The Farm Credit dilemma
(Continued from Page A3B)
guarantee programs offered by
FmHA. This situation is distur
bing, especially because lending
limits are twice as high for
guaranteed loans as for direct
loans.
Private lenders state that the
FmHA loan guarantee programs
require too much “red tape” and
tend to be categorized as a
“problem loan” by federal and
state bank examiners. FmHA
officials stated that guidelines
from Washington, DC have
authorized them to continue to
finance existing borrowers if they
can show repayment ability for the
current loan request and have
followed previous agreements with
the agency.
Officials indicated that they only
denied 3 percent of the loan ap
plications that met their eligibility
criteria last year and don’t expect
any significant change this coming
year. The 3 percent figure may be
misleading in that it does not
reflect the large number of ap
plicants who were cited as
ineligible.
The estimate on the number of
people who were denied ap-
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plications was not available for
this report. There appears to be a
significant problem arising for
producers who are not current
FmHA borrowers and who are
unable to obtain financing from
private lenders.
These officials said that new
borrowers will have to meet
stricter cash flow requirements.
FmHA officials stated that due to
budget reductions, they expect to
have less money available in
Pennsylvania to lend this year
than last year. This smaller
amount of funds to lend plus the
fact that many commercial-size
producers will not meet the
“family farm” size criteria in
dicates that these producers who
cannot be financed by private
lenders will have no source of
.credit. This fall-out from private
lenders will surely increase unless
the economic situation for
agriculture improves. Private ag
banks are not immune to this
problem.
One of the most alarming
features of this report is the high
percentage of non-real estate farm
debt that is being financed by non
traditional lenders. Out of the $1.3
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billion in total non-real estate farm
debt in Pennsylvania over $415
million or 32 percent is in the hands
of individuals and others.
Also of note is the fact that the
recently announced FmHA
programs that were designed to
help ease the financial burdens of
FmHA and non-FmHA borrowers
have not provided much relief. As
the report indicated, only 14,138
farmers nationwide out of over
100.000 total borrowers in FmHA
had qualified for the setaside
program with FmHA.
In Pennsylvania, only 342 ap
plicants had qualified for the same
program. Participation in the 10
percent guaranteed program for
non-FmHA borrowers is even
worse with no participants in
Pennsylvania at this time.
The economic health of all farm
credit agencies appears to be in
jeopardy. This is signaled by the
decreased funds expected for
FmHA this year in Pennsylvania,
the low loan volume and high
losses of the PCA, and the high
takeover of land by the FLB.
While there are a large number
of credit programs available from
the various agencies, the problems
of ag producers are such that
many will not be able to stay with
private lenders due to being highly
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leveraged and also cannot qualify
for FmHA programs. The result of
this is that many borrowers will be
without a source of credit. Unless
the agricultural economy im
proves, the loan portfolios of
private lenders will continue to
weaken.
It is obvious that the relative
“health” of all Agricultural credit
in situations is directly tied to the
recovery of the agricultural
economy. The dilemma faced by
credit institutions is a problem that
should receive consideration in all
levels of ag policy debate
particulariy in the upcoming farm
program debate.
.FmHA will surely be closely
scrutinized during this year as to
its effectiveness and even more as
to its cost to the Treasury. Many
congressmen are giving con
sideration to a separate ag credit
subtitle in the new public spotlight
for the near future.
The problem now being ex
perienced by ag credit institutions
both private and government is
due in large part to the weak ag
Willie Nelson booked
for 1986
YORK Willie Nelson, one of
the true superstars of American
entertainment, has been signed to
appear at the 1986 York Fair on
Saturday, September 15 at 8 pm.
Willie’s return to the 1986 Fair is
in response to the volume of
requests received from fans who
missed him in 1985. Nelson played
to enthusiastic crowds at the York
Fair in 1982,1983 and 1984.
Willie Nelson’s credentials as a
multi-talented entertainer are
impressive. He has long been a
best-selling singer and songwriter.
He has recorded and released
more than 45 albums of material,
has received four Grammy awards
and four CMA awards (including
Entertainer of the Year), and has
appeared before hundreds of
thousands of fans throughout the
world. Willie has starred in
movies, including “Honeysuckle
Rose” and “Songwriter”. And, he
has been a featured performer on a
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economy. The fact that producers
have not been able to show any
positive net income from farm
operations due to low prices has
directly affected their debt
repayment ability.
Therefore, for the ag credit
institutions to recover in the long
run, all of agriculture must ex
perience economic recovery.
Ag credit relief cannot be
isolated from a meaningful reform
of our trade policy or an adequate
national farm program. What
affects any one of these policy
areas as well as many others,
affects them all. It would do little
good to formulate a short-run
answer to the ag credit problem at
the expense of a meaningful farm
program.
The Farmers’ View is a column
that is compiled by the Public
Relations Division of the Penn
sylvania Farmers’ Association
(PFA). It expresses the views of
PFA’s policy positions on key
issues as adopted by the
organization’s 23,313 family
members.
York Fair
number of television shows.
Willie’s latest “starring” role
was as one of the organizers of this
year’s “Farm Aid” concert for the
benefit of American farmers.
Through his efforts, millions of
dollars were raised to assist the
hard-hit farm community.
Tickets for the Willie Nelson
concert at the York Fair are priced
at $l5 for track and plaza seats and
$l2 and $lO for grandstand seats.
Tickets are currently available
by mail order only. Orders should
be sent to York Fair Tickets, 334
Carlisle Ave., York, PA 17404. A
handling fee of $l.OO per ticket will
be charged. Checks, money orders,
Visa, Master Card and Choice
cards are accepted.
A special $2.00 advance sale gate
admission ticket may be ordered
along with the grandstand tickets.
Regular adult gate admission is
$2.50.
The 1986 York Fair will be open
September 5-13.