Caution needs to be mixed with compassion as Congress addresses the farm-credit crisis.
An argument is being made that effective and efficient farmers, caught in the present farm recession, will not be able to plant this spring unless the federal government enlarges the loan guarantees available to the farms. That is a compelling argument for making more money available.
But it is no secret that the banks serving the distressed farmers are not using government loan-guarantee programs already available to them because they regard the federal terms as unacceptably onerous. There is evidence that a good deal of the pressure for more money is coming from the banks themselves, as concerned about bailing out their own institutions as about the plight of the farmer. The federal government has been correct in insisting that the banks share the burden in this problem period.
Finding an equitable solution to this short-term emergency is complicated by the politics of writing a new farm bill to replace legislation expiring at the end of this year. The Reagan Administration is expected to make public its farm bill later this week. The preoccupation with the present crisis could produce first-aid remedies for farmers in trouble rather than legislation that strengthens the farm economy.
Credit expansion for the spring planting will help only if there is a major turnaround for the better in agriculture--a turnaround that would include higher prices, lower interest rates and a declining value of the dollar to improve export competitiveness. None of these changes appear likely. That means that credit extensions this spring will only be postponing the crisis. That strategy will be worthwhile if it buys time to write sound legislation while maintaining at least temporarily the viability of efficient and effective farmers. Emergency loan guarantees cannot be a solution, not even for the best of the farmers. And even emergency measures must respect a brutal reality: Some farms, perhaps 30,000 among the 680,000 commercial farms, already are insolvent, and there is no way in which they can be rescued.
Solutions, to the extent that the government can contribute to them, will be found only when the new farm bill is drafted in the months ahead.