[Congressional Record Volume 153, Number 81 (Wednesday, May 16, 2007)]
[Senate]
[Pages S6196-S6197]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN:
  S. 1412. A bill to amend the Farm Security and Rural Development Act 
of 2002 to support beginning farmers and ranchers, and for other 
purposes; to the Committee on Agriculture, Nutrition, and Forestry.

  Mr. HARKIN. Mr. President, today, along with Senators Grassley, 
Brown, and Baucus, I am introducing legislation that will expand 
opportunities for our next generation of farmers and ranchers. Over the 
next two decades, an estimated 400 million acres of agricultural land 
will be transferred to new owners. Today, farmers over the age of 65 
outnumber those below the age of 35 by a margin of nearly two to one. 
The future structure, health and vitality of our Nation's food and 
agriculture system depend on sound public policies that provide the 
next generation of farmers and ranchers the help they need to 
successfully enter farming and ranching.
  The next generation of farmers and ranchers need access to training 
and mentoring which will help them obtain the critical management and 
marketing skills vital to their success. The Beginning Farmer and 
Rancher Program, created in the Farm Security and Rural Investment Act 
of 2002, is the first USDA program other than credit financing to focus 
specifically on beginning farmers and ranchers. The Beginning Farmer 
and Rancher Opportunity Act of 2007 would reauthorize this program and 
provide $25 million a year in mandatory funding. We also propose to 
make beginning farmer issues, such as land transition, farm transfer 
and succession, and entry into farming priority research areas within 
the Initiative for Future Agriculture and Food Systems.
  Beginning farmers and ranchers who are unable to obtain credit from 
commercial sources are eligible for Farm Service Agency direct farm 
ownership and operating loans up to an amount of $200,000 for each type 
of loan. This limit has not been adjusted in nearly

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two decades despite the rising cost of land, equipment and energy, and 
thus it is no longer sufficient. We propose to increase direct farm 
ownership and operating loan limits from $200,000 to $300,000 to 
reflect economic realities. The authorization of appropriations for 
direct loans is adjusted in the bill to reflect the new loan limits. It 
is important to increase direct loan authorization levels and 
appropriations, along with adjusting the direct farm ownership and 
operating loan limits or the net result may well be larger loans to 
fewer borrowers out of a constant pool of loan funds.
  We propose several adjustments to the beginning farmer and rancher 
down payment loan program. This loan combines the financial resources 
of the beginning farmer, the Farm Service Agency and commercial or 
private lenders. Throughout the 1990s this program was very successful, 
but in recent years it has not been widely used due to low interest 
rates on traditional direct farm ownership loans. The interest rates on 
the down payment loan and direct farm ownership loan have been 
comparable so qualified borrowers have chosen to use the traditional 
FSA direct farm ownership loan for which no down payment is required.
  The Beginning Farmer and Rancher Opportunity Act of 2007 would adjust 
the current interest rate of 4 percent for beginning farmer and rancher 
down payment loans to a floating rate of 4 percent below the regular 
FSA direct farm ownership interest rates, or 1 percent, whichever is 
greater. It would also reduce the beginning farmer's down payment from 
10 percent to 5 percent of the total price of land and increase the FSA 
portion of the loan to 45 percent from 40 percent. A commercial lender 
or private seller would still be required to supply the remaining 
portion of the partnership loan.
  These changes, along with a few others, would make the program more 
attractive for beginning farmers and ranchers. Creating more attractive 
incentives in this beginning farmer and rancher down payment loan 
program should result in limited Federal dollars supporting more 
qualified borrowers since the government's portion of financing a farm 
purchase is only 45 percent as opposed to the traditional direct farm 
ownership loan where the government finances 100 percent of the loan.
  The Beginning Farmer and Rancher Opportunity Act of 2007 creates a 
new beginning farmer and rancher individual development account pilot 
program. This program is designed to help beginning farmers and 
ranchers with limited resources establish savings. Eligible program 
participants agree to save money which is matched by federal and local 
money. The savings may be used by a participant for capital 
expenditures for farm and ranch operation, including the purchase of 
land, buildings, equipment and livestock. This program will help 
participating beginning farmers and ranchers save and invest in assets 
that will increase their long-term equity and likelihood of success.
  The challenges beginning farmers and ranchers face are immense. The 
cost of land and equipment, obtaining credit, turning a profit and 
building equity in a highly uncertain business are just a few of the 
challenges. The Beginning Farmer and Rancher Opportunity Act of 2007 
will help address the big challenge facing America's next generation of 
farmers and ranchers. This bill is a comprehensive initiative which 
provides farmers and ranchers critical help they need to enter and 
succeed in farming and ranching, to be good stewards of the land, to be 
innovative and entrepreneurial and to respond to rapidly changing 
markets and economic realities. I encourage my colleagues to support 
this important legislation and help enact it this year.
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