As it begins sending out delinquency notices to some 65,000 American farmers now behind in their loan payments, the Farmers Home Administration is offering them a hand. To help farmers in distress get through these tough times, it has embarked on a three-year, $490 million program in which the FmHA will subsidize banks to cut their loan rates to marginal farmers by 1 to 2 percent.
This may help a substantial number of farmers to survive the immediate crisis, especially now that farm land values appear to be stabilizing after a steady decline. The question is: What comes at the end of the three-year period?
All that really lies ahead for marginal farmers is years and years of federal dependency. Long-term credit subsidies would keep farm operations afloat so they can continue to receive income support subsidies, which are a significant cause of the huge federal debt that is keeping interest rates high. The interest rates hurt the farmers both by raising their costs and by buoying up the dollar against foreign currencies, severely damaging the farm export market. Yet farm state legislators and economists are complaining that this easy credit program is too limited. They`re calling for one of $3 billion a year or more.
That kind of congressional thinking may be high on compassion, but it`s low on foresight.
