upheld in 3,340 cases. Of 389 decision reviews conducted, 300 resulted in decisions being upheld.

Mr. TALLON. Many of the producers of course, there is always two sides to every question, but feeling there is some sort of personal vendetta. There is a case or two, frankly, that I wonder about myself with a supervisor or two. What is your average operating loan? Do you have that information?

Mr. NAYLOR. About 35,000 is the average size, but it is not unusual for one operator to have several loans.

Mr. TALLON. How are the funds authorized allocated to the different States?

Mr. NAYLOR. It is allocated on a historic formula basis, but there are significant amounts kept in reserve and made available to States because of additional demand, or various factors that are out of the ordinary.

We have, as usual last year, with the additional funds appropriated, more than adequate funds to meet our loan requirements last year. We think we are all right this year. But it needs to be watched and we will have to monitor it very closely as we finish up the loan season.

Mr. TALLON. In South Carolina, for example, he actually, as of right now, does not know the amount of funds that he is going to be allocated for operating loans for this year, our State director.

Mr. SHUMAN. Ño. He does have that number. We will be transmitting to the Members of the Congress our exact allocation formula that describes how it was allocated and what the numbers are. Mr. NAYLOR. Mr. Tallon, this methodology is written out. We will be happy to provide it to individual members and for the record. [The information submitted follows:]

The publication, Resource Allocation Methodology for
Fiscal Year 1983, is held in the committee files.

Mr. SHUMAN. And the dollars each State director got went out January 15.

Mr. TALLON. When the State director is talking to me and he says that we are hoping to get more money, that we are running out of money, I don't know exactly what he means. The farmers are telling me that they are not getting their answers, and they are waiting. So there is not a chance for him to receive any more money now?

Mr. SHUMAN. No, sir. There is a chance. We will be allocating and reallocating within States to assure that all of our applicants, all of our borrowers, that need assistance from Farmers Home Administration are able to receive the funds.

We try to allocate it up front using our estimate of what they will need. But because of changing situations from year to year it is sometimes difficult to do this and we have to make adjustments. We have in your State, for instance, recently allocated some additional funds. I talked to the State director before I came up here this morning and he indicated to me some further needs that he had. We will be trying to handle those as expeditiously as we can. Mr. TALLON. We sure would appreciate it if we could get those additional funds.

Mr. SHUMAN. Yes, sir.

Mr. NAYLOR. I think also we are not quite sure yet until we see how the signup is going how much pressure will be taken off as a result of the payment-in-kind program. In some areas that may reduce significantly the amount of credit that is required as producers require less input on a current operating year. We are trying to assess that.

But frankly until the signup is completed, March 11, and producers really know themselves where they are going, it is hard to tell how many of them will scale back their financial requirements both with us and the commercial sector.

Mr. BEDELL. Mr. Glickman.

Mr. GLICKMAN. Yes.

Mr. Naylor, in fiscal year 1983 I think less than half of the limited resources operating loan money was used. Why was this and do you expect using the full amount of money allotted in fiscal year 1984?

Mr. NAYLOR. Mr. Shuman has reviewed that, Mr. Glickman, I think. If you don't mind, I will ask him to respond.

Mr. GLICKMAN. Sure, go ahead.

Mr. SHUMAN. Mr. Chairman, Mr. Glickman, we in Farmers Home Administration find that in years in which we have a high need for annual operating expenses, rather than term-type operating credit, that the provision in the regulations where a loan officer has to make a determination that the borrower receiving the limited resource funds must not be able to repay the operating loan with a regular rate, causes some need to do some very, very close examination of the borrower's finances.

For instance, the 3 percent lower interest rate on an average operating loan last year of $35,000 that was used for annual operating expenses for only 4 months in the year with repayment when the crop was taken out would have had a very small effect on the bottom line of that borrower. The 3-percentage points difference in

the operating loan interest expense, would have had a very small effect.

However, we did use most of our farm ownership limited resource funds. I think there, where the rule is that the interest rate is half of the interest rate, and you are borrowing the money for at least a full year and much beyond, the bottom line effect on the borrower's financial statement is substantially greater and makes a significant difference.

Mr. GLICKMAN. You are requesting more money in fiscal year 1984 for operating loan money, loan money; correct?

Mr. SHUMAN. That is correct.

Mr. GLICKMAN. Therefore you conceivably will have more resource money available. I am wondering what you plan to do with the resource loans for 1984. Are you going to notice people of the availability of this?

Mr. SHUMAN. We feel in the next fiscal year because of declining interest rates and because of what we anticipate to be a positive impact of the payment-in-kind program on our borrowers that we would be making more advances for term type operating credit.

This then will increase the demand for the limited resource funds. So we would anticipate that the limited resource funds would be utilized in this coming fiscal year.

Mr. GLICKMAN. Mr. Naylor, I was told that last year's Civil Rights Commission report said that the Farmers Home Administration is not using the limited resource loan program for the benefit of black farmers. The program being created in some respects to help minority farmers.

I am wondering, has Farmers Home Administration improved its record in lending to black farmers?

Mr. NAYLOR. Mr. Glickman, we have looked at that report, we have substantial disagreement with the findings or even the validity, the basis on which the study was made. We would be happy to review that with you. We have a good record percentagewise, and operatingwise on the number of loans being made, the size of the loans being made. There is obviously always room for improvement. But we would be pleased to review it with you.

Mr. GLICKMAN. The chairman is not here but you may want to give us your thoughts. Have you replied to the Civil Rights Commission in writing as to their report?

Mr. NAYLOR. Yes; I believe that response has gone out from the Department.

Mr. GLICKMAN. Perhaps you would want to share that with the committee.

Mr. NAYLOR. Yes.

[The information submitted follows:]

Thank you for sharing with me the Commission's February, 1982 report, The Decline of Black Farming in America. We at the Department of Agriculture are deeply concerned that national agricultural policy and programs provide equity for all persons. Your report speaks of two levels of problems: (1) the general problem of the declining number of Black farmers and (2) the specific problem of enforcing nondiscrimination law in USDA programs. The question of cumulative impact on minority groups and the Department's response to this situation cut across both levels.

With respect to the impact of policy and programs on Black small farmers, your report focuses on the role of the Farmers Home Administration in providing farm loans. However, your report discounts the fact that other sources of funding account for 91.2 percent of the farm real estate and 84.9 percent of the farm non real estate debt in the United States. In short, the Farmers Home Administration plays a relatively small role in the total farm credit picture. Both the problems in, and the ultimate solutions to, farm credit matters encompass far more than the Farmers Home Administration within the U.S. Department of Agriculture.

Your report also takes note of the loan performance record of the Farmers Home Administration and suggests that the size of loans received by Black farmers versus White farmers is disparately low. However, if this alleged disparity in the average size of farm ownership and operating loans were put into perspective, one would note that the average size of a Black-operated farm is - approximately 1/5 the size of the average White-operated farm (82.8 acres versus 405.5 acres, as of 1978). This, of course, would markedly affect the size of loans needed and requested.