Thought Leadership Thursday
Supporting Ohio’s Agriculture Community During Challenging Economic Times
Thought Leadership Thursday Article
Agriculture is the backbone of Ohio’s economy. But recently, farmers across the country have faced skyrocketing inflation and massive supply chain issues. From rising energy costs to the soaring price of fertilizer and seed, the agriculture sector faces no shortage of dilemmas heading into this year’s growing season.
For more than 30 years, Ohio’s Ag-LINK linked deposit program has helped farmers and agribusinesses drive down the cost of doing business by providing interest rate reductions on new or existing loans. Borrowers use Ag-LINK to finance upfront operating costs for feed, seed, fertilizer, fuel, and other expenses.
The program operates much like the other linked deposit programs in the Ohio Treasurer’s office - farmers and agribusinesses start by working with an eligible lending institution to apply for a loan through Ag-LINK. Once the loan is approved, the Treasurer’s office deposits funds with the lender at a below market rate. The lender then passes those interest rate savings onto the borrowers via a reduced interest rate on their loan.
Ag-LINK is, by far, our office’s most popular linked deposit program and we’re proud to provide this needed assistance to Ohio’s farmers. However, in response to the recent challenges confronting the agriculture sector, the Ohio Treasurer’s office sought new ways to modernize the Ag-LINK program. In my travels around Ohio, we’ve heard about farmers’ borrowing needs that go beyond the lead-up to the growing season. To better support them, we are moving – for the first-time ever – to a year-round application period so Ag-LINK is there when they need it most – whenever that may be.
Additionally, our office is working with the Ohio General Assembly to make necessary updates to Ag-LINK that will further help the program to keep pace with the diverse borrowing needs of the agriculture community. As part of our broader Ohio Gains initiative, we have proposed adding agricultural cooperatives (co-ops) as eligible borrowers and removing existing loan and program caps to provide borrowers with greater flexibility.
The challenges faced by co-ops are not unlike those experienced by other borrowers and making them eligible further recognizes their contributions to Ohio’s economy. Additionally, removing the overly restrictive caps (which are currently in statute) will ensure Ohio’s agriculture community has access to lower-cost capital when it’s needed most. The Ohio Gains proposal recently passed unanimously in the Ohio House, and we’re actively working with legislators to ensure this important measure clears the full General Assembly.
During these challenging economic times, the Ohio Treasurer’s office remains committed to implementing new and innovative investment strategies to secure a more prosperous future for the Buckeye State. Through the modernization of the Ag-LINK program, we can create significant cost-savings opportunities and provide further support to Ohio’s agriculture community.