Groups Ask FSA to Halt Lending for New Poultry Houses

Andrew Jenner
Virginia Correspondent

Amidst an extended period of oversupply in the poultry and swine industries, a coalition of farm advocacy groups delivered a petition last week to Secretary of Agriculture Tom Vilsack requesting the USDA to halt lending practices they say exacerbate the problem.

“The Farm Service Agency (FSA) is continuing to provide loans to build new hog and poultry facilities and expand production, at a time when overproduction in these sectors is greatly depressing prices,” reads a letter delivered with the petition, which called on the USDA to “immediately suspend all direct or guaranteed loans for the construction or expansion of specialized hog or poultry production facilities.”

According to lending data released by the FSA, more than $196 million in direct and guaranteed loans have been issued for construction of new poultry house construction nationwide in fiscal years 2008 and 2009. Meanwhile, last December the USDA spent $42 million to purchase more than 60 million pounds of chicken products to “create a much-needed market for the broilers” — which, according to petition organizers, amounts to a bailout for the oversupplied poultry industry.

Becky Ceartas, the program director for contract agriculture reform with the Rural Advancement Foundation International-USA, said oversupply in the poultry industry directly affects growers who face longer downtimes — and lost income —between flocks. Ceartas also called the lending for new poultry house construction an irresponsible use of taxpayer money, given current conditions in the poultry industry.

The petition drive was organized by the Campaign for Family Farms and the Environment (CFFE), a coalition chiefly composed of three family farm advocacy groups in the Mid-West — the Land Stewardship Project, the Missouri Rural Crisis Center and Iowa Citizens for Community Improvement. The petition, which the CFFE says was signed by more than 25,000 Americans, was delivered to Secretary Vilsack’s office on Tuesday, Oct. 20. Several other organizations, like RAFI-USA, also helped gather signatures for the petition.

During a press conference following the delivery of the petition, campaign organizers emphasized their main concern is with federal lending for the construction of new poultry and swine houses – not lending for upgrading, refinancing or purchasing existing facilities. They also said that lending programs for new poultry and swine houses would free up much-needed credit for other farmers.

“We’re hopeful that this will transpire,” said Rhonda Perry of the Missouri Rural Crisis Center. “We’re looking at very difficult conditions in the hog and poultry industries, and it just makes common sense.”

Their request didn’t have universal appeal, though. Hobey Bauhan, president of the Virginia Poultry Federation, said the FSA loans have little, if any, relationship to supply and demand in the poultry industry (he said factors affecting domestic and foreign demand for chicken products, for example, are far more important).

“FSA backing… is important in certain circumstances, such as helping young farmers get a start, and it should not be discontinued,” Bauhan said.

The FSA has approved just 23 direct or guaranteed loans for new poultry house construction in Virginia, West Virginia, Maryland or Delaware over the past two years — a fraction of the 356 direct or guaranteed loans approved nationwide for new poultry house construction. Much of the lending has been concentrated in North Carolina, South Carolina, Alabama and Arkansas.

The USDA has yet to take any action or issue a response specifically addressing the petition to end FSA lending for new construction of poultry and swine barns. On Tuesday, a USDA spokesman told Lancaster Farming that “during these tough economic times … (the agency) has concerns about actions that would restrict credit.”

“Any proposed action that would restrict the availability of credit will be reviewed carefully to determine whether making changes would be prudent,” the spokesman said, in a written statement.