[Congressional Record Volume 144, Number 29 (Tuesday, March 17, 1998)]
[Senate]
[Pages S2122-S2123]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LOTT (for himself and Mr. Cochran):
  S. 1774. A bill to amend the Consolidated Farm and Rural Development 
Act to authorize the Secretary of Agriculture to make guaranteed farm 
ownership loans and guaranteed farm operating loans of up to $600,000, 
and to increase the maximum loan amounts with inflation; to the 
Committee on Agriculture, Nutrition, and Forestry.


             the family farm credit opportunity act of 1998

  Mr. LOTT. Mr. President, 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. That is 20 years ago for one and 14 years ago for 
the other. A great deal has changed. Prices have gone up and inflation 
has eroded the value of the caps. Back then, farm ownership and 
operating costs could be adequately financed within both of these cap 
limits. Not anymore. It is time for a cap correction.
  Given today's larger and more capital-intensive farming operations, 
the limits must be raised in order to realistically 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. However, most banks will not finance a beginning poultry farm 
with less than four poultry houses. That makes the initial costs 
$500,000. 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 eliminate qualified applicants. This 
type of problem exists throughout the entire agricultural community, 
not just the poultry industry.
  To address this problem, I am introducing the Family Farm Credit 
Opportunity Act of 1998 which would raise the cap limits on both the 
farm ownership loan and the operating loan to $600,000.
  Mr. President, this is the companion bill to the one introduced by 
Representative Chip Pickering from Mississippi. He saw a problem and he 
has proposed a responsible fix. The poultry example displays how much 
agriculture has changed since the caps were last amended twenty years 
ago. In fact, while the increase in the cap limits may seem substantial 
at first, neither

[[Page S2123]]

increase reflects the increase just caused by inflation. We should at 
least keep up with inflation for a program that has served as a 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 find solutions 
at a relatively low cost to the taxpayer. 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 two. This last provision will allow the caps to automatically 
adjust for inflation, which will provide a long-term fix to assure that 
the family farm does not again outgrow the upper limits of the farm 
ownership loan or the 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 the vigorous 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.
  Mr. President, we must preserve the family farm and continue 
America's tradition of promoting family farmers. Congress must provide 
a mechanism which enables family farmers to receive the necessary funds 
for ownership and operation of a farming business.
  Congress appropriates money for the FSA Guarantee Loan Program each 
year. Congress should put this money to its best and most efficient 
use. We should take a step back and take a good look at what a family 
farmer in 1997 really is? It is not the 1978 farmer with 1978 costs. Of 
course these programs should be run as efficiently as possible.
  Mr. President, as for the ``family farmer,'' they still exist and are 
successful, but they aren't the same as they were 20 years ago. Why? 
Well, let's 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 with farmers around the 
world--farmers in China, Japan, Russia, Canada, Mexico just to name a 
few. Technology and research have both been overwhelmingly successful 
in allowing America to increase its production with less land. We are 
now able 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. Today farmers live in a capital intensive world. 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 farmers would be using 
satellites to level their land or to tell them exactly where chemical 
applications are needed? Who could have imagined that biotechnology 
would yield such complex seed developments?
  Who could have imagined that farmers would have the technology to so 
closely monitor the growth of animals or that farmers would have the 
ability to specifically and scientifically regulate diets in order to 
achieve faster growth with less fat?
  Mr. President my point is that agriculture has changed and so has the 
family farmer. The Guaranteed Loan Program was designed to help the 
family farmer. Let's make sure it is big enough to do just that. In 
order to continue this goal, we must address the needs of today, not of 
1978 by providing the capital necessary to compete and be successful in 
1998.
  The family farmer is a larger operator relative to 1978 standards. We 
need new cap limits that reflect this change.
  Mr. President, I want to truly help the family farmer. Mr. President, 
Mr. Pickering, my colleague in the House wants to truly help the family 
farmer.
  Let's fix a program that has been successful in the past in helping 
this critical sector of our country. Let us not stop the progress of 
our family farmers. Congress 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.
  Mr. President, I ask unanimous consent that the text of the bill be 
inserted in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1774

       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 ``Sec. 305. The'' and inserting:

     ``SEC. 205. MAXIMUM AMOUNT OF FARM OWNERSHIP LOANS.

       ``(a) In General.--The'';
       (2) by striking ``of (1) the'' and inserting ``of--
       ``(1) the'';
       (3) by striking ``security, or (2) in'' and inserting 
     ``security; or
       ``(2) in'';
       (4) by striking ``$300,000'' and inserting ``$600,000 
     (increased, beginning with fiscal year 1998, by the inflation 
     percentage applicable to the fiscal year in which the loan is 
     made or insured)'';
       (5) by striking ``In determining'' and inserting the 
     following:
       ``(b) Value of Farms.--In determining''; and
       (6) by adding at the end the following:
       ``(c) Inflation Percentage.--For purposes of subsection 
     (a)(2), the inflation percentage applicable to a fiscal year 
     is the percentage (if any) by which--
       ``(1) 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 preceding 
     fiscal year; exceeds
       ``(2) the average of the Consumer Price Index 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 ``Sec. 313. The'' and inserting:

     ``SEC. 313. MAXIMUM AMOUNT OF FARM OPERATING LOANS.

       ``(a) In General.--The'';
       (2) by striking ``subtitle (1) that'' and inserting 
     ``subtitle--
       ``(1) that'';
       (3) by striking ``$400,000; or (2) for'' and inserting 
     ``$600,000 (increased, beginning with fiscal year 1998, by 
     the inflation percentage applicable to the fiscal year in 
     which the loan is made or insured); or
       ``(2) for''; and
       (4) by adding at the end the following:
       ``(b) Inflation Percentage.--For purposes of subsection 
     (a)(1), the inflation percentage applicable to a fiscal year 
     is the percentage (if any) by which--
       ``(1) 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 preceding 
     fiscal year; exceeds
       ``(2) the average of the Consumer Price Index for the 12-
     month period ending on August 31, 1996.''.
                                 ______