Bankers look to provide insight on next Farm Bill

Paul Yeager   You know, a lot of things are needed to make up a farm bill. There's the titles about nutrition, there's the titles about crop insurance. Then there's the titles about the finance side of things. Hello, everybody. I'm Paul Yeager This is the MToM Show podcast, a production of Iowa PBS. And the Market to Market TV show. Gus Barker is a community banker in Newell, Iowa. He's been all around the state of Iowa working at various community banks. And right now he is with the Independent Community Bankers of America. As the chairman of their agriculture committee, he was called to testify in front of the United States Senate recently about the upcoming Farm Bill. So we're gonna find out what it was like to testify his second time, we'll find out what is the conversation like with young farmers coming into his office has that changed over his career, which started at the beginning of the farm crisis? So of course, we have a conversation about the comparisons between then and now. And how we sit are we in the same scenario, we'll talk about land prices, we'll talk about farm programs and some ways to speed up situations to help those who are trying to farm on a day to day basis. And of course, we start with sports. Because I mean, if you liked this episode, or any episode, we would really like a rating in the app store where you watch or listen and a sharing with a friend that would really mean a lot. If you ever have any feedback for me send it to me at Paul.Yeager@IowaPBS.org. Now, let's get into banking with Gus Barker. Every time I see the basketball or softball season, come along I know this audience knows I do a little bit of sports. Newell Fonda is always there, what is it with sports in your community?

Gus Barker   And we have a tradition and it starts the lower grades and it just continues up through high school, great coaching staff and and supportive administration and school board. And it's just really been fun to be a part of that.

Paul Yeager   Do you get the sense that athletics has helped the community as a whole?

Gus Barker   You know, I think that's a big part of what keeps us cohesive. In the small towns. We don't have a lot of things left anymore. In fact, one of the sad things for the Our Town of Newell is that our swimming pool can't open this year. They are just in too bad a repair disrepair and the funds just aren't there. So we have to do other things. So one thing we did to compensate is put in a new basketball court and pickleball court at the City Park

Paul Yeager   pickleball great now you're gonna dominate and pickleball too great.

Gus Barker   Absolutely. Yeah.

Paul Yeager   It's both boys and girls sports I should say it's not just the girls, the boys good football teams, boys basketball, baseball over the years. Are you from that area?

Gus Barker   I actually grew up in Pomeroy, on a small farm south of Pomeroy. So yeah, so I'm back in my home area. I was gone for about 30 years. Over in eastern Iowa. Various banks working and now came home had the opportunity. So

Paul Yeager   I think one of my Google searches said you were in Oelwein for a while where else were you?

Gus Barker   Waverly was over there and for a while over in Bennett, Iowa. That's where I met my wife over almost a Davenport

Paul Yeager   the Durant Bennett School District. I'm familiar. Absolutely. Absolutely. Yeah, near Wilton and the Candy Kitchen right off of I 80. So why banking for you?

Gus Barker   You know, I grew up on that small farm saw the Pomeroy and I really wanted to farm but we were too small. I didn't have an ag lender who was supportive at that time, I guess nobody ever called on me to help me. And we just had no land, no machinery and no capital to continue. So I took the route, that I had to sit behind the death, take an accounting degree and see what happens. And it diverted me through the school as a recommendation to a savings and loan in Spencer. And that's where I started in lending. But that was at that time, strictly real estate and houses. And I wanted to get back into agriculture. And so I started interviewing and landed a job in the small community of gallery and a bank down there. And that was good, other than it was a beginning of the 80s farm crisis.

Paul Yeager   Well, I was gonna do the math there and say I'm guessing you are pretty either you're right at the beginning of your career or a couple of years. And so what do you take from then to now when you're having conversations with people about banking

Gus Barker   You know, it's one of those things that I didn't want anybody to feel left in the dust. There was a time when I felt that nobody really cared what my career was other than my teachers and school. But as far as anybody trying to help me get into farming, that wasn't an option. So I did not want anybody to ever feel that there was a lack of understanding and somebody who was wanting them to succeed. And it didn't matter to me, what station in life anybody was that everybody gets treated with respect. And we try to solve all our problems with them together.

Paul Yeager   Listening sounds key.

Gus Barker   Very, very key. It's a lot of give and take. And, you know, and as a good lender, you start out with a business relationship, and it usually develops into something more than that you almost become part of the family. And you live through births, marriages, and even some deaths. And yeah, it's very humbling and very rewarding career.

Paul Yeager   What are you hearing right now?

Gus Barker   You know, there's a little apprehension, where's, where are we going to end up we have a little bit of drought up in our area. We have no subsoil moisture at all. We've been fortunate the last couple of years, he had timely rains that have given us decent crops, the prices have been good. And now there's a little apprehension, you know, the farm bill not done yet? What's the future going to be? where price is going to be our exports going to be there for us? How will the laws in other states affect us? And so we have so many factors in farming that can affect us that are out of our control?

Paul Yeager   Do you find that instability is always an issue I always hear, you know, we always hear on the market analysis segment that farmers want to know stability. Do you feel that that is hurting agriculture right now, without some of that stability? Short term, long term, medium term?

Gus Barker   You know, I think it's been in our lives forever. There's never been real stability. One of the things that helps us the most of the federal crop program, that gives us a safety net, we do have the access to the USDA guaranteed loan programs, which has also created some stability for us over the years. But as far as the having any guarantees, it's pretty difficult out there. I sometimes laugh with people, we don't have to go to casinos, because we gamble every year with a crop.

Paul Yeager   And in some days, I think that's good. And some days I think it shouldn't be like gambling. Right? Right. When you have that conversation with a farmer, has the conversation with a young farmer changed over the years for you? Or is it all kind of basic the same?

Gus Barker   You know, I think they're pretty much the same. Everybody's interested in getting started and they want answers. How can I get started? We happen to have a good team of lenders here. And frankly, I think we have started more young farmers in the last five years than I did probably the previous 10 years. And it's because we've become a reputation of being helpful and having the tools, knowing how to use the tools of the USDA in particular, and getting these folks available to help. So it's been fun.

Paul Yeager   So that's your bank specifically or is that industry wide?

Gus Barker   Oh, I think industry wide is it's a trend for most community banks that serve on my ag committee, but for ours in particular. I see it and it's a tribute to my lending team.

Paul Yeager   Who are these young farmers? Are they someone that has family ties someone new to agriculture, someone that hasn't had that chance before?

Gus Barker   Most of them have a family who's in the farming operation. Now. We've had a couple who had grandfathers who decided to help the young man gets started by selling them maybe a hog building and guiding them in the operation of that. Maybe they have them custom farm some of their land for them to get started. But in general, there is some type of an experience level there with family. 

Paul Yeager   Do you find families are helpful to have that history or I suppose it's a unicorn when somebody comes in, absolutely 100% New to agriculture.

Gus Barker   Yeah, it's unusual. I have seen it happen over the years where city kid came in and said he wanted to start farming. And by gosh, we did get him started with an 80 acres. And he borrowed the owners, machinery to get it done. And again, he had a little bit of help by the use of that, but right out of the blocks, he was a city kid, and now he's pretty successful farmer in eastern Iowa. But it is kind of unusual to see that fresh out of the gate, somebody new.

Paul Yeager   You mentioned, an Ag Committee, you, you've traveled around been a lot of places, which gives you a great perspective, I always was fine. But you've gotten involved with the Independent Community Bankers of America, when did you start working, or I wouldn't say volunteering, but working with them.

Gus Barker Probably started working with the Independent Community Bankers more than 20 years ago, they rose to the top for me as championing my desires in small community banks. Sometimes other banking, trade organizations get indebted to the large banks who pay a lot of dues. And so they have to be very politically correct as to what their statements are the Independent Community Bankers are the only organization that truly are dedicated to community banking. And, you know, our numbers keep shrinking over the years. And we don't like to see that we fight for our survival. And we've been very successful. I started on the Ag Committee, probably 10 years ago, I've been chairman of the ag committee now for three years. And that is a committee comprised of bankers, ag bankers, from across the United States, about 30 of us. And 20% of that committee rotates every year. So we get a real diverse opinion base of what we're doing.

Paul Yeager   Any consistent messaging across the ag bankers specifically.

Gus Barker   You know, I think we're pretty consistent. You know, we all fight the same battles. Some of us have droughts, some of us don't. And it's the normal things that we do get involved with. We're all concerned about the farm bill. We just had a meeting in Washington, DC as a committee, and we were able to present our ideas to the Senate Ag Committee on what we thought should be in the farm bill on the Ag side, and I think all of our committee is in pretty much in agreement on things.

Paul Yeager   We'll get to your committee work on the farm bill, because I do want to get into some nuts and bolts of that. But I'm always intrigued by the banker in Washington State, and Idaho and Iowa and Florida. You've said whether twice now when we've talked about things, so it's it's not depend. It's not crop specific in the weather impacts all the crops? I mean, that's the obvious thing.

Gus Barker   Right? Well, I believe in livestock, our friends in Montana, had such a drought that they were liquidating their cow herd. Last winter, they had tremendous snows, and some spring rains. And so now they're rebuilding those. But in the meantime, I had a customer that was buying those Montana cows. And it worked out fine for us out here. But that's the kind of thing that that goes on, where it affects one person one year, the next year, they're in good shape and another person gets affected.

Paul Yeager   So I guess weather does tie us all together. But also when you mentioned on the committee side of things, are there banking is such an old industry? How is it that you do you come up with new ways to help farmers? I think you mentioned you utilize what tools USDA has, but are there new ways that what they're doing out west or in the South? You can learn from in the Midwest, or is the Midwest teaching the others?

Gus Barker   Well, I'd like to think we're pretty innovative out here. I know the state of Iowa does have a state tax credit program for people who help a young farmer get started. There's an income tax credit, I believe, for five years where the landowner can take advantage to help somebody get started. That's a unique thing to Iowa, I understand. But the USDA programs are very good and we've been able to use them however we're proposing in the new farm bill Maybe there should be some changes to those, we've offered up what was called an ag Express program, which would have a turnaround program of 36 hours, a $1 million limit and maybe a 50 or 75% guarantee. And it is a lot better system than the 60 day approval. You know, a lot of these things need approval quickly. And to wait 60 days, sometimes our young farmers don't have that ability to wait. So we feel that would be a tool that we could use. The other thing that we're proposing is maybe increase the limits. The limits right now are somewhat just over 2 million. And we're proposing that for farm ownership loans, maybe we have a three and a half million dollar loan limit for the farm ownership and a $3 million limit under the USDA guarantees for the farm operating. And at the testimony I had, every panelist was pretty much in agreement with those limits. So we're hopeful that the senators and congressmen would go along with us on that, are those

Paul Yeager   increases more tied to inflation or tied to size of operations?

Gus Barker   Now they're tied to inflation. And they were supposed to keep up, but who in the world would ever predict our cost of land to be where it is now? And of course, going through the 80s, I have this big fear, will there be a bubble, but we just don't see that it just keeps going and going. So it that's the main thing is is inflation has taken things quicker than the rate projected for those.

Paul Yeager   Your role with the ICBA allowed you to testify in front of the Senate. Was that your first time testifying in DC?

Gus Barker   No, actually, I did that in 2016. I was at a Senate hearing, I believe that one was on the Farm Credit System.

Paul Yeager   And what were similarities in the two experiences.

Gus Barker   Oh, they were they were quite similar. And you know, when you see it on TV, it's what it is. You said that those tables with the microphones in front of you and the elected officials are up on the desks above. And they're allowed to ask any question that comes to mind. So you really have to be prepared to answer most of those questions and or have a source later to do that. But you present a written testimony, which if you read the whole thing would probably be about a 20 minute timeframe. But they give you five minutes to condense that down. And you have a timer right in front of you and begin to flash on your time getting toward.

Paul Yeager   So yeah, we have William Cole on a couple of weeks ago. And he says, yeah, that clock thing that that light kind of threw me off. And he says I had to put the foot down on the pedal and fly through. And for a Mississippi guy to talk faster. That's a challenge.

Gus Barker   Oh, heavens, I don't know how he could do it.

Paul Yeager   Is it and I've watched enough hearings. I don't know if the audience sits there and watches C span enough to know the the senators will come in and out of the room. And some may ask some of those same questions that you've already answered. Do you like when you get the same question multiple times?

Gus Barker   Oh, I guess I've just come to realize that that's the way the system operates. They come in and out because they have other committees. I think the day that I testify, there were five or six other hearings in that building, where they were on multiple committees and needed to come and go. Their staff, however, usually stays in the room and is picking up on things listening intently and and fills them in on anything that they're unaware of. So,

Paul Yeager   and that's what I said with William, the staff is really who you are having the most correspondence back and forth with is was that accurate?

Gus Barker   Yes, I think that's a pretty accurate statement. You know, these young people that are out there working are the ones that take the time to read every word of every bill or every proposal that comes and they have a solid grasp of what's going on out there and keep our senators and congresspeople informed very well.

Paul Yeager   Do you, or I'm sorry, have you had a follow up questions since your testimony from one of those staffers?

Gus Barker   I do I have a couple apps to work on yet and submit tomorrow. So they were just just expanding on some of the things that we talked about. So they have the right to submit those. Believe it's with after two weeks, and then we provide the written answers that get put in the record. Oh, they do get put in the record. That's what I thought. Yes, they do, they get put back in the record, and everyone is notified of the answers.

Paul Yeager   So your prep work who's helping you the most with your prep?

Gus Barker   Well, since I was representing the ICBA, community bankers there, we have one of the best ag divisions there. Mark Scanlon is our ag liaison. And I had another young man working with him with ICBA. And it was pretty intense. You know, I'm representing all of our community banks, the 6000 community banks out there. And so you don't want to come across as an idiot. And so we did sit and study and study and I had many emails back and forth. So I could understand the topics well, and present them for us.

Paul Yeager   By but at one point, when you have all these voices in your head, you have to at some point, you fall back to what it is that you're doing in Newell, Iowa.

Gus Barker   Oh, yes, yeah, yes, yes, we're there to take care of our customers. And, you know, this was part of the big picture. Many of these things affect us. And, in fact, one of the items is what's called pan 71. It's a number that we we talk about in the banking industry. But what that is telling us is it is a new proposal that says we have to go and gather all the information of a small business loan, which is not defined, we're not sure if it includes ag loans or not, but small business loans, and publish that it could be their name, address, personal information that we're trying to fight to get that repealed. We don't want that personal information out there that everybody can see. And understand, oh, there's a new loan. And John Doe just got that I can tell it's him by the personal information. So all of these things that we fight at the national level trickled down to us. And that's why it does affect us out here. And in my four communities,

Paul Yeager   I would think it would and you, you mentioned some of the things you'd like to see changed, what would you like to see carry over from previous Farm Bills?

Gus Barker   Well, obviously, the crop insurance is, is the biggest thing. There may be some tweaks that need to be done fine tuning in the formulas they use and stuff. But in general, that is a successful program. And it does give us a safety net, we have to make sure there's adequate funding in the programs that are out there. I know there are some dairy programs that the dairy people survive on and without those, we would lose our dairy folks. You know, we want to make sure the USDA guaranteed loan programs are still in place. And we you know, with the suggested enhancements, I think they would be wonderful, the Ag Express loan pattern after the SBA loan that they do in 36 hours, that's identical. So there is an example of how that can happen. We want to make sure that maybe some of our competitors don't overstep their bounds. There's a proposal from the Farm Credit System that they want to be able to make loans for essential services in small communities, or nonprofit as well as for profit entities. And that just takes more business away from the local bank. And we have such regulations that we have to abide by that are not the same for other lenders. And so we would like to have a level playing field for something like that. Another one of our proposals is a bill that was co sponsored by Randy Feenstra. Representative in Iowa called the acre Bill AC R E. What that does is it allows us to make loans to agriculture and real estate loans in communities under 2500 people and that interest would be tax exempt that would save that borrower anywhere from one and a half to two and three fourths percent interest on that loan. And that would be a great savings for beginning farmers especially, but also our community the you know, we don't have a lot of source source of revenue out here in these small communities of 500. That was, yeah. So that's another thing that we're proposing as well.

Paul Yeager   You've mentioned a couple of times the the speed of some of these loans that you'd like to see increase, what are the scenarios that the trigger those things? I mean, is it a? Is it an event like a DeRay? Chico? Is it an event like a market collapse, where we lose $2? In, you know, in six days, what is that triggering scenario, that you're talking about where the speed is needed on some of the turnaround of some of these emergency loans?

Gus Barker   I think some of the stuff, I would say most of it is probably in purchasing things. There's so much competition, if there is a 40 acres, for example, next door to a beginning farmer. And there are multiple offers out there, you know, they're not going to wait 60 days to say, oh, maybe he can get a loan, maybe he can't. So as long as we can have that commitment for them, and then work to get it funded, pieces of machinery, I've seen the same thing. They were pretty scarce here for a while, good used equipment and some of the new stuff. But usually the used equipment around here. And if you don't have your checkbook, ready to write the check, it can be gone pretty fast.

Paul Yeager   I see. So it is a planned but not an emergency. I get it. I get it. I get it on on what you're talking about the operation side, because yeah, those those land sales can escalate quickly, you can be cleared to a certain level. You've had a conversation with somebody who says I think the the Johnson farmers is coming up on the corner, and you've cleared him for this. And it goes higher. And yeah, I get exactly what you're saying. Let's go back to the acre. Discussion from from Congressman Feenstra. You said Newell, is a town of 500. Right? That's Is that about right? Yeah, roughly. So in when you say 2500 and a community is is the acre. You mentioned the benefit to the farmer. The benefit to the banker? Is this Are there going to be needs need to be more programs like this that are targeting specifically communities that are under 100,000 50,000 10,000, to make sure that rural America continues to have opportunities to exist?

Gus Barker   I think that's a definite possibility. I think that these levels are probably the start of things to see how it goes. But I know from our standpoint, some of our people have struggled to qualify even for the small $50,000 home or $100,000. Home. And this would be a huge benefit for them. And again, back to the farming community, in the last six months with the raised of the Fed rates the way they are, you know, we still have loans on the books for 3%. But we're making loans at 9%. Now, so it's a huge expense for our farm community. Because of that Fed rate.

Paul Yeager   A lot of the towns you've named are smaller communities, what's the best way small, rural community at rural is just smaller communities can help rural America in general, what's what are challenges that these places are facing outside of agriculture?

Gus Barker   You know, I think one of the biggest things that I've seen is the loss population. I drive through my hometown of Pomeroy. And there are a lot of vacant lots that used to have a house and many of them had kids on it. One of the last times I was able to take my dad on a drive through the country roads. I started to turn left. He said Well, you there's no sense going that direction for eight miles. There's no foreign place left. And so that is devastating for us. We have fewer people. The needs are still there in the in the communities. But we have no resources, the volunteer ambulances, the fire departments. Can we keep the schools intact? You know, we have that problem. Now. There's a nice building sitting in Pomeroy empty and the school is 15-20 miles away. But the district runs, you know, a lot bigger than that. And so there there are many things that are needed yet, but there are fewer people that have to pay for those things. And then it

Paul Yeager   becomes the do you need industry to keep people there? Do you need housing to keep people there? Do you need the schools? You have to kind of maintain all three.

Gus Barker   Exactly. And you can't get a business in there if they don't have employees.

Paul Yeager   gotta drive 20 miles to work, a minimum wage job.

Gus Barker   No, it's just a catch 22. And all of those factors have to come together at the right time to put all these things together and very fortunate to have a strong mayor and council to better interested in keeping the town alive. And I see that in our small communities, we've got very strong leadership, I'm very proud of them. In our local towns, I've seen other communities that struggle, because they don't have that leadership.

Paul Yeager   Big part of the farm bill is not always about agriculture, in the sense of land payments and crop insurance and crop protection, but it is around food assistance. When you talk about areas that might not have high paying jobs. It's not just a city issue, it's also a rural issue, knowing that the farm bill is so heavily weighted towards the food assistance. Do you feel that when you're in there talking about that my new show that you are of the smaller part of that bill? Do you feel confident that your voice is heard, and then we'll make sure to help get that segment of the farm bill that you really need to see to help an industry knowing that it doesn't maybe carry as many dollars of influence as say food assistance does.

Gus Barker   But it's an interesting thing that you bring up because the 85% of that farm bill is non AG. So we are only a 15% piece, but that very conversation we had in Washington DC with some of the staff and the elected officials who indicated that's the reason this bill is structured the way it is because the urban areas would not vote favorably for strictly a Farm Bill. And the rural areas are not very inclined to give everything on the other side of that bill. So they combined them. I'm gonna say 10 or 20 years ago, I don't remember the date for sure. But they put them together to make sure that there was interest on both sides of that bill to get it passed.

Paul Yeager   The the rural urban partnership, the Dole/McGovern partnership, is kind of where I think a lot of those roots go back to. Are those right?

Gus Barker   Yeah, so I think you're right.

Paul Yeager   The is there, though, a way to help the two come together, more local food grown or in encouragement of a food grown in a rural area that helps on that food assistance? Do you ever get a sense I know I'm really kind of stepping out of your lane here. But just in that conversation of what can the people of Newell and Fonda and and Pomeroy do to help those in their own community?

Gus Barker   Well, an example in Newell is there's actually a community garden. They have taken a vacant lot which it sits right next to the food bank building. And they're volunteers who actually plant lettuce, radishes, other crops. And then they'll put a notice on Facebook or in the paper that hey, there's stuff ready in the garden, help yourself whatever you need, and people do. They can help themselves. So if we were able to do that in all of our communities, what a great thing that would be to supplement what we're not getting in the food banks,

Paul Yeager   and encourage all sorts of local food options and community. Fun as well. I say fun. pulling weeds is fun.

Gus Barker   It's a character building exercise.

Paul Yeager   I saw somebody posted a picture about all they're picking up a rock and I'm like, Yeah, that's a character issue to a character building exercise, too. Oh, yes. All right, Gus Parker, I appreciate your time. Thank you so very much, and appreciate your insight here on the farm bill.

Gus Barker   Thank you very much, Paul.

Paul Yeager   My thanks to Gus, because we cover all sorts of great topics. Interesting ones for me anyway. And that's why I do what I do. New episodes of this podcast come out each and every Tuesday. Like and Subscribe wherever you get your podcasts or watch the video on YouTube. That's always fun. We'll see you next time. Thank you.