The Wall Street Journal
Wednesday, June 19, 1996
Letters to the Editor: An Insult to Hard-Working Farmers
James Bovard's editorial-page commentary on the Department of Agriculture's farm loan
programs (editorial page, May 21) seems to have forgotten the wisdom of "don't throw out the
baby with the bath water." The loan programs have had certain problems that all observers agree
to be serious. Mr. Bovard's editorial contained nothing new in this regard. But rather than
abolishing the programs because of these problems, as Mr. Bovard suggests, the Clinton
administration is promoting sensible reform while continuing to provide a valuable service to
farmers and ranchers.
For example, in the farm bill proposals, we recommended eliminating a perennial congressional
mandate that the USDA make new loans to farmers every year, even if they were currently
delinquent. We also advocated other restrictions to tighten eligibility for the farm loan programs,
recommendations that Congress adopted in the new farm bill.
We are also resolving million-dollar delinquent loans that were on the books throughout the
Reagan and Bush administrations, the majority of them made in the 1970s and early 1980s, when
land values were high, under programs that have since been eliminated or restricted. It is a legacy
of bad debt from the sloppy lending practices of previous administrations. While we collect as
much of this outstanding debt as possible when we resolve these loans, we will never collect it all
because of legal barriers and the fact that most of these borrowers simply do not have any
resources to repay their outstanding loans.
Mr. Bovard is correct to credit Sen. Lugar for his efforts to improve the farm loan programs; the
USDA worked closely with him in developing the credit provisions of the new farm bill as well as
in resolving outstanding loans. But Mr. Bovard is wrong on a number of his characterizations of
the loan programs.
Mr. Bovard insults the vast majority of USDA borrowers when he labels them as "big . . . and
incompetent" as well as "uncreditworthy." In fact, only family-size farmers are eligible. None of
them are uncreditworthy; all borrowers must have a positive cash flow. And every farmer I know
works hard every day to produce food for customers in America and world-wide.
With the average age of American farmers in the mid-50s, the USDA's loan programs are essential
to help beginning farmers. In fact, more than half of our farm ownership loan funds in 1994 and
1995 went to beginning farmers, and the new farm bill appropriately targets funding to assist more
young people get started.
Readers should also know that the Farmers Home Administration was eliminated as part of the
USDA's reorganization, and the farm loan programs were transferred to the Farm Service
Agency, which also administers the USDA's commodity programs. We eliminated 14 agencies,
closing more than 1,200 field offices, saving taxpayers more than $4 billion in five years.