Representatives of the Wyoming Stock Growers Association told the Joint Agriculture Committee on Oct. 31 that changes to the state farm loan program and a proposed action by the State Loan and Investment Board could sharply reduce the program’s usefulness as a safety net for agricultural producers.

Mister Magagna, introduced to the committee as a representative of the Stock Growers, described two program components: a regular farm loan program historically offered at an 8% fixed rate and a beginning farmer-and-rancher program offered at 3% for up to 10 years before converting to the regular rate. He said the legislature previously authorized $270,000,000 for these programs; recent sessions reduced that to $50,000,000 available for farm lending.

Why it matters: Magagna said the combination of a smaller pool of capital and proposed new SLIB credit rules could make the state program unavailable to many borrowers. That would remove a financing option that Stock Growers and others view as a backstop when private credit is not affordable.

Details and department position: Magagna told the committee the beginning farmer program currently has “just slightly over $15,000,000 out in loans,” while the regular program has “almost nothing.” He said the legislature’s reduction of available funds from $270 million to $50 million reflected an intent to let the uncommitted pool be invested for greater return by the state treasurer.

Magagna summarized two actions he expected the State Loan and Investment Board to consider at a special meeting the next day: first, a proposal to recommend approving regular farm loans only if commercial interest rates exceed 18%; and second, for beginning-farmer loans, to underwrite borrowers assuming that any loan years beyond the initial 10-year low-rate period would carry a 20% interest rate for credit-worthiness calculations. “If we get to 18% interest rates, we're all in a lot of trouble,” Magagna told the committee. He said the 20% assumption would disqualify many beginning borrowers because it is difficult to prove the ability to pay at that extreme rate a decade into the future.

Committee follow-up and next steps: Committee leadership directed staff to consult fiscal staff and review the cap-fin bill the committee passed last year to determine whether that cap applies past 10 years on interest-rate calculations. Magagna said the Stock Growers’ position is that if the program begins to reach the new $50 million cap the association will return to the legislature to advocate for an additional allocation.

What was not decided: The committee received Magagna’s notice and asked staff to research the legal and fiscal implications. No formal motion, vote, or change to statute was made during the meeting. Magagna said he would raise the concerns at the SLIB special meeting and the committee asked staff to report back at the next interim meeting.