Credit is no substitute for income, but it is essential to any farm operation, says USDA Under Secretary for Farm and Foreign Agricultural Services August Schumacher, Jr. In an address to USDA’s ag forum, he said funds are exhausted or soon will be for key credit programs, meaning Congress will have to appropriate more money soon.
There have been strong indications from Capitol Hill that a supplemental appropriations bill later this year will include more money for direct and guaranteed farm loans. Schumacher notes that commercial lenders are using loan guarantees to restructure short-term indebtedness into more favorable long-term rates to keep farmers in business.
At the 1998 ag forum, Schumacher noted, USDA economists predicted "robust growth in global import demand, driven primarily by income growth in developing countries and increasingly open trade environment..." Even with the Asian economic crisis and a more extensive foreign economic contraction than was foreseen last year, longer term trade prospects "remain relatively bright," he added.
Farm exports still contribute significantly to net farm income, Schumacher said. "After all, 96 percent of the world’s population still lives outside the United States, and we still produce far more food than we could ever consume in this country."
Still, the global financial crisis has lowered absolute wealth and "thrown 40-45 percent of U.S. export markets into recession," he said. "However, it is our expectation that the anticipated restructuring of many of these economies will result in even healthier economies and ultimately larger markets for our products in the long term."