Agriculture has long been the backbone of Ohio’s economy, but the last few years have been especially tough for farmers. High inflation coupled with a series of interest rate hikes have drastically increased the cost of doing business.
As we have all seen play out over the last year, the Federal Reserve raised interest rates seven times in 2022 and once more at the start of this month. This one-two punch of ongoing inflation and interest rate hikes has made it extremely difficult for the agriculture industry to plan for this year’s growing season.
While these national economic challenges continue to work against Ohio’s farmers, here at the state level, the Treasurer’s office is working for them to lower their borrowing costs and save them money.
Through our Ag-LINK program, farmers, agribusinesses, and agricultural cooperatives can receive interest rate reductions on new or existing loans. For more than 30 years, the program has helped Ohio’s agriculture industry to finance the upfront costs of feed, seed, fuel, fertilizer, equipment, and other expenses.
For family farmers and others in the agriculture industry whose profit margins are already razor thin, Ag-LINK’s interest rate reduction can make a real difference. And in the current high interest rate environment, the program is even more impactful. For the first quarter of 2023, the minimum loan discount is 2.0% — further demonstrating Ag-LINK’s ability to serve as a significant cost-saving tool in an ever-changing financial landscape.
To make the program more responsive to current economic conditions and modern borrowing needs, Ag-LINK underwent a significant revamp last year. Central to this effort was the transition to a year-round application cycle that benefits both crop and livestock farmers alike. Through this reform, we’ve made the program more accessible by ensuring lower-cost capital is available to them whenever they may need it most.
Through our Ohio Gains legislation, we also removed the outdated, statutory cap on loan size that couldn’t keep up with farmers’ borrowing needs. Now, the Treasurer’s office has the ability to react to market conditions and adjust the cap on an annual basis. The loan cap for the current year is $500,000 per borrower.
I am proud to report that these relatively recent reform measures resulted in making 2022 a record-setting year for Ag-LINK. And now, in 2023, we stand ready to put our balance sheet to work and support even more Ohio farmers this year. I encourage all farmers, agribusinesses, and co-ops looking at financing options to talk to their financial institution about how Ag-LINK can help them save. More information on Ag-LINK, including how to get started, can be found on our website at https://www.tos.ohio.gov/ag-link/.
Robert Sprague is the treasurer of the State of Ohio.
