Bill Allows Expansion of New Farmers

Bills are pending in the Senate and House to increase access to a low-interest lending program for beginning farmers. The bills seek to increase access to low-interest lending through federal tax-exempt "aggie" bonds.

The bonds finance low-interest loans through private lenders who participate in the program. But the bonds are subject to the volume cap for industrial revenue bonds and must compete with industrial projects for bond allocation, making aggie bond availability severely limited in many states.

Aggie bonds would be removed from the private activity bond limit and in turn lending authorities could extend more aggie bond loans. Sens. Charles Grassley (R-IA) and Kent Conrad (D-ND) introduced the bill in the Senate, and Reps. Jim Nussle (R-IA) and Leonard Boswell (D-IA) introduced the measure in the House.

Grassley called aggie bonds "important tools for first-time farmers who need capital to buy farm land and equipment." In Iowa, he added, $262.3 million has been loaned to 2,603 qualified beginning farmers with a default rate of only 1.5% of loans and 1.75% of loan value.

Nussle said it must become easier for young people "to follow in the footsteps of their parents and grandparents if we hope to preserve the proud heritage of the family farm." That future appears "less and less attractive to today's young people as they watch low commodity prices and weak foreign markets pile stress and strain on their families."