Why is the USDA continuing loans for new factory farms?

I am a card carrying member of the Land Stewardship Project. For those of you who are unfamiliar with LSP, it is a private, nonprofit organization founded in 1982 whose stated purpose is to promote sustainable agriculture, develop sustainable communities and foster an ethic of farmland stewardship.

This morning, I received an email from them alerting me to the USDA’s Farm Service Agency policy of continuing to provide loans to build new specialized hog and poultry facilities at a time when overproduction in these agricultural sectors is leading to depressed prices, contract cancellations, abusive contract terms and increased corporate consolidation of the hog and poultry industries. This policy is a reversal of a directive issued on January 8, 1999, that suspended all direct and guaranteed loan financing for the construction of such facilities. The reasoning behind the suspension was the concern that FSA loans of this type could exacerbate the crisis of oversupply and depressed prices that were already affecting the hog industry. Shortly after assuming office in 2001, the Bush Administration re-instituted the loans, and so far the Obama Administration has continued to support this policy.

LSP’s position on this is clear and unequivocal. They believe that the USDA is siding with so called “mega-operations” at the expense of existing hog and poultry contract growers and independent hog farmers by issuing these loans. In short, they claim that these loans provide public financing for speculators whose strategy it is to expand in order to seize greater market share when prices are low while existing hog and poultry producers are being forced to reduce production in order to cut their losses in an effort to correct the market by bringing the supply more in line with current demand. They insist that these loans favor corporate-backed farming over small family farms. They further contend that this is bad public policy that puts taxpayers’ money at risk. Why, they ask, are we increasing production at a time when overproduction is creating a crisis for America’s farmers? It’s a good question and one that begs to be answered.

Full Story Why is the USDA continuing loans for new factory farms? | StarTribune.com.

OPS: Why is the FDA in the business of making loans? It’s a  bank?