CHICAGO — Zach Ducheneaux is a child of farm financial crisis of the 1980s, when farmers were dealing with rising inflation, rising interest rates, uncertainty in the markets and weather events.
“About 1986, I had just graduated from high school and we were loading our cows on the trucks, but this time it was different because we were liquidating the cow herd,” said Ducheneaux, administrator of the U.S. Department of Agriculture’s Farm Service Agency.
“The Production Credit Association stopped lending in Indian country because of a couple bad apples and they withheld operating credit from my old man,” recalled Ducheneaux during a keynote presentation at the Agricultural Conference hosted by the Federal Reserve Bank of Chicago.
“I’m from the Cheyenne River Sioux Reservation located in South Dakota, but not by choice.”
This withholding of capital that was needed for the family to continue the ranching operation started a cascading effect.
“Pretty quick the Farmers Home Administration needed to get paid up, too, but we were able to keep the land together through the sheer force of will on my dad’s part,” Ducheneaux said. “So, we had to start over and dad was 51, with seven kids.”
“That will help you understand the formative processes that helped develop the philosophies I’m trying to bring to bear as your administrator to FSA,” he said. “I’m a public servant and I believe strongly in that.”
The FSA administrator said he is proud to lead thousands of public servants across the country located in 2,100 offices.
“I get to do the things I never dreamed I would do as we were standing there watching the cows get on the truck,” he said.
Ducheneaux remembers the day he saw his dad looking at tires in the junk pile at their ranch.
“It turns out we were looking for the best worst tire in the place because we needed a different tire on the pickup so he could go to town and implore the grocery store owner to carry him on his word so he could continue to feed us,” Ducheneaux said.
“Had he not done that, my story would have been a lot different,” he said. “We would have left the ranch, lost the land and I wouldn’t be here today.”
“We owe our existence to one grocery store owner because the lenders wouldn’t do it,” he said. “Dad true to his word paid him every dime with interest and kept his kids in school.”
Farmers and ranchers should not have to be stoic to financial institutions, the FSA administrator said.
“They can be that resilient against weather, markets or animals that don’t want to go in the gate you want them to go in,” he said. “But we’ve got to do a better job as a country in providing financial support for our producers, especially the beginning, young and socially disadvantaged farmers.”
Ducheneaux attended the University of Minnesota, Morris through a tuition-free program for Native Americans.
“There’s no way I would have gone to college if I didn’t have that opportunity,” he said. “I spent from 1987 to 1993 dropping out of college because I was always drawn back to the ranch.”
As his dad needed more help, Ducheneaux and his brother took turns taking a quarter off of college and returning to help at the ranch.
In 1993, Ducheneaux wanted to join his dad in the ranching operation, so he went to six different banks.
“My dad had equipment and access to land, but I was turned down for a loan to buy some cows with a 90% guarantee from the Bureau of Indian Affairs,” he said. “Those lenders unwillingness to serve where they should really motivates everything I do today because that still happens.”
The young cattleman received approval for an equity grant program offered by the Bureau of Indian Affairs.
“I received 25% equity in my perspective operation, which was cattle, and then I took that commitment to four banks,” he said. “Not until I went to the bank where my dad got repositioned in the industry and they knew our place that I was able to do it.”
Ducheneaux was working as the executive director of the Intertribal Agriculture Council when he received an email from the Biden-Harris transition team that said he might be interested in serving in the administration.
“I wasn’t looking for a job because I had my dream job that I thought I’d retire from,” he said. “But you have to put up or shut up and I’m not ready to shut up yet and I don’t know if I ever will be.”
In his letter of interest, Ducheneaux included his philosophies.
“I put together a resume with my accomplishments to hide the fact that I’d dropped out of college in 1993 and I said if I’m selected I’ll be there on Inauguration Day,” he said.
“I truly believe the ag finance system in this country is broken,” Ducheneaux said. “Otherwise we wouldn’t have 57-year-old producers trending upward, we wouldn’t have increasing farm debt since 1993 up 4% per year and we wouldn’t have farmer and rancher stress assistance networks as a matter of federal policy.”
In February 2021, Ducheneaux started working as the FSA administrator.
“It has been one of the great honors of my life,” he said. “The day I went into that building I wore my dad’s vest.”
The FSA administrator’s “grand vision” is a system of ag finance that is an investment in the ag producer that has a return that covers the cost of capital and has repayment terms that are dictated by the producer.
“If we have an investment that’s paying for its own cost, meeting some of our other needs and the producers can pay it back at their comfort, we’ve eliminated a lot of their stress,” he said.
The USDA makes significant investments in conservation practices, value-added ag development systems and nutrition programs.
“Imagine a world where we invest in producers and they pay a return that covers the cost of capital in either cash from production income or they take that income and do their own conservation practice and we count that as payback of some of that investment,” Ducheneaux said.
“So, we’ve generated a return which is paying down the national debt and we have offset an expense which is paying down the annual deficit,” he said.
“Currently our system is perfectly designed for an ever-aging rancher and farmer, more consolidation and increasing debt,” Ducheneaux said. “We’re going to have to do it different if we want a different outcome.”