US farmers in Iowa are asking their senators to try and change the way that the US Farm Credit system operates to allow it to loan money to ethanol plants that are not majority owned by farmers. According to Domestic fuel.
On the face of it this sounds silly to me. As one of the signatories to the letter sent to the senators put it…
“We understand the struggles of expanding the ethanol and biodiesel industry and trying to keep it profitable in changing economic times,” he adds. “Rising input costs and other factors are creating increasingly smaller margins for ethanol and biodiesel producers.”
In the UK at least, the banks prefer to loan you money to buy an umbrella when the sun is shining. If margins are shrinking and input costs are rising you are not going to have a compelling case to take to the banks.
Jim Schipper, is president of American State Bank at Osceola and current chairman of the Iowa Bankers Association. He explains that the Farm Credit System has preferential tax treatment and access to funding at interest rates a commercial bank is not eligible to get.
“That’s fine as long as Farm Credit lenders are within their mission–providing credit to farmers,” says Schipper. “But this expanded horizons idea goes way beyond that. If they want to finance enterprises that are not farmer-owned projects, then they should have to discontinue their federal support.”