Alabama Farmer Faced Foreclosure Despite No Missed Payments, Sues Biden Over Farm Credit Board Appointments

An Alabama farmer and attorney has sued President Joe Biden for his failure to appoint members to the Farm Credit Agency Board. The suit itself is just one tentacle of a larger underlying issue within the Farm Credit System that small farmers rely upon.

Dustin Kittle is the plaintiff in the suit and says the government has been behind the death of the family farm in the United States. He has a personal story that started in 2021 involving Alabama Farm Credit (AFC), which he says extorted him out of his home by threatening foreclosure on his farm even though he never missed a single loan payment. The Farm Credit Agency (FCA) ruled that AFC violated federal law, including “1) retaliation in violation of the Equal Credit Opportunity Act; and 2) sending an improper distress notice with a threat of foreclosure in violation of the Farm Credit Act.” The only problem is that the investigation took 655 days to complete. Meanwhile, Kittle had to sell his cattle and his home because AFC was threatening foreclosure, including on his Tennessee farm and his family farm in Alabama.

People are probably not familiar with being threatened with foreclosure for never missing a payment, but farm credit loans have different rules than typical bank loans. The agency is also connected with large corporate meat producers like Tyson. All secured loans have some collateral, usually just the house and/or property. However, farm credit loans ask for additional collateral to ensure the borrower has enough funds to make the next payment. These funds come from the clients of the borrower, which is usually Tyson for poultry farmers. When Tyson writes a check for the chicken provided by the farmer, they send from one-third up to 65% of the total payment directly to the local farm credit chapter, which was AFC for Kittle. This is held in an account as an additional form of collateral to ensure the farmer doesn’t default on the loan. More than a quarter of the farm credit loans are government-insured. That means the loan company has three forms of protection for some loans, including the property collateral, the government insurance, and the assignment agreement.

“The problem is most of these farm credit loans are set up on bi-annual or annual loans,” Kittle said. “They might figure that assignment so high, it’s more than what that payment is going to be. They know they’re not supposed to be holding deposits.”

Kittle said there was a memo in the 1990’s that instructed lenders to deny farmers access to their own money to prevent a surplus of farmers attempting to withdraw their cash when farm credit doesn’t have that cash on hand. The collateral agreement should only collect enough so that farm credit has the funds to cover the farmer’s next loan payment. These agreements hold the borrower’s money, and they often hold enough to cover years’ worth of loan payments without allowing the farmer to withdraw those funds. Kittle is representing other farmers in court who are going through the same AFC extortion process that forced him to sell his family home and cattle. He has a client named Dwight Brooks, who the AFC admitted had $65,000 of his funds in the account that he is unable to access. Brooks said he wanted to retire as a farmer but needed to go back to driving a truck to make ends meet. Another client of Kittle’s has over $100,000 held in that account and is unable to buy groceries.

The lender asks the borrower what they are going to use the money for if the farmer asks to withdraw funds from their collateral account. If the borrower doesn’t provide a “good reason,” then they don’t let them withdraw the funds. Kittle said that farm credit has turned the collateral assignment into an absolute assignment. They have liquidated funds the borrowers provide that are repackaged into loans back to entities like Tyson. Tyson can leverage those funds into expansion efforts while small farmers are extorted for cash and have difficulty buying groceries for their families.

“They turned it into an absolute assignment to where that lender has become a partner with a poultry farmer,” Kittle said. “When the poultry farmer gets paid, the lender gets paid. It doesn’t make a difference if that lender is owed money or not. Somehow a lender, a lawyer, a corporation is taking money that should belong to a farmer, and they’re screwing them out of it.”

Kittle stressed that the farm credit system was intended to help small farmers succeed, but it has instead been used as a tool for corporate conglomerates like Tyson to gain more market share based on the labor of the small farmer. The latest USDA census data compares 2022 data to 2017. In these 5 years, the number of family farms dropped by 141,227, a total of eight percent. In the same time frame, corporate farms increased by 10,808, a total increase of 9.25%. Most farmers must rely on off-farm income to stay in business and pay the bills. In 2017, 56% of farmers had a primary job off-farm, which indicates that small farms are not an advantageous venture for most. Meanwhile, Tyson has continued to expand with multi-million dollar investments, including $58 million in Texas and $83 million in Kentucky. 

Kittle’s story is just one example of a small farmer who has been harmed by the government’s failure to regulate the farm credit lending system. He said he received an extortion letter from AFC in November 2021 and had 90 days to respond. He was asked to provide a list of all his clients so they could increase the collateral assignment he was paying for his loan. Later, Kittle was bribed $1.2 million by AFC to drop the borrower clients that he had been representing against AFC. The bribe also included a condition that he would become a consultant on behalf of AFC. This would prevent him from speaking out or suing AFC, so he denied the bribe. It has now been revealed that the lawyers will not be sanctioned or disciplined for ethical violations because Kittle did not accept the offer. AFC is a co-op in which the borrowers are the company stakeholders. This is the same with each chapter of farm credit around the country that is supposed to be regulated by the Farm Credit Administration. It is Biden’s duty to appoint members to the board so the FCA can regulate lending institutions properly so that banks do not exploit borrowers/stakeholders/farmers.

The Farm Credit Council is a national trade association non-profit that receives membership dues from farm credit borrowers to represent the Farm Credit System. The Farm Credit System is the nationwide network of state-run farm co-ops where lending institutions provide loans to farmers. They say their financial records are available upon request. Kittle’s lawyer, Ashley Posey, requested the documents from the Farm Credit Bank of Texas but was referred to their lawyers. She asked the Farm Credit Council for their documents and was stonewalled. She shared documents that show the Farm Credit Council received $1.5 million as a loan from the Farm Credit System and paid their CEO $976,100. President Biden’s legal team filed a motion to dismiss on several flawed points, according to Kittle and Posey. Biden’s lawyers say that the three equal branches of government do not allow the judicial branch to compel actions by the executive branch. They further argue that appointments to a political board are not exceptions to the separation of powers doctrine. Posey said this does not hold water because they are not challenging a specific appointment made by Biden but the fact that no appointment has been made to the FCA. Biden also argues that Kittle has not been harmed by the lack of appointment to the FCA, but Kittle’s story is outlined in detail in the lawsuit.

Another argument made by Biden’s lawyers is that he doesn’t have authority over the decisions of “rogue actors” in Alabama. However, the president appoints members to the Farm Credit Administration Board, which oversees the Farm Credit Administration. The FCA oversees Alabama Farm Credit, the co-op agency Kittle says extorted him beginning in August 2021. According to Kittle, because Biden failed to appoint members to the FCA board, farmers facing extortion schemes have no recourse. The program intended to help small family farms succeed is destroying them.

“The family farm has a completely different set of needs than the corporate farm does,” Kittle said. “Farm credit has been used to fund entitles like Tyson Foods. It creates a relationship with them so they can continue to grow. As those corporations grow, the dichotomy you see is that our government is funding what is effectively the destruction of the small family farm.

If a farmer is illegally deprived of their property, they have no recourse. It goes far beyond that with the government when you go to different elements of corporate capture. The huge family farm and corporation agriculture really aren’t that different. They don’t mind the regulation because they can handle this.”

Kittle has been promoting the #saveourfarms movement as he sees the importance of small family farms to provide food separate from the corporate agriculture systems. The Highwire has reported on psychological manipulation strategies in New York to reduce meat consumption and the surveillance of farmers to prevent the spread of zoonotic diseases. Deborah Birx just suggested that every cow should be tested weekly for H5N1. These are policies that may cause more harm to small farmers and ranchers if they are fully implemented.