By ensuring that the product is sold before it is harvested, farmers and retailers could more accurately meet the demand for their product and minimize their losses, making the market more commercially viable.

July 24, 2012 at 3:05 pm 1 comment

U.S. House Delays Considering Farm Bill

As covered before in our blog on July 13th, the House Committee on Agriculture approved its 2012 Farm Bill, titled the Federal Agriculture Reform and Risk Management Act (FARRM) on July 11, 2012.  However, the full House has not yet considered the bill and it is not scheduled for debate this week.

The decision not to consider the Farm Bill this week could have lasting ramifications for many Americans.  The current Farm Bill expires on September 30th.  In order to meet that deadline, the new bill would need to come before the House before the August 4th recess.  If the bill is not considered this week, there is only four days left for the House Leadership to bring the bill forward before that deadline.

If the new bill is not enacted by September 30th, it will leave farmers without clear safety nets.  Farm Assistance programs, such as Direct and Counter-cyclical programs would cease to continue and would not be replaced with either the Senate or House proposals.  Public Crop insurance programs   would be left in upheaval, and some programs could revert back to older standards.

As farmers battle with severe weather across rural America, determining the future of these safety net programs is key to determining the future of American agriculture.  We will see next week whether the House considers the bill before the August 4th recess.

July 23, 2012 at 4:28 pm 4 comments

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