Statement of Administration Policy: S. 1793 - Omnibus Agriculture Amendments

(Senate)
(Pryor (D) Arkansas and 3 others)

The Administration opposes S. 1793, unless the bill is amended to delete a number of objectionable provisions, as explained below.

The Administration would also oppose any amendment to allow Rural Electrification Administration (REA) borrowers to refinance loans held by the Federal Financing Bank (FFB) without paying contractually-required FFB prepayment fees. These fees total approximately $1.7 billion. If S. 1793 were so amended, the President's senior advisers would recommend that the bill be vetoed.

Chief among the troublesome provisions that the Administration recommends be deleted from S. 1793 is section 7. This section would delay until October 1, 1992, the rebate of certain assessments collected by the Farm Credit System Financial Assistance Corporation. Section 7 would also require the Corporation to pay interest on a portion of the assessments until they are rebated. This would substantially reduce the Corporation's Trust Fund in future years. As a result, the Fund's resources may be insufficient to cover expected System defaults, which could lead to increased taxpayer costs.

The Administration also seeks amendments to:

• Delete section 12, which would extend the Rural Development Insurance Fund (RDIF) prepayment program for 150 days for certain RDIF borrowers. This section would lead other RDIF borrowers to seek a similar extension. The prepayment receipts under section 12 cannot be counted as reducing the deficit, but the revenue forgone as a result of the prepayments would increase the deficit. These costs would be about $1 million in Fiscal Year 1990 and $3 million annually thereafter.
  
  
• Delete subsection 6(a)(3). This subsection would exclude Federally-guaranteed loans from being counted as obligations of the Farm Credit System when calculating reserves required for the Farm Credit System Insurance Corporation. Any reduction of the Insurance Corporation's reserves would increase the risk that the Corporation might not be able to meet its obligations, and increase the potential for additional Federal assistance.
  
  
• Delete section 11, which would require the Secretary of Agriculture to conduct a study of alternative methods of computing actual crop yields for farm program purposes. If 1989 actual yields or five-year average yields were used to determine farm program payments for the 1990 crops, Federal outlays for such payments would probably increase by approximately $1 billion.
  
  
• Delete section 4, which would require all peanut shellers to meet the terms of an existing marketing agreement. This marketing agreement is voluntary. Mandating that all shellers comply with the agreement would change it into a mandatory marketing order, without the normal "due process" protections of public hearings and prior approval by referendum. This would almost certainly result in litigation, and would set an undesirable precedent.