The House and Senate Agriculture Committee has approved legislation (S.24 and H.R.1190) to ensure sufficient credit for spring planting and increase the loan limit for Farmer Home Administration loans. With the increase in the size of the average farm, today's farmer requires large quantities of production credit and the current FmHA limits are too low to meet the farmer's needs. The Fertilizer Institute supports S.24 and H.R.1190 as a step in assuring sufficient production capital for 1983 crops to our hard-pressed farmers. The farmer is struggling to maintain financial stability. Without legislation, many good farmers may not have sufficient credit to pay for their production inputs. Enactment of the proposed legislation will ensure the planting of 1983 crops by making available sufficient, economical credit. We urge the Department of Agriculture to support S.24 and H.R.1190. GDM: PC Sincerely, Day Q. My Gary D. Myers Rt. 1, Bx. 70 Benoit, Miss. February 14, 1983 38725 Gentlemen: I am Travis Satterfield a rice, soybean, and wheat farmer in Bolivar County, Mississippi. committee, and concerned about its role in agriculture. I would like to express my appreciation to the committee for this opportunity. Runaway costs, rocketing interest rates, sinking commodity prices and a crash in land values turned a lot of farmers' balance sheets red. Yet in the same area of the country, working under similiar conditions, one farmer continues to pay his bills and some even show a small profit, while others face huge debts that can't be repaid. Many farmers during the 1970's decided to get bigger for greater efficiency; use leverage because they were attempting to beat inflation; expand; modernize. Excessive land prices and land rent were being paid. There was investment or the ability to repay the loans needed for this expansion. In our area land that traditionally was leased on crop shares began little concern about the return on to rent for cash. One section of land that was leased for $31.00 an acre in 1975, was leased for more than $90.00 per acre in 1980. A large portion of this land was being leased by FmHA borrowers. These farmers had gone to FmHA for loans because they were available to them elsewhere. not The very farmers who were in a serious financial position were also the ones who were taking the greatest risk. Instead of being conservative and attempting to do a better job on present acres, it appeared that expansion, at great risk, was the rule of the day. Along with the added acres additional equipment was needed to farm the land. This equipment was purchased with minimum down payment, and the balance financed at high interest rates. Because of easy credit, often more equipment was purchased than was actually needed. In addition to land and equipment, the financially troubled farmer often added capital improvements. New farm shops, grain storage, and irrigation systems, purchased again with minimum down payments, were hastily put into place. In many cases these improvements were not economically justifiable and the ability to repay these loans could not be soundly demonstrated. Farmers assume large financial risk. In a lot of these cases the burden of risk was actually transferred from the farmer himself to the American taxpayer. In many cases the individual farmer had little or no financial assets, but due to the availability of credit from FmHA, he was able to create large financial liabilities, with very little personal financial risk. There were instances in my home county where the borrower has assets of approximately $3 million and liabilities of approximately $4.5 million. This loan is accruing interest at the rate of over $700.00 a day. The interest alone on this 2,154 acre farm is approximately $120.00 per acre annually. In another case a borrower has assets of approximately $335,000 and liabilities of approximately $600,000. Another case involves a borrower with assets of $300,000 and total liabilities of $761,000. On this 1,142 acre rented farm the borrower has 10 different loans with FmHA. The annual interest on these loans is in excess of $90,000 annually. On these cotton, rice, and soybean farms there can not be enough income generated to service these debts. These are cases where the risk has been transferred from the borrower to the lender. These individuals can continue to increase their indebtedness with no personal risk because their debts greatly exceed their assets and they have little or no chance ever to repay these debts. In many cases such as these, an opportunity for the borrower to consolidate, reschedule or reamortize these loans would only result in shifting more risk to the American taxpayer. Being a member of the county FmHA committee, I feel that a blanket moratorium on foreclosures will not be in the best interest of American agriculture. Individual cases should be reviewed on their own merits. The county committee and the county FmHA staff should be in the best position to review these loans and make reasonable decisions based upon all the facts. An appeal system should be maintained to assure the borrower's rights to question these decisions. I also feel that the $100,000 limit on farm operating loans hinders FmHA ability to assist some farmers. Many credit worthy now coming to FmHA the first time for assistance. In many cases $100,000 is not sufficient to adequately finance their farming operations. farmers are To assume that we can keep every farmer in business, regardless of his financial position, will not serve the best interest of American agriculture. Farming is a high risk business and we can expect some losses. 18-811 0-83-15 Respectfully, submitted, Travis Satterfiell Travis Satterfield STATEMENT OF DAVID SENTER, NATIONAL DIRECTOR, AMERICAN AGRICULTURE MOVEMENT, INC MR. CHAIRMAN, MEMBERS OF THE COMMITTEE, I APPEAR HERE TODAY, ON BEHALF OF THE AMERICAN AGRICULTURE MOVEMENT, INC. WE WANT TO EXPRESS OUR APPRECIATION TO THE CHAIRMAN FOR RECOGNIZING THE SERIOUS SITUATION IN AGRICULTURE AND CALLING THIS HEARING TO MOVE FORWARD WITH MUCH NEEDED HELP FOR THE PRODUCERS OF THIS COUNTRY. WE KNOW THAT UNTIL WE GET A PRICE, BORROWING WILL ONLY BE A TEMPORARY STEP. ALL TO OFTEN, CREDIT HAS BEEN SUBSTITUTED FOR PROFIT. WE SEE SIGNS, THE USDA IS FINALLY REALIZING AGRICULTURE MUST HAVE SUPPLY MANAGEMENT, HOPEFULLY WITH THE DIRECTION OF CONGRESS, AGRICULTURE CAN FINALLY MOVE IN A PRODUCTIVE MANNER LOOKING TO THE FUTURE, AND PROVIDING FOR THE PRESENT. I HOPE IN ALL FUTURE LEGISLATIVE PACKAGES, THE LANGUAGE ALWAYS WILL OFFER A FEW OTHER SUGGESTIONS, THE PROVISION TO PROVIDE FUNDING FOR NEW BORROWERS IS IMPORTANT, AAM STILL FEELS, THERE MUST BE AN ACROSS THE BOARD MORATORIUM ON FOR THOSE OF YOU THAT FEEL, CUTTING PRODUCTION WILL INCREASE PRICES, WE HAVE URGED REINSTATEMENT OF THE E.E. PROGRAM SINCE SEPTEMBER 1981. IT IS PLAIN FOR ALL TO SEE, CONGRESS WILL NOW HAVE TO CHANGE, THE MAY TO SHALL AND REINSTATE THE PROGRAM. |