Remarks by Secretary of Agriculture Dan Glickman Farm Credit Council Annual Conference via Satellite January 16, 1999 Release No. 0023.99 Remarks As Prepared for Delivery by SECRETARY OF AGRICULTURE DAN GLICKMAN FARM CREDIT COUNCIL ANNUAL CONFERENCE VIA SATELLITE JANUARY 16, 1999 "Thank you Bill (Mainer) for that introduction. I want to thank the Farm Credit Council for inviting me to speak to you today. I apologize that it has to be from so far away. But I'm sure as you all know, the President's State of the Union is this evening, so duty calls here. "It's going on four years that I've been Agriculture Secretary. Though I can't say I've seen it all, I can say that I've seen a lot. Farmers have been through some of the best times ever records in prices, production, net farm income and exports. They've also seen pretty grim times -- getting hit with the fallout from the Asian financial crisis, bad weather and low commodity prices. "And frankly speaking we were lucky. Under President Clinton we have the strongest economy in a generation with the lowest unemployment, inflation and, as you well know, lowest interest rates in more than two decades. For the second year in a row he will submit a balanced budget to Congress. Pretty startling for an Administration that when we came into office was looking at budget deficits for as far as the eye could see. So this nation was able to come to the aid of farmers. But it might not work out that way every time. I don't believe we should lurch from relief bill to relief bill. "Business cycles are a fact of life. We need to find better ways for farmers to prepare for inevitable downturns and unforseen circumstances. In general, we all know that the best remedy for robustly producing businesses is more places to sell their products. One third of U.S. agricultural output is exported. Domestic demand doesn't come close to keeping pace with our steady increase in farm productivity. So as technology helps farmers produce more, their ability to prosper will depend on expanding opportunities overseas. That's why this Administration has pursued such an aggressive trade policy. "I know that many farmers are wary of the behavior of some of our trading partners such as a Canadian style state trading enterprise that some believe permits the dumping of wheat into the U.S. market or by European intransigence in complying with WTO decisions or by a trade imbalance with China that keeps our wheat and citrus out while we import billions of dollars of consumer goods from them each year. "But that doesn't negate the need for trade. For example, our trade with Canada is up astronomically. Without the freer trading relationship that we enjoy with Canada today, which helped offset our losses in Asian exports, our farm exports would be down hundreds of millions of dollars more right now. The truth is that U.S. agriculture cannot survive without free access to world markets. While it sure would be nice if everyone else would just open up their markets, and we wouldn't have to do the same, the fact is life doesn't work that way. That's why with critical trade talks like the World Trade Organization negotiations just around the corner, the United States will need to take a strong stand for more free, open and reciprocal trade. "But, even as I emphasize the importance of trade, I don't want to see all our eggs in that trade basket. As the events of last year demonstrated, trade is not the panacea for all the challenges that face U.S. agriculture. "U.S. agriculture is in transition, as government gets out of the day- to-day decisions of farming. This puts more responsibilities on the shoulders of farmers to manage their own risks and better prepare for the inevitable downturns. I'd like to see more farmers adopt sound business management practices, such as aggressive marketing plans that explore the use of co-ops or other methods to grow and guard the bottom line. I'd like to see sound financial management tools used more often, and more farmers staying abreast of and open to changes in technology. "But even with all of this, I still don't think farmers should have to go it alone. Agriculture is the backbone of our country. There's no getting away from the simple fact that everybody eats. Ensuring the success of U.S. agriculture benefits us all. So when hard-working farmers make wise, prudent decisions, and difficulties beyond their control strike, we must be there for farmers. "And, we shouldn't wait for hard times to hit. That's what we did last year -- at a pretty hefty cost to taxpayers. In the future, I think that we should focus more on preventive medicine. "I've said that I want to make 1999 the year of the safety net. But rather than envisioning one broad federal initiative, I look at the safety net as a combination of efforts from many quarters -- from farmers to farm groups to government to lenders. Agriculture today is far too complex for us to think that we can have one, catch-all, big-government initiative that answers all our prayers. "I see a strong crop insurance program as the anchor to our safety net. President Clinton and I will work with Congress to pursue crop insurance that farmers can depend on. With that as our foundation, we can develop more strategies to protect farmers -- on the trade and home fronts. "Last year USDA made massive humanitarian grain purchases which provided a boost to our farmers. We purchased hundreds of millions of dollars worth of agricultural products for domestic food programs. We made adjustments in our loan programs to help many good farmers stay in business. And, we dramatically increased our export credit guarantees so our Asian customers could continue buying from us. "Helping farmers succeed is our job. But as farmers and part of a Government Sponsored Entity, it's your responsibility, too. There's no hiding the fact that small farms are in trouble. They have been for quite some time. But running a farm is running a business and businesses need capital. Meeting the cash flow needs of farmers is what you do and if small farmers are going to, not just survive, but get a fair share of the American dream then lenders are going to have to go that extra mile. A strong safety net gives bankers and other creditors confidence that farmers will be able to meet their obligations even during hard times. But it is precisely during these hard times -- when our customers need us most -- that we need to show, particularly the family farmers and limited-resource farmers, some flexibility. "Look at the current situation with hog farmers where prices recently hit their lowest level in more than half a century. This Administration is taking action on many fronts to help -- everything from direct cash payments, to accelerated purchases for our food programs, to increased export credits. But we're also emphasizing credit flexibility. We're deferring payments where possible on loans normally due in 1999 and we're working with farmers in financial difficulty to reschedule loan payments or write down portions of a loan depending on individual circumstances. "Another thing we can do is make the paperwork a little easier on our farmers. That's why very shortly, we will announce new regulations on our Guaranteed Loan Programs. I want to thank the many of you who made suggestions to help us streamline the program. Your hands-on experience was invaluable to us in designing a program that will work for farmers and lenders. These new regulations will allow farmers to spend less time behind a desk. For example, for loans under $50,000, the application will be one page. That's it. Our guaranteed loans will require a lot less documentation, and our Preferred Lender Program will guarantee whether loans are approved in 14-days or less. We want to make things easier for farmers and for lenders. "Recently I heard two stories that show lenders and USDA working together to show small farmers flexibility. In both cases, young men wanted to follow in the footsteps of their fathers. A Michigan farmer was retiring, but his son couldn't get the financing to keep the farm going a farm that had been in the family for generations. And, in Virginia, a Black farmer wanted to buy a piece of his father's farm which was in liquidation. Like the Michigan farmer, he ran into a brick wall with the banks. But with USDA guaranteeing the loans, and with local lenders tailoring the loans to the specific needs of each farmer, I'm proud to say that both farmers today are carrying on the family business. These are stories I'd like to here more of in the future. "If we are to feed our nation tomorrow, then our young people today must be able to see a future for themselves on the farm. America can't afford to let its small farm heritage slip through our fingers. We need to be there for America's farmers as they are there for the rest of America." #