Congress: Make Farm Credit System Invest in Local Food Systems

Contributor Bob Heuer Highlights the Flawed History of Federal Farm Policy

Federal farm policy is “rigged” against small- and medium-sized farmers. So said Dr. Marion Nestle — a pioneering academic advocate for a better food system — on this recent edition of the Dan Buettner Podcast.

Buettner is a longevity expert. Dr. Nestle is one of the world’s most respected nutritionists. They sit in armchairs and talk for an hour about how federal farm policy is undermining the health of people and planet.

Dr. Nestle has long championed nutrition education as a driver of healthier eating habits. She has come to realize that the success of this demand-side solution depends on supply-side solutions that reorganize the federal incentive structure to support small- and mid-sized farms.

This Buettner/Nestle give-and-take got me thinking about how to reform the federal Farm Bill revision that is now under consideration on Capitol Hill.

The commodity farm price support system that sustains the conventional food system isn’t going to just disappear, and Corn Belt farm operations can’t be diversified overnight.  Moreover, proponents of the Marion Nestle worldview tend to focus on particular aspects of agri-food, nutrition and conservation policy.

Farm Bill reformers could learn from Buckminster Fuller, the 20th century architect whose legacy includes some famous quotes. The one that animates me is this: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Building a “new model” — a new regional food system financing model — could drive significant benefit. This reform could be easily achieved.  All Congress needs to do is tweak an established U.S. Department of Agriculture program that unfortunately nobody seems to be thinking about.

Same Old, Same Old

The podcast titled “Fighting the $1 Trillion Food System with Marion Nestle” was posted the end of June. That same week, Senate Republicans introduced the “Agriculture Act of 2026.”

This proposed Senate Farm Bill overhaul is pretty much the same as the House-approved version.  Both green-light a continuation of the long-running gravy train for large commodity farmers, agri-food conglomerates and their financiers.

The lead sponsor is John Boozman, an Arkansas Republican, who chairs the Senate Committee on Agriculture, Nutrition and Forestry. Boozman presented his bill as “a discussion draft” and called on Democratic committee members to get on board.

So far, Senate Democrats are withholding support.  Referring to massive cutbacks in food aid programs, skeptics and opponents of the proposed measure say the next Farm Bill must benefit "farmers and families.”

Boozman laid plain his priority in this July 21 post on the X social media site. He’s pictured standing in his Capitol Hill office with three constituents. The tagline reads: “Farm Bill 2.0 is built for Arkansas soybean farmers.”

Thursday, August 6 Committee Vote

This Thursday (August 6), Boozman plans to bring his Farm Bill proposal to a committee vote, POLITICO’s Weekly Agriculture reports. Their August 3 story included a comment from Amy Klobuchar, the lead Democrat on the Ag Committee.

Klobuchar is seeking to succeed retiring Democratic Gov. Tim Walz and is an overwhelming favorite to win the August 11 Democratic primary.  According to her campaign website, she’s “ranked #1 for authoring bipartisan bills and #3 for passing bills into law” during her nearly 20 years in the Senate.

As for the Farm Bill, Klobuchar issued a statement to POLITICO saying that she and Boozman continue “to discuss the bill that members received. I look forward to working on the details of a bipartisan Farm Bill that can pass on the Senate floor as it will need both Republican and Democratic support.”

The sticking point for Democrats is that poke in the eye delivered last year by congressional Republicans.  For more than half a century, a grand legislative compromise bound together Farm Bill politics.  The tradeoff was “Farm aid for food aid” — meaning commodity programs in exchange for the Supplemental Nutrition Assistance (SNAP) program and other food assistance efforts.

That compromise died last summer when President Donald J. Trump and his congressional allies rammed through what they labeled the One Big Beautiful Bill Act.  OBBBA included farmer “safety-net” program enhancements — i.e. certainty for agri-food conglomerates. A wide range of social safety-net programs were pushed off on states. As it is designed, reducing hunger is no longer a primary federal responsibility.

Reducing dependence on federal funding is not a bad idea. But it’s irresponsible to try this without a plan to help state and local government ensure a peaceful transition of resources.

According to POLITICO, Sen. Cory Booker of New Jersey is encouraging fellow Democratic committee members to oppose Boozman’s bill.  Booker insists the Farm Bill should not go forward unless the federal government grants a two-year window to develop a cost-share requirement on expensive food aid programs.

Heading into Thursday’s committee meeting, Boozman apparently has agreed to a one-year extension — so far. (By the way, his home state of Arkansas is headquarters for Walmart, the world's largest grocery chain.  Federal food aid purchases through SNAP are an important revenue stream for Walmart.  Many of its low-paid workforce also depend on SNAP.)

Current Senate Committee negotiations suggest the agri-food gravy train is again ready to pull out of the station.  They also confirm Dr. Nestle’s critique of the Farm Bill as “a collection of hundreds of largely disconnected programs dispensing public benefits to one group or another, each with its own dedicated constituency and lobbyists.”

89-Year-Old Living Legend

A retired professor, Dr. Nestle has spent the last half century teaching, writing and speaking publicly about how what we eat affects our health. Her 2002 book Food Politics exposed the corporate vice grip on the U.S. food system.

The most recent of seven books was published in 2025. It’s called What to Eat Now: The Indispensable Guide to Good Food, How to Find It, and Why It Matters. The book jacket named Dr. Nestle “America’s preeminent nutritionist.”

She’s fluent in Farm Bill facts and the long-standing pattern of favoritism for row-crop growers. The two dominant crops — corn and soybeans — mainly produce fuel for vehicles or feed for animals. A small portion becomes ingredients for the cheap food economy.

Well-advertised/ultra-processed products account for 60 percent of the stuff that shoppers see on grocery shelves. This same stuff deserves a good part of the blame for diet-related illness, obesity and medical bills.

Dr. Nestle says Congress gives “billions” to commodity growers and “millions” to growers of nutritious vegetables and fruit that are perversely labeled as “specialty crops.” She bristles at the term, noting that “specialty crops” is government speak for “actual food for people.”

Federal policy, Dr. Nestle explains, should be incentivizing local markets and production of fresh fruits, vegetables and nutrient-dense food. A number of small and fragmented federal grant programs have been established over the past couple of decades. Yet, the net effect has been to essentially nibble around the edges of unmet consumer demand for increasing the availability of farmers-market-type products in wholesale supply channels.

The need is for a “competitive system” into which small and mid-sized farmers can sell their products.

Realizing Marion Nestle’s Dream

Better than direct subsidies to individuals or groups would be an investment strategy enabling the entire regional food system to make best use of federally subsidized money.  A vehicle for this already exists: the Farm Credit System.

This quasi-governmental national network is the largest U.S. farm financier. In 2025, Farm Credit netted $8 billion in profits on assets totaling $456.9 billion.

A key revenue source appears to involve commodity farm bailouts. The federal “ag safety net” spend exceeded $230 billion between 2017-2025.  During a decade when many farmers used this ad hoc bailout money to pay off debt, Farm Credit’s annual profits soared 75 percent.

Congress could direct Farm Credit to use a portion of its profits to put wind into the sails of the Regional Food System Partnership Program. RFSP was authorized through the 2018 Farm Bill that President Trump signed into law. The intent was to catalyze investment. But policymakers didn’t appear to put much thought into ensuring that limited public resources would in fact leverage larger pools of private capital.

USDA administers RFSP as part of another 2018 Farm Bill add-on — the Local

Agriculture Market Program. LAMP aligns several established federal grant programs for farmers markets, local food and value-added producers. LAMP doesn’t shine any light on how individual grant projects unleash the systems-wide investments envisioned by RSFP.

RSFP was initially funded at $10 million a year. The Boozman draft of the Farm Bill maintains that number.

Farm Credit is written into the law but almost as an afterthought. Prospective RFSP grantees are directed to do a number of things, including collaborate with any (or all) of six “eligible partner” cohorts.

No incentives are specified for projects that tap expertise from each of the six eligible partner cohorts. Nor is there any direction or discussion about the unique nature of two potential partner cohorts that could put money into the project. Instead, they are separate entities listed as “philanthropic organizations” and “commercial, Federal or Farm Credit System lending institutions.”

Farm Credit has the reach, savvy and resources to seed funding frameworks capable of scaling regional food systems. What this creature of Congress doesn’t have is a directive from its master to do what it was created to do.

Farm Bill Origin Story

In his 1913 State of the Union address, President Woodrow Wilson congratulated Congress on its imminent passage of the Federal Reserve Act. He then asked lawmakers to improve farm finance through legislation to facilitate credits needed by all “the farmers of the country.”

Congress answered with the Federal Land Bank Act of 1916. This law gave rise to the Farm Credit System. Ironically, large commercial farmers initially steered clear of what they viewed as a government program. Smaller credit-starved farmers jumped on board and, by the mid 1920s, thousands of Farm Credit lending associations dotted the countryside.

The rise of the conventional food system after World War II, combined with the mechanization of agriculture that greatly reduced the number of family farmers, turned the dynamic on its head. Today, there only 55 Farm Credit lending associations across the nation.

A century ago, Farm Credit gave rise to a new federal funding structure — the “Government Sponsored Enterprise,” or GSE. The second GSE, Federal Home Loan Banks, was founded in 1932. (Then came Fannie Mae, Freddie Mac and most recently Farmer Mac.)

Like other GSEs, Farm Credit enjoys hefty federal tax breaks. Its lendable capital is secured at a low cost on Wall Street thanks to an implicit federal guarantee. (Farm Credit got bailed out once — and then repaid with interest a 1987 federal aid package totaling nearly $1.5 billion.)

Farm Credit Must Stop Dodging Responsibility

In 2022, two Democratic U.S. House members — North Carolina’s Alma Adams and Ohio’s Shontell Brown — led the charge to get Farm Credit to invest in next-generation agriculture. The Congressional precedent is a grant program run by another GSE.

The 1980s collapse of the savings-and-loan industry led Congress to approve the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Included was a provision requiring Federal Home Loan Banks to invest 10 percent of annual profits for an affordable housing program. FHLBanks have awarded $8 billion in funding to non-profit groups supporting construction of 1.1 million housing units since the 1990 launch of its Affordable Housing Program.

Adams, Brown and other Democrats asked the General Accounting Office (GAO) to assess the potential of a Farm Credit-funded program. Their idea — a blend of grants and interest-rate subsidies — could do a world of good in the farm sector.

Emerging farm populations need help buying farmland. Technical assistance programming could equip many new farmers with the skills to become creditworthy.  Robust investment in systems approaches could even help corn and soybean farmers.  After all, promoting the purchase of locally and regionally produced foods could create incentives for established farmers who are too locked into federal commodity programs to diversify their operations.

GAO released the requested report in December 2023. In a subsequent interview, the report’s authors conceded to me they could have done a more thorough job. 

GAO didn’t consider, for example, how a Farm Credit-funded grant program could become the leveraging mechanism to enable the four-year-old Regional Food System Partnership program to achieve its goal to maximize a return on public grant dollars. Report authors did not talk to Federal Home Loan Bank officials about the impact of their nearly four-decade-old Affordable Housing grant program.

The GAO did appear to spend a lot of time with Farm Credit officials. The report considers the impact of a Farm Credit grant program tapping either 5, 10 or 15 percent of profits. Farm Credit officials were adamant. They claimed Congress should impose no grant fund requirement at any level due to the “unique risks in the agricultural industry.”

An FHLBanks spokesperson read the GAO report and told me Farm Credit’s arguments sounded like what FHLBanks lobbyists likely told Congress in 1989. FHLBanks had opposed the Affordable Housing Program. Yet, decades later, he said that the 10%-profits mandate has proven to be a wise idea as it forced this quasi-governmental agency to “innovate.”

National Affordable Farming Program

Given the size of agriculture’s GSE, a Farm Credit-funded affordable farming program could be more impactful than FHLBanks’ Affordable Housing Program. (Remember that over the program’s 35-year existence, FHLBanks awarded grants totaling only $8 billion.) Based on 2025 earnings, five percent of Farm Credit annual profits would mean $400 million; 10 percent would be $800 million; and 15 percent would be $1.2 billion.

A Farm Credit funding requirement in the Regional Food System Partnership program would prime the pump for collaborative investment combining public dollars with philanthropy, community and commercial banks, community development financial institutions and impact investors.

As Congress envisioned in 2018, an effective RFSP program would enable a more effective impact for the three established grant programs. In turn, a better organized funding sector could spark the market forces to grow the impact of myriad other public grant programs.

Two decades ago, USDA ran exactly one local food grant program. Today, 30 overlapping USDA programs provide grants, loans, and technical assistance in the local food space.

A better organized funding sector could help realize Dr. Nestle’s dream of community food networks across the land committed to improving soil health, water quality, public health and local economies. It would also help Farm Credit System more effectively deliver on Woodrow Wilson’s request that Congress create an agricultural finance system serving all of “the farmers of the country.”

Bob Heuer is director of HNA Networks, an Evanston, Illinois based consultancy that supports the growth and development of regional farm and food economies.  Last month, the National Association of Counties (NACo) adopted a “Good Food For All” policy authored by HNA Networks for Will County, Illinois board members.  The NACo policy urges neighboring counties to collaborate on funding strategies to grow local food systems.  From 2004 to 2011, Bob consulted for Farm Credit’s Washington lobbyist, the Farm Credit Council. He can be reached at bob@hnanetworks.net.