APPENDIX B Chart A: Limited Resource Operating Loans. Original 34 77 22,600 3,328,130 147, *Based on Form FmHA 389-175, 8-31-82. This is one month short of the end of the fiscal year. As operating loan activity is negligable in September, these figures will not vary significantly. **This column is hypothetical. It is an attempt to determine how many borrowers would have been served in that particular state had unused funds been obligated at that state's average loan rate. Published in Small Farm Advocate, a newsletter of the Mr. BEDELL. Thank you for your support of the legislation. I note your statement regarding the Privacy Act. Have you found a number of people have not been allowed to view their own records and to rebut arguments that are being given against their obtaining loans out there? Mr. SACIA. Yes, that has been a common complaint. Mr. COLEMAN. Is there actually an argument that the Privacy Act precludes these people from getting their own information? Mr. SACIA. No. I believe there is a lot of confusion out there. They are trying to be too careful with the Privacy Act. Mr. COLEMAN. Thank you very much. Mr. BEDELL. Mr. Durbin? Mr. DURBIN. Thank you. I apologize for coming in late. One of the reasons was I attended the all night Farmer Union convention in Springfield over the weekend, and am still recuperating from a fine time. I don't know whether you heard the testimony this morning, but one of the points I have been trying to zero in on is how most organizations and agencies view the scope of the problem in terms of the type of farmers being affected by this credit squeeze. Do you have any observation on that? Mr. SACIA. My first observation would be that it is pretty much across the board, but with an emphasis on our younger farmers. As mentioned quite early in the statement, the problem is that although these farmers are efficient farmers, and some of our best educated, they have not been around long enough to build up the equity necessary to sustain themselves over a number of bad years. That is where the focus of the problem would be. Mr. DURBIN. It was suggested this morning by Mr. Fredrickson, he felt it was generally the farmer in the 30 to 40 age group with a farm, I would suppose a gross farming of $40,000 to $100,000 a year. Does that sound reasonable to you? Mr. SACIA. Yes. Mr. DURBIN. That is all I have. Mr. BEDELL. Mr. Stenholm? Mr. STENHOLM. Where you make your recommendations, you say, "We would prefer that this requirement be made more definitive," this requirement being that you would have a reasonable chance of recovery. What precisely do you mean by being more definitive? Mr. SACIA. The reasonable chance just leaves a lot of discretion to the decisionmaker. We are just afraid everyone, there is a good reason to give the farmer a loan in the first place, and he has been proven to be a good operator, and he is suffering from circumstances beyond his control-we want to make sure there is not so much discretion in there that if it is the intent of the Farmers Home Administration to cut down on their borrowers, or cut down on their delinquency, that they are not given the freedom to do so with this provision. I think it is a fair provision. I am just a little concerned it might be a little too loose. Mr. STENHOLM. I understand that. I am trying to get at, when you say, "more definitive," how much more definitive could we get than to say, "a reasonable chance of recovery." What would be a more reasonable definition? Mr. SACIA. I am not really sure. We would be certainly happy to try to provide some language to you. Mr. STENHOLM. Let me come at you a different way. In arriving at this recommendation, assuming you sat on the Farmers Home Board three-man committee, what criteria would you use that would be more definitive, you yourself? When you are looking at a man or a loan portfolio, and what you are talking about is a reasonable chance of recovery, at some point you have to make a judgment, don't you? And that is what you are talking about. Mr. SACIA. I am not saying that that language is poor or unfair. I am just saying there is a danger that they will take that, what you could call, loophole, and use it to their advantage. Maybe that is the best language we can come up with. I would just like to alert you to the danger of that. Mr. STENHOLM. So really you don't have a specific recommendation. Just be cautious in that area that there could be some abuse? Mr. SACIA. Yes. We would be glad to provide some different language shortly. Mr. STENHOLM. Thank you. Mr. BEDELL. Mr. Gunderson? Mr. GUNDERSON. No questions, Mr. Chairman. Mr. BEDELL. You mentioned the fact that the Comptroller General had said that the Department is not obeying the law in the way they are handling the program. They indicated that they felt that the Comptroller General is not necesssarily the one that they need to listen in that regard. Were you here this morning? Mr. SACIA. I was not able to be here, no. Mr. BEDELL. Do you understand that if the Comptroller General tells you you are disobeying the law, it does not necessarily mean you are disobeying the law? Mr. SACIA. I understand that. Mr. BEDELL. Is that the reality? Mr. SACIA. Yes, that is the reality. However, I think they have taken his advice to some extent. There have been some revisions in that program, and applying it on a case-by-case basis. Our concern was why does this even have to take place. The intent of the law was clearly stated in the law. Mr. BEDELL. We didn't have time this morning. But if the Comptroller General tells the Department of Agriculture it is obeying the law and the Department of Agriculture doesn't agree with that, who is it that then decides who is right? Mr. SACIA. The courts would. Mr. BEDELL. We have to go to court anyway. Mr. SACIA. Our complaint is farmers are now less than 3 percent of the population. When it comes down to interpretation of the law, we are going to lose out every time. We can take it through the courts, but it is a long laborious process. Our hope is that Congress will assert its will and put enough pressure on its Department of Agriculture to make sure that they do the thing that Congress first intended. That is our only hope. Mr. BEDELL. Thank you very much. Mr. SACIA. Thank you. Mr. BEDELL. Because of the possibility of more bad weather, we will move along as rapidly as possible. Ms. Mary Thatcher, please proceed. STATEMENT OF MARY KAY THATCHER, ASSISTANT DIRECTOR, NATIONAL AFFAIRS DIVISION, AMERICAN FARM BUREAU FEDERATION MS. THATCHER. Mr. Chairman and members of the subcommittee, the Farm Bureau appreciates the opportunity to present testimony on the Emergency Agricultural Credit Act of 1983. The American Farm Bureau Federation is the Nation's largest general farm organization with a membership of over 3 million families in 48 States and Puerto Rico. Farm Bureau members produce virtually every type of commodity grown on a commercial basis in the country. Farm Bureau policy is developed by the producer members at the county, State, and national levels of the organization. Let me make a few observations about the Farmers Home Administration in general before I discuss the specifics of this bill. First, the FmHA was originally created for one purpose-to make loans to depression-stricken farm families. Today, although FmHA still aids family farmers, its resources are not concentrated on aiding family farmers because its programs have become so highly diversified. Programs which require not only funds, but time and effort of FmHA personnel include homeownership loans, rental housing loans, mutual self-help housing loans, congregate housing loans, water and waste disposal loans, energy impact assistance grants, community facility funding, business and industry program funding, watershed and flood prevention loans, and resource conservation and development loans. These programs all draw on the time that FmHA personnel at the national, State, and local levels have to spend on the agricultural credit programs-those programs which FmHA was established to address. In fiscal year 1982 FmHA's rural housing insurance fund, spent mainly on various housing progams, had a budget exceeding $3.7 billion. The rural development insurance fund, spent on alcohol production, community facility, and water and waste disposal loans, had a budget exceeding $1 billion. In addition, FmHA's budget for grants for programs such as farm labor housing, mutual and self-help housing, home repair, and water and waste disposal exceeded $560 million. At the same time, the agricultural credit insurance fund, which funds farm ownership and operating loanswhich should be the backbone of all FmHÁ funding—had a budget of only $2.3 billion. This included funding for soil and water loans, Indian land acquisition loans, recreation loans, and others. Our point is simple. Farmers could be aided much more if FmHA did not have to spend so much time and money on all the nonfarm programs presently administered by FmHA. A specific example would be a recent discussion one of our State Farm Bureau presidents had with his country FmHA personnel. |