Summary

GAO testified on the Farmers Home Administration's (FmHA) farm loan program and proposed legislation--the Agricultural Credit Improvement Act of 1992--that would create a program to aid beginning farmers and revise FmHA loan-processing procedures. GAO concludes that the federal investment in farm loans is inadequately protected and that FmHA has been ineffective in improving the financial condition of borrowers so that they can obtain commercial credit, as was originally intended. While GAO agrees with the underlying intent of the proposed legislation, particularly measures to provide closely supervised, conditional credit to new farmers as a way to increase their chances for long-term success, GAO is concerned that the bill does not set limits on the length of time that FmHA is expected to provide financial help to borrowers who are not new farmers.