S-2098               _______________________________________________

                                          SENATE JOINT MEMORIAL NO. 8016

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State of Washington                              50th Legislature                              1987 Regular Session

By Senator Hansen

Read first time 2/2/87 and referred to Committee on Agriculture.

TO THE HONORABLE RONALD REAGAN, PRESIDENT OF THE UNITED STATES, AND TO THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, AND TO THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES, IN CONGRESS ASSEMBLED:

          We, your Memorialists, the Senate and House of Representatives of the State of Washington, in legislative session assembled, respectfully represent and petition as follows:

          WHEREAS, Agriculture is the leading industry in the state of Washington with the value of production at approximately three billion dollars, and a total amount value of agricultural exports of one billion dollars; and

          WHEREAS, Since 1981, the average farm debt to asset ratio in the state of Washington has risen from 17.5 percent to 24.2 percent, and the value of agricultural land has dropped by 27.9 percent; and

          WHEREAS, In 1985, approximately 55 percent of the farms in the state of Washington had negative farm income, and even with an average nonfarm income of twenty-six thousand dollars, 30 percent of the farms had a negative household cash balance; and

          WHEREAS, About five thousand farms in the state of Washington are under financial distress with a debt to asset ratio of at least 40 percent; and

          WHEREAS, The farming community in the state of Washington heavily relies on the Farmer's Home Administration and the Farm Credit System to operate effectively, and to make credit available to help maintain the farming industry through these difficult financial times; and

          WHEREAS, The Farmer's Home Administration has twenty-five hundred borrowers in the state of Washington and 24 percent of these borrowers have delinquent loans, up from 10 percent five years ago; and

          WHEREAS, The recent allocation for the Farmer's Home Administration has dramatically shifted from moneys for direct insured loans to guarantees for loans which farmers must obtain from traditional commercial farm lenders; and

          WHEREAS, Even with a guarantee from the Farmer's Home Administration, the commercial lenders are hesitant to make direct loans to those farmers who are currently and historically financed through the Farmer's Home Administration; and

          WHEREAS, The Farmer's Home Administration in the state of Washington has already used its allocated money for direct insured loans for the first and second quarters of 1987; and

          WHEREAS, The twelfth circuit of the Farm Credit System, which includes the state of Washington, has experienced an increase in delinquencies, bankruptcies, foreclosures, deeds in lieu of foreclosure and nonaccrual loans in the last year, with the number of foreclosures in the state of Washington increasing from eleven in 1980 to fifty-seven in 1985; and

          WHEREAS, The Farm Credit System in the state of Washington continues to weaken as the nonaccrual loans increase and the institutions' surpluses decrease, causing a flight of the healthy borrowers, threats to the value of the institutions' stock, and a restriction on the ability to restructure debts or otherwise attempt creative financing to keep delinquent borrowers viable; and

          WHEREAS, The agricultural community in the state of Washington has a great demand for increased availability of credit through the Farmer's Home Administration and the Farm Credit System;

          NOW, THEREFORE, Your Memorialists respectfully pray that:

          (1) Congress take appropriate action to assure the stability of the Farmer's Home Administration and the Farm Credit System, and take steps to increase the availability of direct credit through these institutions for the agricultural community; and

          (2) Congress require a study of the Farm Credit System, and take that action necessary to guarantee its survival and its efficient administration so as to be a viable resource  for the farmers of the state of Washington.

          BE IT RESOLVED, That copies of this Memorial be immediately transmitted to the Honorable Ronald Reagan, President of the United States, the President of the United States Senate, the Speaker of the House of Representatives, and each member of Congress from the State of Washington.