[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Page 31055]
[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 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 is attempting to fix the problem with proposed rules and 
regulations but farmers need help with these agreements now. The USDA 
has published several regulations addressing the issue but the comment 
period will further drag out the process. I am fearful that in the 
meantime more farmers will be forced into foreclosure.
  My bill mandates by legislation 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 ranches 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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