Date: 1983-04-27
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Chairman. I yield myself such time as I may consume. Mr. Chairman. I rise to begin the debate this afternoon on the bill. H.R. 1190. and. first. let me assure my colleagues that the word. emergency. that we have used is used advisedly. The economic crisis in rural America is too familiar to require extensive explanation. but I would highlight a few of the stark realities. First. let me say that all of us who live in rural America or who are involved in any way with farmers. rai.hers. dairy producers. or producers of livestock. sheep and goats and other major commodities know too well that farm income is at the lowest level of this century. It Is with no great amount of pride as chairman of the Committee on Agriculture that I stand before tile Members to admit that we have in the farm sector the lowest income in this century and the fact that 52 percent of the farm borrowers of the Farters Home Administration. the lender of last resort to this group. are delinquent in their payments. II 2382 These are good. efficient. productive farmers. who. because of other circumstances. find themselves in one of the harshest times since the Great Depression. So we bring this legislation to the Members with that urging that in a time of emergency and stress we need to do something. I would agree that perhaps the overall economy seems to be taking a turnaround for the better. The good Lord willing. hopefully. that will be the case. I am not here to take or give credit to any individual or to stand for or against the administration or for or against the Congress. My hope and expectation and prayer is that it has turned around. but the last place where the turnaround will impact is in rural America and the first place that we should address the issue should be in rural America. It is very difficult sometimes. dealing with those in the executive who want to put the farmer or the producer in a vacuum. saying that the Department of Agriculture should be solely for farmer programs. It sounds good. but it is not workable because the farmer does not live in a vacuum. He has to have roads. he has to have bridges. he has to have schools for his children. he has to have implement suppliers. he has to have seed suppliers. he has to have all of the tools available for living in a rural atmosplhere. Therefore. if one link falters. Ihe whole sequence falters. This bill Is a modest bill. I know that there are differences of opinion. That is normal. that is natural. Too many on the outside and a few of us here on the inside demand perfection of legislation. This is impossible. This is not attainable. I will be the first one to admit that. We have to work within the limits of art of the possible. What is possible today. that hour. that minute. that second. and can pass when the votes are tallied. that is what we have to work for. not perfection. not perfection as some demand. It is unobtainable. We have to start with this. Our average subcommittee has 15 members. so right away you have to have at least 7 to bring the bill out. The full committee has 41. so we have got to have 21 to bring the bill out. In the Hcuse. we have to have 218. 219. That is the art of the possible. We have very carefully drafted this legislation in the subcommittee and in the committee. looking at the need. looking at our resources. One thing I am proud of in the Agriculture Committee is that we are not just throwing money at the problem. We are the first ones to admit that this is not a solution. We have had to do things like the PIK program. payment in kind. We know that is not a solution. That is a bandaid. but it is a tool to assist the farmer to stay in operation. We have reduced the socalled surplus. applied some of it that we have in storage and used it as a tool to try to assist. That is where we are working daily. diligently. the majority and the minority. the subcommittee chairmen and the ranking subcommittee members. diligently working every day. How can we help? Where can we help? What can we do? I do not say this disrespectfully. but just saying "stay the course" is not going to do it. "Everything is all right" is not going to do it. All we know is that the farmers are in trouble. My dear friends. we need to keep in mind the bottom line. You can talk about the nuclear freeze. You can talk about how many missiles the Russians have and how many missiles there are in Western Europe and how many missiles we have everywhere. You can talk about submarines. You can talk about all the major issues of this world thal we discuss here. The bottom line is that if there is no food. forget the rest. no food. no matter how many missiles. no matter how many submarines. Ycu know. I think I can tell you this because I had the great experience of riding in a nuclear submarine. I asked the captain of the submarine. "How long can this submarine remain under water?" He told me. "Thats a military secret." Well. I can divulge the military secret to you without breaking my oath or without breaking or compromising anything relating to that submarine. This is what it is all about. my dear friends. Do you know how long a nuclear submarine can stay under water? As long as it has food for its crewfood for its crew. The people that we try to help today are those that provide the food and fiber for us here in America. the best fed Nation in the world. possibly in the history of the world. for the lowest amount of disposable income in the world. possibly in the history of the woid. with the possible exception of some bare subsistence countries in some very remote areas. Then we have exports. The world is not buying what we manufacture. my friends. They are not buying our cars. our radios. our television sets. They are buying what we produce. They are buying our food. So we save the Boeings. we save the Chryslers. we come and save everyone that is in trouble. To hear anyone that would deny those who feed us. I cannot believe it. I cannot believe it. it is beyond my wildest comprehension. After we have set up the President to save major industries. automobiles. major industries. airplanes. what would we do. my friends. if we did not have the food fur tomorrow? What would we do.? That is what this bill is all about Now. I will try to answer some questions that have been raised. Is this a blanket moratorium? Does this make a Rockefeller get a moratorium on his Farmers Home loan? There is no such thing. We have carefully and artfully drafted this bill. Yes. we give the Secretary less discretion than he would have under ordinary circumstances. but this is not unprecedented. This committee has never agreed to give any Secretary complete discretion and as long as I am chairman and I have any sayso. we will not in the future. That is the prerogative of the legislative system. We raised to a more practical amount the loan authorization. The Farmers Home Administration came to the committee of the other body and admitted that the operating loan funds were gone in 17 States. They admitted that. Shortly before that. they had told iis. no. everything is fine. This bill tries to help correct that. although they have taken initial steps to do that. Fiftytwo percent of borrowers are delinquent. 52 percent. How many have gone into bankruptcy? Well. that is debatable. because I personally can attest to one situation where a fellow said. "no. they did not foreclose on me. but the fellow made faces at me and told me. do not come back. because we are not going to do. anything for you. I had the word from Washington that you types should not get any further assistance. Therefore. I had to sell out." OK. count your fingers. Say that is one foreclosure less. Nonethel as. the fellow sold out. My concern also iswho is going to pick up this land? You know. we are looking at the 1990s and the year 2000. The population of the world is growing by billions. We are the only country in the world that has been blessed to have the climate. north and south and east and west. to grow the variety of food. unlike any other country in the world. The world is going to be looking to us to help the farmers with this bill. H.R. 1190. The world is going to be looking to us whether people will starve. I am talking about starvation. people dying for lack of food. They are going to be looking to us and now is when we have to keep that farmer producing. because once you take productive farmland out of circulation. my friends. it cannot really be put back. I would attest to you that it will not be put back if it is taken out of circulation. So forgive me if I sound emotional. I have used this term before. I have looked at the crystal ball and I see out there problems. I see mass starvation. I see people dying of hunger. I see us here in the United States. the best quality food for the lowest amount of disposable income. I see us in trouble 10. 20 years from now. Now is the time. I know that we can talk ourselves around this bill. I know that we can pick points in it. I know that we can bring out any kind of arguments. But let me lay before you. my friends. the fact that what we do here can well impact on 10 and 20 years from now. whether we are going to have the bounty that the good Lord has blessed us with at this time. And let us keep in mind. as we discuss H.R. 1190. that farm borrowers of the Farmers Home Administration are those who deserve an opportunity to farm but who lack strong financial resources and are. therefore. generally unable to obtain adequate credit at reasonable rates from private sources of funds. Given the desperate costincome squeeze existing among farmers generally. the squeeze on Farmers Home borrowers is obviously even more acute. Further. events which have come to light in the last few days compound the serious problems otherwise existing. As I have stated. notwithstanding the assurance of top officials of the Farmers Home Administration as recently as during the committee markup of H.R. 1190 that ample funds were available for farm operating loans. it has now been disclosed that fiscal 1983 funds for this purpose have been exhausted in 18 Statesat a crucial time for farmers currently attempting to put in their crops for the 1983 season. The Department of Agriculture has announced that. under asserted emergency authority. it will dip into funds designated for other Farmers Home programs to make up the shortfall in operating funds. At best this is only a stopgap measure. It is robbing Peter to pay Paul. The word "emergency" therefore takes on an added urgency. Fortunately. we have available. in this crisis situation. remedial legislation for immediate consideration by the House. To meet these urgent r.oeds. H.R. 1190 offers workable remedies. It reauthorizes. through fiscal 1984. the aptly named economic emergency loan program originally enacted in 1978. For fiscal 1983. it authorizes $600 million in insured and guaranteed loans for operating purposes under this progrnm oker and above a $600 million guarimil ed loan program authorized by the fiwcal 1983 Appropriation Act but. unfortunately. not implemented by the Secretary of Agriculture. To insure that the urgently needed prograin is not again made a dead letter. H.R. 1190 requires the Secretary to carry out the program. And it. authorizes loans and guarantees totaling $600 million for fiscal 1984. Further. for the current fiscal year. the bill authorizes an additional $200 million in operating loans. above funds now authorized. under the regular Farmers Home operating loan program. This amount would be earmarked for new borrowers. a particularly deserving group in view of Farmers Home policyarguably a valid oneof first meeting the needs of current borrowers for operating funds. Seldom in my experience in the House has a piece of legislation in so timely a fashion matched a genuine emergency in the Nation. I would emphasize that H.R. 1190 is no giveaway bill. it is. however. an investment in the futureand. in a real sense. in the existence of a significant segment of American agriculture. There has been considerable controversyas well as considerable misinformationabout another emergency aspect of the bill which would be effective through September 30. 1984. It involves provisions which. under narrowly and carefully drawn guidelines. will enable some borrowers to avoid foreclosure and obtain a deferral of payment of principal and interest on their Farmers Home loans. The depression in our rural areas has made it impossible for many Farmers Home borrowers to make scheduled repayments on their loans. Their plight is not associated with poor management or inefficient operation. It is a direct result of national and international conditions over which these farmers have no control. It exists without any fault on their part. It is farmers such as these that H.R. 1190 is designed to rescuenot by foregoing their debts. but by giving them nothing more costly than a little additional time to pay their financial obligations to Uncle Sam. The bill would. for a period of 1 year. require the Secretary to forgo foreclosure and defer payment of principal and interest on farmtype Farmers Home loans. But relief of this nature would be available. strictly on a casebycase basis. only in the following circumstances. A borrower requesting relief from the Secretary would be required to establish by substantial evidence that he has exercised good management but is unable to make scheduled payments due to conditions beyond his control. Those successfully sustaining this burden would then have to be offered rescheduled repayment terms which the Secretary believes fit the borrowers farm and financial situation. It is only if the borrower then establishes. again by substantial evidence. that he cannot meet even the new ternis and that. there is a reasonable likelihood that. after a deferral. he will be able fully to repay the loan. that he would become entitled to a 1year deferral of payments. It is readily apparent that these provisions do not constitute a loan moratorium or blanket deferral. The committee took great care in assuring that the burden of proving the conditions meriting relief is on each borrower seeking relief. It strengthened those conditions. And it added the requirement that borrowers. if possible. pay what they are able on their loans if they cannot make full payments as scheduled. But the committee has likewise assured. through fiscal year 1984. that relief for truly deserving borrowers does not depend upon the unbridled discretion of the Secretary. The committee would note that during 1982 the Secretary did. under his present discretionary authority. act in over 40.000 cases to reschedule or defer payments or otherwise adjust loan conditions. However. the committee has received evidence that discretionary relief has not been applied uniformly and consistently throughout the country. Further. the inventory of farms held by the Farmers Home Administration in March of 1983 represented a sevenfold increase over the inventory level of recent years. During the present emergency. the committee is not willing to leave crucial decisions on the financial survival of farmers purely to the Secretarys will or to the fancy of local administratorsit has. therefore. revised the statute to assure relief. on a casebycase basis. to those who establish the facts meriting relief. I would point out that the benefits of the deferral provisions will not be restricted to the borrowers involved. It takes little imagination to envision the consequences on the agricultural communityfarmers. lenders. and rural enterprises alikethat a wave of foreclosures or forced liquidations would have. The resulting erosion of farm asset values could well devastate all segments of rural America. In this regard. it is beyond the committees jurisdiction to prescribe deferrals for worthy but strapped borrowers from private lenders. But such borrowers who may be cut off from further financing by private lenders are among those who may benefit from the economic emergency loan program resurrected by H.R. 1190. I would not want to leave the fipression that H.R. 1190 contains provisior 8 exclusively of an emergency nature. It. would. on a longer term basis. change other provisions of the Consolidated Farm and hural Development Act to insure effective financial assistance for farmers and for the development of rural areas of thie Nation. Last year the House overwkhelmlngly passed a bill which would have established annual Farmers Home progrram lending levels for a 3year period. The Senate failed to act on the bill. Therefore. H.R. 1190 establishes these prograin levels for fiscal years 1984 through 1986. The authorized program levels contained in the bill were adopted without. controversy within the committi*e. These provisions enjoyed a broad consensus 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. Credit is no substitute for decent farm income. But it may be all that will permit farmersincluding many able and expeienced farmersII12383 to 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 has fashioned this reauthorizing legislation. For example. authorized program levels applicable for fiscal year 1982the last year of the previously authorized 3year periodand in H.R. 1190 are as follows: FisciA year 1982 HR 1190 ReA eslate bans (.ncludig farm own ersnptoans)............... . ........ $1.615000.f000 $1 000.000 farm operatng lans . ..... ... 1.325.000.000 1.860.000.000 asat banS . ............. Business und ....stnall ........ L00.00 .0 000.000 Communt fa .ilis................ 130 000.300 300.000.000 =ncilding 5700.000.000 for imured farm ownership kas Amonts e s. The bill would also provide that 20 percent of the funds for farm ownership and operating loans would be earmarked for lowincome. limitedresource borrowers. I shall not discuss these figures in detail. But a few of them merit mention. The authorized level for emergency disaster loansand. 1 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. 1190 continues this prudent approach. 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. 1190 would cut by onethird the last 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. In this connection. according to a recent USDA analysis of the paymentinkind (PIK) program. rural areas may well experience shortterm economic difficulties related to the idling of up to 30 to 50 percent of cropland. It is estimated that agriculturalrelated employment may be off by 2 to 3 percent. a significant drop in rural areas where unemployment is already unacceptably high. For example. cottonginning and ricedrying firms could face a 25percent decline in demand for their services. Other firms that will face significant declines in demand include those that retail or transport farm production inputs apply fertilizer. lime. pesticides and other chemicals: and service farm machinery and equipment. Farm machinery and implement dealers are an example of rural Main Street firms that will continue to experience financial difficulties associated with the farm sector economic situation. On top of already slumping sales and service functions. PIK may cause an additional 12- to 15percent decline in business for the local farm Implement dealers. Mr. Chairman. I bring this concern to the attention of the House to illustrate that not only has our farm sector but Main Street in rural areas as well. suffered the consequences of a sorely depressed farm economy. While H.R. 1190 is largely designed to meet the credit needs of our farm sector. we are reauthorizing the rural development lending programs that are so important to rural America. It would be my hope that the Secretary of Agriculture will use the business and industrial loan program to offset some of the adverse affects that the PIK program will have on rural industries which service our farm sector. 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 addressed by H.R. 1190. It would-