April 6, 2004

Deputy Administrator for Farm Loan Programs
USDA, Farm Service Agency
DAFLP/STOP 0520
1400 Independence Avenue, SW
Washington, DC 20250-0520

Re: Proposed Rule; Regulatory Streamlining of the Farm Service Agency’s Direct Farm Loan Programs; 7 CFR Parts 761 through 769; 69 Federal Register 6056, February 9, 2004

To Whom It May Concern:

The undersigned agricultural organizations oppose the definition of a “family farm” in the February 9 proposed rule.  Access to capital is vital to the success of our members, and this rule runs counter to that access. 

The proposed rule would arbitrarily cap family farm eligibility for direct and guaranteed loan programs based on farm income limits.  Only farms that in a typical year generate annual gross farm income that does not exceed the greater of $750,000 or 95 percent of the statistical distribution of the income of farms in the state with gross sales in excess of $10,000 will be eligible for Farm Service Agency (FSA) assistance. 

National Agricultural Statistics Service (NASS) data is to be used to determine eligibility for the program.  NASS data shows that for the vast majority of states, this rule would result in a defacto eligibility income cap of $750,000.  We understand USDA officials estimate that about 25,000 farms would no longer be eligible for FSA assistance simply due to the $750,000 cap.  Producers of high-value crops and livestock products (dairy, fruit, vegetables, and nursery stock among others) would be impacted more severely than other producers by the proposed definition.  This potential exclusion flies in the face of everything our organizations have worked to accomplish in the last several decades, namely to encourage our members to produce more high value, and value-added agricultural products to help our members be more competitive in the global economy.

We do not believe that the proposed definition adds any clarity to the question of what is a “family farm” and would unnecessarily exclude legitimate family farmers from access to capital.  We also are greatly concerned that while this rule only affects farm lending programs, it could easily serve as a precedent for possible future income caps on other USDA farm programs.

We urge USDA to withdraw the proposed definition of a “family farm.” 

Sincerely,

Alabama Farmers Federation
American Bankers Association
American Farm Bureau Federation
American Nursery and Landscape Association
American Sugar Alliance
Dairy Farmers of America
Farm Credit Council
Georgia Peanut Commission
Independent Community Bankers Association
National Association of Wheat Growers
National Council of Farmer Cooperatives
National Cotton Council
National Grain Sorghum Producers
National Milk Producers Federation
Southern Peanut Farmers Federation
USA Rice Federation
U.S. Rice Producers Federation
Western Peanut Growers

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