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DEPARTMENT OF AGRICULTURE
APPROPRIATIONS FOR 1964

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES

EIGHTY-EIGHTH CONGRESS

FIRST SESSION

SUBCOMMITTEE ON DEPARTMENT OF AGRICULTURE AND RELATED

AGENCIES APPROPRIATIONS

JAMIE L. WHITTEN, Mississippi, Chairman
WILLIAM H. NATCHER, Kentucky

WALT HORAN, Washington
JOSEPH P. ADDABBO, New York

ROBERT H. MICHEL, Illinois
Ross P, POPE, Staf Assistant to the Subcommittee

PART 4

(Pages 2153 to 2995)
FARM CREDIT ADMINISTRATION
FARMERS HOME ADMINISTRATION
FEDERAL CROP INSURANCE CORPORATION
GENERAL ADMINISTRATION
LANGUAGE CHANGES AND GENERAL PROVISIONS
NATIONAL AGRICULTURAL LIBRARY
OFFICE OF THE GENERAL COUNSEL
OFFICE OF INFORMATION
OFFICE OF RURAL AREAS DEVELOPMENT
RURAL ELECTRIFICATION ADMINISTRATION
SECRETARY OF AGRICULTURE

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1963

96884

COMMITTEE ON APPROPRIATIONS

CLARENCE CANNON, Missouri, Chairman GEORGE H. MAHON, Texas

BEN F. JENSEN, Iowa HARRY R. SHEPPARD, California

WALT HORAN, Washington ALBERT THOMAS, Texas

GERALD R. FORD, JR., Michigan MICHAEL J. KIRWAN, Ohio

HAROLD C. OSTERTAG, New York JAMIE L, WHITTEN, Mississippi

FRANK T, BOW, Ohio GEORGE W. ANDREWS, Alabama

CHARLES RAPER JONAS, North Carolina JOHN J. ROONEY, New York

MELVIN R. LAIRD, Wisconsin J. VAUGHAN GARY, Virginia

ELFORD A. CEDERBERG, Michigan JOHN E. FOGARTY, Rhode Island

GLENARD P. LIPSCOMB, California ROBERT L. F. SIKES, Florida

JOHN J. RHODES, Arizona OTTO E. PASSMAN, Louisiana

JOHN R. PILLION, New York JOE L. EVINS, Tennessee

WILLIAM E. MINSHALL, Ohio JOHN F. SHELLEY, California

ROBERT H, MICHEL, Illinois EDWARD P. BOLAND, Massachusetts SILVIO O. CONTE, Massachusetts WILLIAM H, NATCHER, Kentucky

WILLIAM H. MILLIKEN, JR., Pennsylvania DANIEL J. FLOOD, Pennsylvania

EARL WILSON, Indiana WINFIELD K. DENTON, Indiana

ODIN LANGEN, Minnesota TOM STEED, Oklahoma

WILLIAM HENRY HARRISON, Wyoming JOSEPH M. MONTOYA, New Mexico

BEN REIFEL, South Dakota
GEORGE E. SHIPLEY, Illinois

LOUIS C. WYMAN, New Hampshire
JOHN M. SLACK, JR., West Virginia
JOHN LESINSKI, Michigan
JOHN J. FLYNT, Georgia
NEAL SMITH, Iowa
ROBERT N. GIAIMO, Connecticut
JULIA BUTLER HANSEN, Washington
EDWARD R. FINNEGAN, Illinois
CHARLES S. JOELSON, New Jersey
JOSEPH P. ADDABBO, New York

KENNETH SPRANKLE, Clerk and Staff Director

DEPARTMENT OF AGRICULTURE APPROPRIATIONS

FOR 1964

FRIDAY, MARCH 15, 1963.

FARMERS HOME ADMINISTRATION

WITNESSES

HOWARD BERTSCH, ADMINISTRATOR, FARMERS HOME ADMINIS

TRATION FLOYD F. HIGBEE, DEPUTY ADMINISTRATOR, FARMERS HOME

ADMINISTRATION J. VIRGIL HIGHFILL, ASSISTANT ADMINISTRATOR, OPERATING

LOANS, FARMERS HOME ADMINISTRATION BERNARD H. POLK, ASSISTANT ADMINISTRATOR, REAL ESTATE

LOANS, FARMERS HOME ADMINISTRATION JAMES T. HOLLIDAY, DIRECTOR, BUDGET DIVISION, FARMERS

HOME DIVISION HOWARD V. CAMPBELL, DIRECTOR, FARMERS HOME DIVISION,

OFFICE OF THE GENERAL COUNSEL CHARLES L. GRANT, DIRECTOR OF FINANCE AND BUDGET OFFICER,

DEPARTMENT OF AGRICUTLURE

Mr. WHITTEN. Gentlemen, the committee will come to order. We shall take up first today the Farmers Home Administration. We shall be glad to have pages 132 through 136, 145, 169 through 175, 182 and 183 inserted in the record at this point. (The pages referred to follow:)

PURPOSE STATEMENT The Farmers Home Administration, established November 1, 1946, pursuant to the Farmers Home Administration Act of 1946, approved August 14, 1946, conducts the following activities:

1. Makes direct and insured farmownership loans pursuant to subtitle A of the Consolidated Farmers Home Administration Act of 1961, as amended. Such loans are made to farmers and ranchers including persons engaged in fish farming for acquiring, enlarging, or improving farms and farm buildings; land and water development, use, and conservation; forestry development; recreational facilities; refinancing indebtedness; and for loan closing costs. Loans are confined to farms which are not larger than family farms. A loan cannot exceed $60,000 in any case. Loans are repayable in not more than 40 years and bear interest not in excess of 5 percent. Insured loans are made with funds advanced

by private lenders and payments of principal and interest are fully guaranteed. The Government retains at least one-half of 1-percent interest as an insurance premium. Any interest in excess of one-half of 1 percent which is not paid to the lender is available for administrative expenses of the Farmers Home Administration. The Administration services these insured loans, makes collections, and pays the lender.

2. Makes direct and insured soil and water conservation loans pursuant to subtitle A of the Consolidated Farmers Home Administration Act of 1961, as amended. Such loans are made to farmers and ranchers including persons engaged in fish farming and to associations for the effective development and utilization of water

(2153)

supplies and for the improvement of farmland by soil and water conserving facilities and practices. Loans to associations also may be made for shifts in land use including the development of recreational facilities. Loans may be made on farms of any size. For loans to individuals, a loan cannot exceed $60,000 in any case. For loans to associations, the unpaid principal indebtedness is limited to $500,000 in the case of a direct loan and $1 million in the case of an insured loan. Loans are repayable in not more than 40 years and bear interest not in excess of 5 percent. Insured loans are made on the same basis as applicable to farmownership insured loans.

3. Makes direct operating loans pursuant to subtitle B of the Consolidated Farmers Home Administration Act of 1961, as amended. Such loans are made to farmers and ranchers including persons engaged in fish farming for paying costs incident to reorganizing a farming system for more profitable operations; for a variety of essential farm operating expenses such as purchase of livestock, farm equipment, feed, seed, fertilizer, and farm supplies; for financing land and water development, use, and conservation, including recreational uses and facilities for refinancing indebtedness; for other farm and home needs; and for loan closing costs. Loans are confined to operators of not larger than family farms. The outstanding principal loan balance for operating loans is limited to $35,000. Loans bear interest at 5 percent and may be made for periods up to 7 years, but may be renewed for not more than 5 additional years. Loans are secured by crop and chattel liens and, when necessary, by real estate mortgages.

4. Makes direct rural housing loans pursuant to title V of the Housing Act of 1949, as amended. Building loans are made to farmowners, to owners of other real estate in rural areas, to elderly persons who own land or who can buy a small tract in rural areas, and to long-term farm leaseholders to construct, improve, alter, repair, or replace dwellings and essential farm service buildings. Direct farm enlargement and development loans, along with building loans, are also made to farmowners on potentially adequate farms who need to develop their farms so as to increase their income sufficiently to repay the loans. Loans are repayable in not more than 33 years and bear interest at 4 percent.

5. Makes rural housing repair and improvement grants pursuant to title V of the Housing Act of 1949, as amended, for such minor items as repairing roofs, providing toilet facilities, providing a convenient and sanitary water supply, supplying screens, etc. In some cases, combination loans and grants are made, but the loan, grant, or combination may not exceed $1,000.

6. Makes insured farm labor housing loans pursuant to title V of the Housing Act of 1949, as amended. Such insured loans are made either to farmowners or to organizations to provide modest living quarters and related facilities for domestic farm labor. These loans, which are made with funds advanced by private lenders, are repayable in not more than 33 years. Otherwise insured farm labor housing loans are subject to the same terms and limitations applicable to other types of insured loans.

7. Makes insured loans for rental housing for the elderly pursuant to title V of the Housing Act of 1949, as amended. Such insured loans are made to individuals, corporations, associations, trusts, or partnerships to provide moderate cost rental housing and related facilities for elderly persons in rural areas. These loans, made with funds advanced by private lenders, are repayable in the number of years best suited to the individual case and bear interest at 574 percent. No loan may exceed $100,000. Annual payments of principal and interest to lenders are fully guaranteed. The Government retains at least one-half of 1 percent interest as an insurance premium. Any interest in excess of one-half of 1 percent which is not paid to the lender is available for administrative expenses of the Farmers Home Administration. The Administration services these insured loans, makes collections, and pays the lender.

8. Makes direct loans for rental housing for the elderly pursuant to title V of the Housing Act of 1949, as amended. Such direct loans are made to private nonprofit corporations and consumer cooperatives to provide modest cost rental housing and related facilities for elderly persons of low or moderate income in rural areas. These direct loans, made from the Rural Housing for the Elderly Revolving Fund, are repayable in not more than 50 years and bear interest at a rate similar to that of the direct loan program of the Housing and Home Finance Agency for the elderly in urban areas which is currently 344 percent.

9. Beginning with fiscal year 1964 the Farmers Home Administration will provide technical assistance and make loans for rural renewal activity pursuant to section 102 of the Food and Agriculture Act of 1962. Loans will be made to local agencies or groups for rural renewal projects specifically related to conservation and land utilization. Each project financed with loan funds will be an important component of an overall rural renewal plan developed to rebuild the economy of the designated area. To be eligible for designation as a rural renewal area, the locality must be one of chronic underemployment on farms and unemployment in the surrounding communities. The area must also be one in which agriculture or forestry contribute substantially to the economy. Rural renewal loans will be repayable in not more than 30 years, with repayment of principal and interest deferred up to 5 years, if necessary. Loans will bear interest at the average rate paid by the U.S. Treasury on obligations of similar maturity. The present rate is 2.936 percent. Loans in excess of $250,000 will require approval of the Committee on Agriculture of the House and Committee on Agriculture and Forestry of the Senate.

10. Makes direct emergency loans pursuant to subtitle C of the Consolidated Farmers Home Administration Act of 1961. Such loans may be made in designated areas where a natural disaster has caused a general need for agricultural credit which cannot be met for temporary periods of time by private, cooperative, or other responsible sources, including the Farmers Home Administration in its regular loan programs. Emergency loans are made to established farmers, ranchers (including persons engaged in fish farming) and oyster planters, and to private domestic corporations or partnerships engaged primarily in farming, ranching or oyster planting. Emergency loans may be made for any of the purposes for which farm ownership, soil and water conservation, and operating loans are authorized. Emergency loans bear interest not in excess of 3 percent and are repayable not later than regular loans made by the Farmers Home Administration for similar purposes. Loans may be made outside of designated emergency areas to persons or corporations who have suffered severe production losses not general to the area, or to persons who are indebted for emergency loans made by the Farmers Home Administration under prior authorities.

11. Makes watershed and flood prevention loans from funds appropriated under “Watershed protection” and under "Flood prevention,” under the Soil Conservation Service. Such loans are made to local organizations for installing, repairing or improving works of improvement and water storage facilities, purchasing sites or rights-of-way and for related costs. Loans are repayable in not more than 50 years at an interest rate based on specified outstanding obligations of the Treasury. Total loans outstanding on any one project may not exceed $5 million.

12. Will make resource conservation and development loans in fiscal year 1964 from funds appropriated under “Resource conservation and development projects, Soil Conservation Service.” Loans will be made to local organizations and individuals for planned conservation measures and works of improvement as specified in approved work plans.

Technical guidance in planning and carrying out sound farm operations is provided borrowers on the basis of their individual problems and needs. No loan is made to anyone who can secure adequate credit from other sources at reasonable rates. A local county committee of three (two of whom must be farmers) is required to approve each applicant and each loan.

On July 1, 1962, the Administration was servicing the accounts of about 210,200 individual borrowers with outstanding indebtedness of $1,676,969,000 principal and interest.

The Farmers Home Administration maintains a central office in Washington with program activities decentralized to 43 State offices (a few of which service 2 or more States), about 1,494 county offices serving all agricultural counties, and a finance office in St. Louis, Mo. The Farmers Home Administration on November 30, 1962, had 5,059 full-time employees, 209 of whom were in Washington, and the balance in the field, and 5,901 State and county committeemen who are part-time employees paid an average of 8 to 10 days a year.

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