Remarks on Signing the Agricultural Credit Act of 1987

The President. Thank you all very much. Before saying anything else, I want to thank Senator Lugar. As ranking minority member on the Agriculture Committee, he was instrumental in helping to give this legislation its final shape. Senators Boschwitz, Leahy, and Boren, and Congressmen Madigan and Dingell, as well as other Representatives you see here today, also deserve special mention. And we should thank the members from the House Banking and Energy and Commerce Committees for their hard work.

Now, I hope you'll forgive me if I start off with one of my favorite stories. Whenever farming is the business at hand, I'm reminded of when I was in Las Vegas some years back. I was out on the mashed-potato circuit, and I was there to address the annual Farm Bureau meeting. And on my way into the hall, a fellow, one of the regular visitors in Las Vegas, asked me what was a bunch of farmers doing in a place like Las Vegas. And I couldn't resist. I said, "Buster, they're in a business that makes a Las Vegas trap table look like a guaranteed annual income." [Laughter]

But unfortunately, in the past our nation's farmers have had to contend not only with the usual, God-given variables, such as the weather, but with other uncertainties and hardships that were manmade right here in Washington. Many of America's farmers are still suffering from the aftershocks of the runaway inflation of the seventies. As inflation pushed up the price of land, farmers were too often encouraged to overextend themselves in debt. At the same time, in the 3 years prior to 1980, farm costs shot right through the roof—nearly a 50-percent increase, or it amounted to about $44 billion.

Well, since then we've been doing our best to get the situation straightened out, and there's good news for farming. The volume of agriculture exports was up nearly 18 percent in 1987, and we're expecting another 9-percent jump this year, more than doubling our trade surplus of 2 years ago. The U.S. share of world grain trade is rising: from 31 percent in '85-'86 to 36 percent in '86-'87 to an expected 43 percent in '87-'88. Surplus stocks are being reduced. Farm production expenses are down, prices are up, and farm income is at a record high. Meanwhile, land prices are stabilizing, and by the end of 1988, farm debt is expected to have dropped 35 percent from its peak.

Now, that doesn't paint a completely rosy picture for agriculture, however. There are still pockets of financial stress, and high debt and low-income growth in many foreign importing countries combined with global agricultural protectionism still adding to farmers' woes.

Well, today's signing of the farm credit act should help alleviate some of those woes. The act ensures that the Farm Credit System will continue as a principal source of private credit to America's farmers, while at the same time implements many needed reforms to the System to ensure its long-term viability.

Unfortunately, the Congress declined to require the System to provide as much self-help as we believed was appropriate and created new and potentially expensive Federal support mechanisms for secondary markets for private sector agricultural loans. The Congress also added other costly provisions that were not necessary to the health of the Farm Credit System. Of principal concern is the additional forbearance provided to producers that have been substantially delinquent on loans issued directly by the Farmers Home Administration of the United States Department of Agriculture. It makes little sense to add on new and unnecessary spending in this time of deficits, and I urge Congress to reconsider and to take its responsibility for the deficit seriously and to work with us to amend or remove these provisions as soon as possible.

Apart from this bill, there are two encouraging developments for agriculture on the horizon. First, trade negotiations are underway to reform the General Agreement on Tariffs and Trade, to break through the protectionist stranglehold on agriculture and to make the world market in agriculture a free market. American farmers will prosper under these reforms not only because of new access to markets now closed to them but also because trade reform will boost worldwide growth, especially in the less developed countries, where the agricultural trade growth prospects are greatest. As demand increases, American farmers are in a solid position to compete in a more open and expanding world market.

Second, as you know, over New Year's weekend, Prime Minister Mulroney and I hooked up by telephone as we signed a free trade agreement between the United States and Canada. Now, that agreement must be ratified by both nations. This agreement will be vital as we fight back against global protectionism. By persuasion and example, we will show the world what free trade really means: job creation, opportunity, improved international relations, and an upward cycle of prosperity for all nations and their people.

Well, I thank you all. And now it's time to sign the bill. You know, I only had half an hour to read it. [Laughter] The bill is signed. All right. Well, thank you all.

Reporter. Mr. President, are you ordering ships out of the Gulf?

The President. I don't answer questions, but that one's easy—no. [Laughter]