Law Bars Aid to Farmers With Forgiven Debt

Large numbers of struggling farmers who depend on government financing have been suddenly denied loans because of the new farm law, and officials say many of them may be forced out of business.

The law, effective April 4, bars the Agriculture Department from lending to producers who have had a federal farm loan forgiven or written off in the past.

Agriculture Secretary Dan Glickman, whose department is the lender of last resort for farmers who cannot get private credit, said Thursday that he was looking into the situation.

The department made or guaranteed 28,000 farm operating loans in 1994, the latest year for which figures are available. Thousands of those farmers could be affected, USDA officials say, and a survey of county offices to determine a number is underway.

Officials say the loan ban also could hurt suppliers who sold farmers fuel, fertilizer and seed with the expectation that they would be paid with the loan money.

The ban was designed to clean up chronic problems in the USDA loan portfolio. The congressional General Accounting Office estimated last year that $5 billion in loans were held by borrowers who would have trouble repaying them.

The House and Senate Agriculture committees are writing to Glickman, saying he has the authority to go ahead this year with loans to farmers whose debts were forgiven in the past but only if they aren’t behind on current debts, congressional aides said.