Congress typically does not include Farm Credit Administration issues in agriculture policy, but bankers and Farm Credit lenders - pushing vastly different agendas - are asking lawmakers to do so when they begin debating a farm bill next year.
Whether members of Congress will be listening is another matter.
The Farm Security and Rural Investment Act of 2002 expires Sept. 30, the end of the current fiscal year, and lawmakers are expected to start on the farm bill during the session that begins in January.
Farm Credit lenders would like the bill to include provisions widening the scope of their lending beyond agriculture.
The banking industry, meanwhile, is loath to give the government-sponsored Farm Credit lenders any more powers and, in fact, will be asking Congress to consider privatizing the 90-year-old system that was created to ensure that rural America had reliable access to credit.
It is unclear whether the new Democratic majorities in Congress will be willing to address Farm Credit-related issues in the farm bill, however. Calls to several members of the House and Senate agricultural committees were not returned.
But Alise Kowalski, a spokeswoman for the House Agriculture Committee, said a separate law deals with Farm Credit System issues and the general feeling is that any change in the system should be made directly, through amendments to the Farm Credit Act. (The 2002 law made some technical changes in the Farm Credit Act, but these were seen as minor.)
Though not ruling out a debate on Farm Credit matters, Ms. Kowalski said, "We would be very cautious about adding anything" to the next farm bill. "Once you start doing that, there is no end in sight."
The Farm Credit Council, a trade group representing most of the nation's roughly 100 Farm Credit System lenders, released a report this year called the Horizons Project that includes recommendations for improving the system to better meet the needs of U.S. agriculture.
Kenneth E. Auer, the council's president, said the system's lenders would like Congress to include a provision in the next farm bill to let them make housing loans in areas with a populations of up to 50,000. The current charter only lets Farm Credit lenders make nonfarm housing loans in areas with up to 2,500 people.
Farm Credit lenders also are asking for more flexibility to finance businesses that primarily serve agriculture. In general, the system can only lend to businesses that are owned by farmers or to cooperatives owned by farmers. Modern farming has changed, Mr. Auer said, and the system's lenders would like to have more flexibility to lend to businesses and cooperatives that serve farms, whether or not they are exclusively owned by farmers.
"The proposals we will lay out are pretty modest," he said. "It is to get the flexibility to serve agriculture and rural America today."
But banking industry advocates say these proposals are an attempt to move the Farm Credit System further away from its legally defined mission.
The Farm Credit System's lenders do not pay federal taxes on the income they earn from long-term real estate loans. Though they do pay state and local taxes in some states, bankers argue that the federal tax exemption gives them the ability to unfairly undercut private-sector lenders in the competition for agricultural loans.
Bert Ely, a consultant in Alexandria, Va., and a longtime critic of the Farm Credit System, said it should be serving small farms and beginning farmers but that many of its lenders are financing well-to-do farmers and ranchers who would easily qualify for bank loans.
Any effort to broaden the Farm Credit System's powers would be met with fierce opposition, he said. "It is highly unlikely [that Farm Credit lenders] will get what they want through amendments slipped quietly into the farm bill, because the bankers are raising hell about this," Mr. Ely said.
But bankers will not just be playing defense on Farm Credit-related matters.
Mr. Ely last month released his own report, prepared on behalf of the American Bankers Association, that called on Congress to privatize the system. He and the ABA are also asking Congress to require Farm Credit lenders to register and file reports with the Securities and Exchange Commission or disclose enforcement actions imposed by their regulator. Mr. Ely pointed out that the Farm Credit System is the only government-sponsored enterprise that does neither.
The House Agriculture Committee's Ms. Kowalski said that if specific language or bills were offered, they could be considered. But if a debate does happen, she said, it should answer whether the system's lenders are adequately meeting the needs of U.S. agriculture. "If they're not, that is when we go into how do we make this better and how do we change it," she said.
