Radio Address to the Nation on Farm Credit Programs

My fellow Americans:

I'd like to expand today on what I said in my Thursday night news conference about our farmers' financial plight and what must be done to hasten the return of their prosperity.

It's important to note that about twothirds of today's farmers have no debt problems and only a minority of the remainder are in severe Financial distress. Now, that's not to minimize one bit the difficulties all farmers face following the shocks of the 1970's: two grain embargoes, double-digit inflation, and record interest rates at 21 percent.

As farmers' land values shot up, some borrowed large stuns of money and, yes, sometimes exorbitant sums, based on that inflated land value. Then, as we brought inflation down—and believe me, we're determined to keep it down—those farmers have been left with declining land values to cover their loans, making them harder to repay.

These problems have been worsened by the inflexible farm programs under which we operate. Designed to help agriculture, they have increased dependency upon the Federal Government, weakening incentives for self-reliance.

For example, between 1973 and 1983, the Federal Government went from purchasing 1.9 percent to 12 percent of all dairy products-the equivalent of 17 billion pounds of butter, cheese, and dried milk piled up in cold storage. The cost to taxpayers soared from $117 million to well over $2 billion. Other programs leading to surpluses in corn and wheat depressed prices, sent false signals to the markets, and drove more farmers toward bankruptcy.

The same government which played a part in this unhappy drama must not turn away from those who are the backbone of our nation, who gave America the highest standard of living in the world, and who preserved the blessing of life for millions of the world's hungry.

Last September we announced a $650 million debt restructuring initiative. Yesterday Agriculture Secretary Block announced a modification of Federal regulations so that banks will have an incentive to work out lower payments for farmers having trouble paying off their loans. We're providing loan guarantees for eligible farmers whose local banks fail and who can't find a new private lender without such a guarantee. Our program will ease further the farmers' requirement for participation in it, so more of them can take advantage of our credit offer. This administration is moving forward with its credit program because spring planting cannot wait.

Let me make one thing very plain: Yes, we are sympathetic, and we will extend support. But American taxpayers must not be asked to bail out every farmer hopelessly in debt, some by hundreds of thousands of dollars, or be asked to bail out the banks who also bet on higher inflation. We have already extended a tremendous amount of assistance. It's time for others to pitch in and do more, from officials at the State level to banks, private groups, and individuals in our communities—all joining in partnership to help farmers.

Over the long haul, there's only one sure solution. We have the ability to change, the opportunity to act, and we're going to begin now working our way back to a free market economy. What farmers need and we're determined to provide is less dependence on politicians to supply their incomes and greater independence to supply their own incomes.

Yesterday Secretary Block outlined our proposals when we sent the agricultural adjustment act of 1985 to the Congress. The 1985 farm bill will create stability for the future through policies that permit U.S. agriculture to realize its full potential and be more competitive in world markets.

Our package will be market-oriented, enabling farmers during a transition period to become more independent and make their own decisions in the marketplace again. Government will stop purchasing commodities, stop trying to manipulate supply and demand, refrain from quick fixes and extravagant new farm legislation, and move aggressively to expand markets for American farm products.

The time is now for a fresh start for American agriculture. And if we combine passage of our farm legislation with spending restraints to reduce Federal borrowing so interest rates can come down further and tax simplification to lower tax rates so we can reach greater growth, then farmers can finally reap a real prosperity every bit as bountiful as their own harvests.

Until next week, thanks for listening, and God bless you.