[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Senate]
[Pages 29737-29738]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     SHARED APPRECIATION AGREEMENTS

 Mr. BURNS. Mr. President, shared appreciation agreements have 
the potential to cause hundreds of farm foreclosures across the nation, 
and especially in my home state of Montana. Ten years ago, a large 
number of farmers signed these agreements. At that time they were under 
the impression that they would be required to pay these back at the end 
of ten years, at a reasonable rate of redemption.
  However, that has not proved to be the case. The appraisals being 
conducted by the Farm Service Agency are showing increased values of 
ridiculous proportions. By all standards, one would expect the value to 
have decreased. Farm prices are the lowest

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they have been in years, and there does not seem to be a quick recovery 
forthcoming. Farmers cannot possibly be expected to pay back a value 
twice the amount they originally wrote down. Especially in light of the 
current market situation, I believe something must be done about the 
way these appraisals are conducted.
  USDA has proposed rules and regulations but farmers need help with 
these agreements now. This legislation mandates these important 
regulations. It will exclude capital investments from the increase in 
appreciation and allow farmers to take out a loan at the ``Homestead 
Rate'', which is the government's cost of borrowing.
  Farmers should not be penalized for attempting to better their 
operations. Nor can they be expected to delay capital improvements so 
that they will not be penalized. It will be necessary for most of these 
agricultural producers to take out an additional loan during these hard 
times. It is important that the interest rate on that loan will 
accommodate their needs. The governments current cost of borrowing 
equals about 6.25 percent, far less than the original 9 percent farmers 
and ranchers were paying.
  I look forward to working with members in other states to alleviate 
the financial burdens imposed by shared appreciation agreements. I hope 
that we may move this through the legislative process quickly to 
provide help as soon as possible to our farmers.

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