Washington, DC - U.S. Senators Michael Bennet and Mark Udall, and Congresswoman Betsy Markey, today pushed to secure much-needed loan resources for Colorado's farmers as the closure of New Frontier Bank and the economic crisis have severely limited their access to credit. Greeley area banks and lenders do not have the capacity to meet the demand for credit created by the bank's closure; however, the federal Farm Services Agency has two loan programs that could help local farmers.
In an effort to ensure FSA programs serve as many credit-seeking producers as possible, Bennet, Udall and Markey wrote a personal letter to Agriculture Secretary Tom Vilsack, requesting the agency shift funds from its guaranteed loan program to its direct operating loan program, which has exhausted all of its funds. The move would ensure both programs are available to qualified farmers who need the funds for spring plantings, farmhands and cow feed.
"Northern Colorado farmers are the backbone of the local economy and we must work to protect them from the one-two punch of the economic crisis and the closure of New Frontier bank. These circumstances have left area farmers in a pinch and we need to find them as many credit options as possible," Bennet said. "The Farm Service Agency's credit programs can help farmers stay in business, provide for their families and make it through these tough times. I will continue fighting to make sure farmers have the resources they need."
"These are difficult economic times for all of us, but particularly for Colorado's farmers who are further burdened by sinking milk and commodity prices," Senator Udall said. "The government has rescued banks that were considered ‘too big to fail.' I hope the same consideration will be made for Colorado's struggling food producers until normalcy can be restored to the credit markets and farms can again secure the loans they need to continue operating."
"The closure of New Frontier bank could have a profound impact on our agricultural community, as so many of the bank's loans were tied to farms," said Rep. Markey. "Farmers rely on lines of credit to plan their feed, plantings, and hiring. The bank's closure puts all that in jeopardy, and we must ensure that credit remains available in Northern Colorado."
Please see below for a full copy of the letter:
April 28, 2009
Secretary of Agriculture
Jamie L. Whitten Building
1400 Independence Avenue
Washington, DC 20009
Dear Secretary Vilsack:
On April 10, 2009 the Colorado state bank commissioner closed New Frontier Bank more than four months after the Federal Deposit Insurance Commission (FDIC) issued the bank a cease and desist order for "unsafe" and "unsound" banking practices. We call this bank closure to your attention because New Frontier Bank specialized in agricultural lending; the closure of this institution leaves an unmet credit need of approximately $700 million just among our region's agricultural borrowers.
Weld County, New Frontier Bank's home, ranks first in Colorado and eighth in the nation in terms of total value of agricultural products sold. However, due to the economic crisis, credit crunch, slump in commodity prices and crash in milk prices, many agricultural operations are unable to demonstrate cash flow. This severely hampers the ability of these agricultural producers to secure lines of credit with a new lender. Area banks and lenders do not have the capacity to fill the demand for credit created in the absence of New Frontier Bank.
The Federal Deposit Insurance Corporation has given local borrowers 30-days to find a new lender and is facilitating communication between interested banks and borrowers. However, given the disproportionate number of agricultural borrowers in the region, the Department of Agriculture may be able to help.
The Farm Service Agency (FSA) makes direct and guaranteed farm ownership and operating loans to farmers and ranchers who cannot obtain commercial credit from a bank, Farm Credit System institution or other lender. Since FSA loans can be used to purchase land, livestock, equipment, feed, seed and supplies, the FSA loan programs are uniquely equipped to assist agricultural producers who will not see a return on their investments in seed, feed, and inputs for the coming year until this autumn.
The Colorado Farm Service Agency indicates it has experienced an unprecedented demand for credit during the first quarter of this year. While Colorado's FSA has funds available in the guaranteed loan program, it has exhausted all funding in the direct operating loan program. Given the magnitude of the current demand for credit in Northeastern Colorado, we respectfully ask you and the Department of Agriculture to consider shifting some funding from the guaranteed loan program to the direct operating loan program.
Additionally, since producers must act quickly to identify new
lenders, should the volume of FSA loan applications increase
significantly, we ask the Department to stand ready to take additional
steps, such as temporarily sending additional FSA loan personnel to the
Greeley area, to ensure all applications are processed in a timely
We appreciate your attention to this situation.
Michael F. Bennet Mark Udall Betsy Markey
U.S. Senator U.S. Senator U.S. Representative
Cc: Jim Miller, Undersecretary for Farm and Foreign Agriculture Service
Carolyn Cooksie, Administrator, Farm Credit Administration
Gary Wall, Acting State Executive Director, USDA Colorado Farm Service Agency