The Campaign for Family Farms and the Environment delivered a petition with more than 25,000 signatures from individuals around the country to Agriculture Secretary Tom Vilsack on Oct. 20. It demanded that the agency immediately suspend the practice of providing guaranteed and direct loans for new and expanded specialized hog and poultry facilities. More than three weeks have passed without a response.
Hog farmers are hurting as low prices have persisted for many months -- even years. Everyone is saying there's a hog surplus and that herd sizes should be reduced. Despite the oversupply, the U.S. Department of Agriculture's Farm Service Agency continues to provide loans for new and expanded hog and poultry factories.
This increases production even more and depresses prices. Based on USDA data, FSA direct and guaranteed loans for new hog and poultry construction for the 2008 and 2009 fiscal years totaled $264 million.
At the same time, the USDA is using taxpayer dollars for bonus pork and poultry buys, ostensibly to stabilize prices resulting from the very overproduction that it's encouraging, through direct and guaranteed loans.
On March 31, the USDA committed to a $25 million bonus pork buy; on Sept. 3, to another $30 million, and on Nov. 10, still an additional $50 million. On Dec. 23, 2008, USDA announced an emergency purchase of more than 60 million pounds of chicken products, at a cost of more than $42 million, in an attempt to create a market for surplus product.
When similar oversupply situations occurred in the past, the USDA suspended the use of loan programs for the construction of these specialized facilities, thus ensuring that it didn't continue to contribute to the detrimental impacts of overproduction. Specifically, on January 8, 1999, the USDA issued a directive suspending all direct and guaranteed loan financing for the construction of such hog facilities, citing concerns that FSA loans could worsen the crisis of oversupply and low prices then affecting the industry.
This same action and leadership is needed now.
We're facing a time when credit needs are high in farm country and resources should be aimed at helping existing farmers weather these tough times. The last thing we need is federal farm loans that create more factory farms, more hogs and longer periods of low prices.
Apparently industrial livestock operations are considered "too big to fail," given that our tax dollars are being funneled through government-subsidized and protected loans that serve as tools for expansion benefiting the integrators at the expense of farm families and their communities. Our analysis of past cycles supports our current concern that these loans will be used by lenders and big operators to expand and seize market share -- driving more independent family farmers out of business.
For these reasons, we call on Secretary Vilsack to suspend immediately all direct or guaranteed farm ownership or operating loans for the construction or expansion of specialized hog or poultry production facilities. Spending public money for this purpose hurts farm families and rural communities. And it's a wasteful and risky use of American taxpayers' dollars.
Frank Jones is a board member of Iowa Citizens for Community Improvement and a family farmer from Davis County, Iowa; Paul Sobocinski is a member of Land Stewardship Project and a hog farmer from Wabasso County, Minn.; Ron Perry is a member of the Missouri Rural Crisis Center and a hog farmer from Livingston County, Mo.