WASHINGTON (2/5/14)--The Federal Agriculture Reform and Risk Management Act of 2013 (H.R. 2642), which repeals term limits in the U.S. Department of Agriculture Farm Service Agency (FSA) Guaranteed Loan Programs and crop insurance, was passed by the U.S. Senate on Tuesday by a 68 to 32 vote.
President Barack Obama is expected to sign the bill into law.
The Farm Bill changes above will impact some credit union practices, the Credit Union National Association has noted. (See Feb. 4 News Now story: CUNA watches UDSA loan developments in Farm Bill.)
Credit unions participate in U.S. Department of Agriculture guaranteed farm loans, and the Farm Bill contains language that would repeal borrower term limits in the program. Under the program, some types of loans are repaid within 7 years, and the terms of others cannot exceed 40 years.
Without the repeal, thousands of farmers and ranchers would be forced out of the program, potentially making it more difficult for them to secure credit in the future.
The bill also creates a new crop insurance program that guarantees that the revenue of participating farmers and ranchers will not fall below 86% from the previous year. This type of insurance is not affordable or easily available on the open market, so the government insurance is important to credit unions, as it protects the underlying assets that collateralize some loans made to agricultural businesses.