May 16, 2001, Wednesday
CAPITOL HILL HEARING TESTIMONY
COMMITTEE: SENATE AGRICULTURE, NUTRITION AND FORESTRY

TESTIMONY-BY: TOM HARKIN, SENATOR/RANKING DEMOCRATIC MEMBER

May 16, 2001
STATEMENT OF SENATOR TOM HARKIN, RANKING DEMOCRATIC MEMBER COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY HEARING ON NOMINATIONS AND AGRICULTURAL CREDIT ISSUES

Thank you Mr. Chairman for convening today's important hearing on nominations to the Department of Agriculture and on the topic of agricultural credit. USDA's role in improving our nation's nutrition is, of course, central to its mission. And its responsibilities in the marketing and regulatory area are essential to fair, properly functioning markets and protection against animal and plant diseases. So I am pleased that we have before us today the nominations of Eric Bost and William Hawks and look forward to hearing from them. Access to credit plays a critical role in helping the U.S. farm sector meet its large capital needs and operate smoothly. In the 1997 Census of Agriculture, some 800,000 farm operators listed interest payments for either ownership or operating loans as a major production expense -- and that was a good year financially. The private banking and financial industry, the Farm Credit System and USDA all have very important roles in financing American agriculture. Much like air traffic control and baseball umpires, the agricultural financing system draws little notice when it is working well, but a lot of attention when things go wrong. Many of us in this room remember all too well the disastrous events of the mid-1980's, when so many farmers had high indebtedness, then got into big trouble when land prices collapsed. Their banks, including institutions of the Farm Credit System, suffered along with them, and Congress was forced to step in to help. I am pleased to note that the Farm Credit System has made good on its losses of the 1980's, and today its members are in sound financial condition across the country. And since that time, further opportunities for access to capital, such as Farmer Mac, have also developed. We certainly must do what we can in the farm bill to promote a healthy farm financial sector. An issue that very much concerns me is opportunity for young people to enter agriculture. In the area of credit, USDA offers loans to beginning farmers and ranchers with special down-payment provisions. A certain share of funds appropriated for both direct and guaranteed loans through the Farm Service Agency is set-aside for those who meet eligibility criteria as beginning farmers. In many states, however, far more applications are made for such loans than can be covered with the available money. There may be possibilities for maximizing the federal funds by combining them with state monies in certain cases. Another essential aspect of credit is providing capital for rural businesses, including farmer-owned cooperatives and other ventures. There is a pressing need to channel additional support for borrowed and equity capital to these rural business enterprises. I continue to be strongly interested in legislation in this area, along the lines of the bill I introduced last year. I look forward to working with the Chairman and all members of the Committee to strengthen the farm credit title, a crucial component of the farm bill we will soon be crafting.

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