[Congressional Record Volume 143, Number 98 (Friday, July 11, 1997)]
[Extensions of Remarks]
[Pages E1404-E1405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE FAMILY FARM CREDIT OPPORTUNITY ACT OF 1997

                                 ______
                                 

                   HON. CHARLES W. ``CHIP'' PICKERING

                             of mississippi

                    in the house of representatives

                        Thursday, July 10, 1997

  Mr. PICKERING. Mr. Speaker, I rise today to introduce the Family Farm 
Credit Opportunity Act of 1997, a bill that will correct an inequity in 
the Farm Service Agency's [FSA] Guaranteed Loan Program. Currently, 
this program has upper limits on the amounts that can be guaranteed by 
the FSA. Specifically, the two types of loans administered under this 
program--farm ownership loans and operating loans--have caps of 
$300,000 and $400,000, respectively. The farm ownership loan cap was 
adjusted to its current level in 1978, while the operating loan cap was 
last raised in 1984. At these times, farm ownership and operating costs 
could be adequately financed within both of these cap limits.
  However, given today's larger and more capital-intensive farming 
operations, the limits must be raised in order to meet the needs of 
those seeking financing through the Guaranteed Loan Program. For 
example, in my home State of Mississippi, poultry is a growing 
industry. In the early 1980's a typical poultry house cost 
approximately $65,000. Today the same poultry house can cost up to 
$125,000. Also, more volume is necessary to compete on the world 
market. In fact, most banks will not finance a beginning poultry farm 
with less than four poultry houses. It is easy to see that a minimum of 
four poultry houses at a cost of $125,000 per house exceeds the farm 
ownership cap level of $300,000 in the Guaranteed Loan Program. This is 
just one example of how the upper limits on loans can take qualified 
applicants out of the market. This problem exists throughout the entire 
agricultural sector, not just the poultry industry.
  To address this problem, I am introducing the Family Farm Credit 
Opportunity Act of 1997 which would raise the cap limits on both the 
farm ownership loan and the operating loan to $600,000. The poultry 
example displays how much agriculture has changed since the caps were 
last amended in 1978 and 1984. In fact, while the increase in the cap 
limits may seem substantial at first, neither increase reflects the 
increase in inflation. Shouldn't we at least keep up with inflation for 
a program that has served as a consistent vehicle of opportunity for 
the small family farmer? In today's budget-minded era, I believe we 
must find solutions that will not only correct problems that have been 
developing over the years, but also do them at a relatively low cost to 
the taxpayer with a long-term solution in mind. That is why my bill 
increases the cap limits to specific amounts, $600,000 for the coming 
year, but also includes a provision to index both caps for inflation 
beginning in year 2. This last provision will allow the caps to 
automatically adjust for inflation, which will provide a long-term fix 
to the problem and assure that the family farm does not outgrow the 
upper limits of the farm ownership loan or the

[[Page E1405]]

operating loan over time. I would like to point out that my bill will 
not guarantee acceptance of applications submitted to the FSA. Farmers 
would still have to go through an application process, but if the 
individual is eligible and accepted he or she would have the 
opportunity to receive adequate financing through a farm ownership or 
operating loan. In order to preserve the family farm and continue 
America's tradition of promoting the family farmer, we must provide a 
mechanism which enables them to receive the funds necessary for 
ownership and operation of a farming business.

  Congress appropriates money for the FSA Guaranteed Loan Program each 
year. Shouldn't we put this money to its best and most efficient use? 
Should we also be willing to step back and take a good look at what a 
family farmer in 1997 really is? Of course we should use these funds as 
efficiently as possible and in a way that positively affects our 
overall economy. As for the family farmer, they still exist and are 
successful, but they aren't the same as they were 19 years ago in 1978 
or even in 1984. Why?
  Well, let's take a look at some of the changes that have occurred 
over this period. First of all, markets have become global. Not only do 
our farmers have to compete with each other, but also farmers around 
the world in China, Japan, Russia, Canada, Mexico just to name a few. 
Technology and research have both been overwhelmingly successful in 
allowing us to increase our production with less land, enabling us to 
idle environmentally sensitive land that is less productive and 
therefore ensure that we never revert back to the ``Dust Bowl'' days of 
the 1930's. Capital intensive is a word that was not as common in the 
late 1970's and early 1980's as it is today. In fact, we cannot talk 
about agriculture today without mentioning how the industry has 
drastically shifted from a labor-intensive industry to an industry 
dominated by capital. Twenty years ago, who could have imagined that we 
would be using satellites to level our land or to tell us exactly where 
chemical application was needed? Who could have imagined that 
biotechnology would yield such complex seed developments? Who could 
have imagined that we would have the technology to so closely monitor 
the growth of our animals that we would have the ability to 
specifically and scientifically regulate diets in order to achieve 
faster growth with less fat? My point, Mr. Speaker is that agriculture 
has changed and so has the family farmer.
  The Guaranteed Loan Program was designed to help the family farmer. 
In order to continue this goal, we must address the needs of today by 
providing the capital necessary to compete and be successful. The 
family farmer is a larger operator relative to 1978 standards. We need 
cap limits that reflect this change. If we truly want to help the 
family farmer, let's fix a program that has historically been 
successful in helping this critical sector of our country. Let us not 
stop the progress of our farmers. We should not deny any eligible 
person in our Nation the opportunity to own and operate a family farm 
in order to pursue their idea of the American dream. This legislation 
will help our farmers expand their opportunities, increase our markets, 
improve our competitiveness, and make possible those dreams.

                                 H.R.--

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INCREASE IN MAXIMUM AMOUNT OF GUARANTEED FARM 
                   OWNERSHIP LOANS; INDEXATION TO INFLATION

       Section 305 of the Consolidated Farm and Rural Development 
     Act (7 U.S.C. 1925) is amended--
       (1) by striking ``$300,000'' and inserting ``$600,000 
     (increased, beginning with fiscal year 1998, by inflation 
     percentage applicable to the fiscal year in which the loan is 
     to be made or insured)''; and
       (2) by adding at the end the following: ``For purposes of 
     this section, the inflation percentage applicable to a fiscal 
     year is the percentage (if any) by which (A) the average of 
     the Consumer Price Index (as defined in section 1(f)(5) of 
     the Internal Revenue Code of 1986) for the 12-month period 
     ending on August 31 of the immediately preceding fiscal year, 
     exceeds (B) the average of the Consumer Price Index (as so 
     defined) for the 12-month period ending on August 31, 
     1996.''.

     SEC. 2. INCREASE IN MAXIMUM AMOUNT OF GUARANTEED FARM 
                   OPERATING LOANS; INDEXATION TO INFLATION.

       Section 313 of the Consolidated Farm and Rural Development 
     Act (7 U.S.C. 1943) is amended--
       (1) by striking ``$400,000'' and inserting ``$600,000 
     (increased, beginning with fiscal year 1998, by the inflation 
     percentage applicable to the fiscal year in which the loan is 
     to be made or insured''); and
       (2) by adding at the end the following: ``For purposes of 
     this section, the inflation percentage applicable to a fiscal 
     year is the percentage (if any) by which (A) the average of 
     the Consumer Price Index (as defined in section 1(f)(5) of 
     the Internal Revenue Code of 1986) for the 12-month period 
     ending on August 31 of the immediately preceding fiscal year, 
     exceeds (B) the average of the Consumer Price Index (as so 
     defined) for the 12-month period ending on August 31, 
     1996.''.

     

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