HYDE-SMITH & WICKER DEMAND SBA RULE CHANGE TO PROTECT MISS. POULTRY FARMERS
Proposed SBA Rule Would Deny Financing Option for Family-Owned Poultry Operations
WASHINGTON – U.S. Senators Cindy Hyde-Smith (R-Miss.) and Roger Wicker (R-Miss.) today challenged a proposed Small Business Administration (SBA) rule that would deny many family-owned poultry producers in Mississippi from accessing SBA-sponsored financing.
In a letter to SBA Administrator Linda McMahon, Hyde-Smith and Wicker asked that a proposed rule to the SBA 7(a) Loan Program be modified to reflect more accurately the relationship between small growers and large producers, commonly referred to as integrators. The SBA 7(a) Loan Program is a critical source of financing for many Mississippi poultry farmers.
“These independent poultry farmers are solely responsible for obtaining financing, supervising, managing day-to-day business and paying taxes. In no way are they partners, agents, or employees of the integrator. The SBA 7(a) loan program provides essential access to financing for small family farmers,” Hyde-Smith and Wicker wrote.
“Access to capital is essential to the continued success of poultry production in Mississippi, and we respectfully request that you revise the SBA proposed rule so growers are not arbitrarily excluded from the SBA 7(a) loan program,” they said.
The Mississippi Senators were sharply critical of a March 6, 2018, SBA Office of the Inspector General (OIG) report titled, “Evaluation of SBA 7(a) Loans Made to Poultry Farmers,” which inaccurately found that large producers, or integrators, maintain control over independent operators, and should therefore be considered “affiliates” of the larger companies that buy their chickens. As affiliates, small farmers, who are actually independent registered businesses, would be deemed too big to participate in the SBA loan program. The proposed rule is based on the flawed OIG report.
The letter also stresses the importance of poultry, one of Mississippi’s leading agricultural commodities. In 2017, Mississippi’s 1,430 poultry farms produced 746 million broilers worth more than $2.5 billion value of production.
The Senators’ letter is available here and below:
Dear Administrator McMahon:
We are writing with regard to the Small Business Administration (SBA) proposed rule on Express Loan Programs and Affiliation Standards. As proposed, provisions of the rule would prevent Mississippi poultry growers from participating in important SBA loan programs, and we respectfully request that you incorporate necessary changes prior to issuing final regulations.
A March 6, 2018, SBA Office of the Inspector General (OIG) report titled, Evaluation of SBA 7(a) Loans Made to Poultry Farmers, inaccurately reflects the relationship between small growers and large producers, commonly referred to as integrators. OIG concluded loans to growers did not meet SBA requirements for eligibility because integrators purportedly exercised control over the growers through contracts, operating procedures and other requirements. The report claimed that growers should be considered “affiliated” with the integrator companies they do business with. Unfortunately, the subsequent SBA proposed rule embraces the OIG conclusions, which could jeopardize the livelihood of thousands of family farms and small businesses across Mississippi.
While large integrator companies provide certain production inputs, technical support, and establish quality criteria, poultry growers are independent registered businesses. These independent poultry farmers are solely responsible for obtaining financing, supervising, managing day-to-day business and paying taxes. In no way are they partners, agents, or employees of the integrator. The SBA 7(a) loan program provides essential access to financing for small family farmers.
Agriculture is the top economic driver for our state, with poultry representing the largest segment of Mississippi’s agricultural industry and supporting thousands of jobs. In 2017, Mississippi’s 1,430 poultry farms produced 746 million broilers worth more than $2.5 billion value of production. Access to capital is essential to the continued success of poultry production in Mississippi, and we respectfully request that you revise the SBA proposed rule so growers are not arbitrarily excluded from the SBA 7(a) loan program.
Thank you for your attention to this important matter.
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