Date: 1982-09-09
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Chairman. I yield myself such time as I may consume. Mr. Chairman. I rise in strong support of H.R. 5831. a bill to provide lending limits for fiscal years 1983. 1984. and 1985 for programs under the Consolidated Farm and Rural Development Act. and for other purposes. In brief summary. this legislation addresses the lending programs carried out by the Department of Agriculture through the Famers Home Administration for farm ownership and operating purposes. rural water and waste disposal. and other community facilities. rural business. and industrial development. and assistance to farmers who are victims of natural disasters. The basic legislation. the Consolidated Farm and Rural Development Act. requires that lending levels for farmer and rural developmenttype programs be reauthorized for successive 3year periods. Current authorizing provisions for this purpose are effective through fiscal year 1982. H.R. 5831 reauthorizes levels for these programs for fiscal years 198385. The authorized program levels contained in the bill were adopted without controversy within the committee. They represent. for the most part. a lower total level than the level originally authorized for the 3year period through fiscal 1982. and approximate the level as revised by the 1981 Reconciliation Act. I would suggest that these provisions enjoyed a broad concensus of support because they reflect a judicious compromise between conflicting interests: First. the need for fiscal restraint and second. the need for adequate credit to enable rural America to survive a period of economIc stress not approached since the depths of the Great Depression. Credit is no substitute for decent farm income. But it may be all that will permit farmersincluding many able and experienced farmersto hang on pending the economic recovery we have been assured is forthcoming. I believe that a few illustrations will establish the responsible manner in which the Committee on Agriculture fashioned this legislation. For example. authorized program levels contained in current law and in H.R. 5831 are as follows: Current law HfR. 5831 Real estate loans (including $900 million................. Si billion. farm owmnerhip loans). Farm operating loans.......... .1.325 billion.............. 11.510 billtn. Emegr disaster loans ............... Amounts necessary... Amounts necssay. Wate an sewer loans .................. $300 million ................. $500 millui. Business and industria loans. $1.5 bilon. $1 billon. Community facties....................... $130 million... $300 million. I shall not discuss these figures in detail. But a few of them merit mention. The authorized level for emergency disaster loansand. I might add. the level utilized for such loans by the Appropriations Committeehas traditionally been established on an "as needed" basis. This recognizes the fact that it is not possible to estimate with any accuracy the magnitude or number of natural disasters which may occur in any given year. H.R. 5831 continues this prudent approach. In addition. the bill would restore a provision of the program changed. to the detriment of farmers. in the Omnibus Budget Reconciliation Act of 1981. It would reduce from 30 to 20 percent. the level of production loss making a farmer eligible for loans. The 30percent loss criterion precluded assistance to many farmers who were severely affected by natural disasters. As to business and industrial loans. it has long been recognized that this program. consisting largely of loan guarantees. has been one.of the most effectiveand lowest costapproaches to creating jobs and promoting healthy economic development in rural areas. While H.R. 5831 would cut by onethird the authorized annual level for this program. it will maintain a meaningful program operation. I would note that the administration has proposed to abolish this program. However. to insure that program benefits are targeted more narrowly to those the committee believes most in need of assistance. the bill imposes a "credit elsewhere" test. and reduces from 50.000 to 25.000 the population limit of areas in which the program will be available. Extensive hearings conducted by the Subcommittee on Conservation. Credit. and Rural Development disclosed a need for other improvements in the programs carried out under the Consolidated Act. The need Is also ad. dressed by H.R. 5831. The severe price declines for agricultural commodities. coupled with ruinous interest rates. have pressed a growing. indeed an alarming. number of farmers ever nearer the edge -of financial collapse. One remedial measure considered and ultimately rejected by the committee was a blanket moratorium on Farmers Home foreclosures and loan repayments in States where such foreclosures approached numbers reflecting a multiple of customary levels. However. the committee did adopt a provision that. on a casebycase basis. makes mandatory through September 30. 1983. a provision. which is discretionary with the Secretary under current law. to defer foreclosures and repayments on farmertype loans. The deferral would be triggered only if a farmer requests deferral and establishes to the satisfaction of the Secretary that inability to pay is due to circumstances beyond the borrowers control. that good management practices were used. and that there is a reasonable chance for ultimate repayment after the deferral. This provision would be available only to owners or operators of familysize farms. It is a provision which can be the salvation of many experienced and competent farmers who are devastated by circumstances over which they have no control. . A series of other provisions are designed to insure the objectives of the water and waste disposal program are met. Several of the provisions are directed to reducing to statutory terms certain directives concerning program operation contained in conference reports on the Omnibus Budget Reconciliation Act of 1981 and the 1981 farm bill. The Secretary. in the committees Judgment. has not satisfactorily responded to the directives. Therefore. stronger measures are required. H.R. 5831 wouldFirst. authorize grants to borrowers to be used solely for repaying loans in cases where repayment cannot. be made because of extraordinary circumstances. Second. direct the Secretary to establish a graduated scale of grant rates reflecting higher rates for communities with lower population and income levels which demonstrate a financial need. Third. direct the Secretary to establish a project selection system for choosing among applicants for loans and grants. giving equal weight to factors of low community income. small population. and health hazards resulting from lack of potable water or inadequate waste disposal. Fourth. authorize payments to associations likely to receive grants or loans to assist them in meeting predevelopment costs of facilities. Fifth. authorize grants to private nonprofit organizations for the purpose of enabling them to provide technical assistance and training to associations likely to receive loans or grants. Sixth. direct the Secretary. in cases in which projects serve more than one rural community. to use the median population level and median community income level of all of the communities to be served for purposes of applying applicable formulas for assistance. Seventh. change the standard - for lowincome areas eligible for 5percent loans from those having an income level below the Federal poverty line to those having an income level below 80 percent of the statewide nonmetropolitan median family income. and Eighth. establish a 7percent maximum loan interest rate for borrowers which do not qualify for 5percent loans but which have an income level not exceeding. 100 percent of the statewide nonmetropolitan median family income. Mr. Chairman. there are other items in the legislation that will be discussed by the chairman of the Subcommittee on Conservation. Credit. and Rural Development. and may I at this time state that the chairman of the subcommittee. the gentleman from Tennessee . the ranking minority member. the gentleman from Vermont . and all the members of the subcommittee merit our appreciation for the fine dedicated work which they did under very difficult circumstances. It would be very easy to just throw money at the problem. but that is not the way that our committee works nor was it the way that the subcommittee worked. Rather. they studied the issues. took a look at the budget. and prepared legislation for the 3year period which is within. if not below. the budget. So at this time I give personal commendation to the chairman. the ranking minority member. and the members of the subcommittee. Mr..Chairman. H.R. 5831 clearly represents. in our view. a responsible and moderate effort to continue a program for furnishing assistance to rural Americaassistance now urgently needed to mitigate the disaster that has befallen this sector of our economy. The various changes in the Consolidated Act proposed by the bill enjoyed broad support. Only the repayment and foreclosure deferral provision described above encountered substantial opposition. The committee ordered H.R. 5831. as amended. reported favorably to the House by a rollcall vote of 38 to 1. Mr. Chairman. I urge my colleagues to give equally strong support to this worthy legislation so essential to the viability of rural America.