Farm Credit Administration Symposium

                                            Release No. 0175.00

REMARKS
          As Prepared for Delivery
                                              by
                  Secretary of Agriculture  Dan Glickman to the
                  Farm Credit Administration Symposium on
                              "Successful Ag Lending: 
             Accomplishing Your Mission in Stressful Times"
                          May 25, 2000   Washington, DC

     "Thank you very much.  It's a great pleasure to be here with many of the
folks who are on the front lines of the effort to provide our farmers with the
capital they need to continue producing the world's safest, most abundant and
most affordable food supply.  

     "Today, I want to talk to you very generally about farm policy   about
what the current political climate is...about what's happening on Capitol
Hill...and about some of my thoughts as we look ahead to a new farm bill two
years from now.

     "Yesterday, the House of Representative voted to grant China permanent
normal trade relations, thus ensuring that American farmers and other
businesses will reap the benefits of China's imminent accession to the World
Trade Organization.  This is a great victory for the Clinton Administration,
but more importantly a great victory for our farmers and ranchers. 

     "Our efforts on China are just one piece of this Administration's broad
export promotion strategy.  We are using virtually every tool at our disposal
to help our farmers penetrate global markets.  The Africa trade bill recently
passed by Congress, for example, has been an Administration priority for
several years now.  Africa is a vast market, which, despite stiff competition
from the European Union, holds out great potential for American farmers. 

     "At President Clinton's direction, we have also moved to relax trade
sanctions, freeing up an estimated $500 million a year in farm exports. 
International food aid continues to be a major part of our farm trade efforts. 
Last year, we moved nearly 8 million metric tons of food aid overseas, four
times the 1998 level and the largest quantity in recent memory.  So far this
fiscal year, we have made $5 billion in export credits available in countries
that otherwise wouldn't be able to buy American farm commodities.  Last year,
we also provided $90 million under our Market Access Program to finance market
research efforts, technical assistance and other trade promotion activities.

     "All these investments are paying off.  Farm export sales for March
climbed to over $4.5 billion.  Our export totals for the first quarter are
ahead of last year's pace, and we're expecting the first year-to-year increase
in farm exports since 1995 -- albeit a small increase.

     "Given all the obstacles we've faced -- the Asian financial crisis,
record worldwide production and a strong U.S. dollar   I am very proud of what
we have been able to do to help farmers take advantage of trade opportunities.

     "Of course, a sound trade strategy alone doesn't guarantee a thriving
farm sector, so we've been working hard on the domestic front as well.  

     "Congress is about to pass a crop insurance reform bill that codifies
the very principles that we've been advocating for some time.  That means
making crop insurance more affordable, by providing premium discounts on buy-
up coverage.  It means a more accessible and inclusive system, with the
authorization of a pilot livestock insurance program and improved coverage of
specialty crops.  It also means addressing multi-year losses and expanding
risk management education and outreach efforts.  It was USDA that got this
ball rolling, with the appointment two years ago of a blue-ribbon panel of
farmers, academics and policy experts who began putting together a reform
package.

     "We still have some concerns about Congress' final crop insurance bill
reform package, but overall it is sound legislation that will improve our
farmers' ability to manage the risk that is inescapable in their line of work. 

     "Congress has also attached several billion dollars in emergency farm
relief to the crop insurance bill.  While we certainly do need to be there to
help our farmers through yet another year of sluggish commodity prices -- and
while I commend Congress for acting early in the year and not waiting until
fall to come through with an aid package -- I'm troubled by indications that
Congress will distribute the money using the same AMTA formula that guided the
emergency bills of the last two years. 

     "The President and I maintain that AMTA bonus payments fail to target
the crops and the producers in greatest need.  They treat the farm economy as
a monolith, failing to consider the varying degree of market weakness across
commodities...failing to take into account exactly which farmers are producing
which crops.  Perhaps most important, the Congressional plan
disproportionately benefits the largest -- and usually most prosperous --
farmers.  It makes little sense, and it will work to weaken public support for
adequate funding and a farm safety net in the future.

  "The payments would not even be based on a current snapshot of American
agriculture.  Instead of paying farmers according to their current situation,
this formula would take into account pre-1996 planting decisions.  So a
producer who raises livestock could get a payment today based on his planted
acreage of wheat five years ago, even though he no longer grows wheat.  Some
people will get paid even though they no longer grow any crop.  It's a
haphazard system that produces gross inequities.

  "Furthermore, even with the best possible method of distribution, ad
hoc, stop-gap, quick-fix emergency assistance is not the most effective or
efficient way to help struggling farmers. 

  "This will be the third consecutive year of emergency assistance, and
while previous payments have helped provide the cash flow to help farmers get
through the year, they have done little to ensure the long-term stability and
competitiveness of the American family farm.  The bleeding continues, and
we're getting ready to apply yet another very expensive tourniquet...when the
situation actually calls for a blood transfusion.

  "In the long run, emergency assistance is unsustainable, because it has
no philosophical underpinning.  It's sheer damage control, rather than a
carefully crafted policy.  What we need to do is address the deficiencies of
the 1996 Farm Bill, which worked well during a bullish farm economy but which
dismantled the safety net that catches our farmers' fall when commodity prices
slump and global financial markets collapse.

  "Earlier this year, the Administration came forward with a thoughtful,
far-reaching plan that not only would repair the farm safety net but also
chart a philosophical course toward a new farm bill in 2002. 

  "Our plan calls for counter-cyclical income assistance that is targeted
to the farmers whose income has dropped and are experiencing financial
hardship.  The plan includes bold and unprecedented conservation provisions,
which will provide direct payments to farmers who practice sound environmental
stewardship.  The plan would also help create new market opportunities for
farmers, with additional investments in cooperatives, bioenergy research and
community development in rural areas.

  "But more important than the details of the plan itself are the
principles that it embodies.  Even though the plan will not become law this
year, I believe that its principles should be our guiding lights as we craft
the next generation of farm policy.

  "I'm talking about principles like fairness and inclusion.  Right now,
we have a narrow, regional farm policy that overlooks the growing diversity of
American agriculture.  We need a national farm policy that embraces more than
just the row-crop producers of the heartland.  To maintain broad support for
farm programs, we need to build a coalition that's larger than just one
regional bloc.

  "Our principles include a recognition that credit is a critical element
of effective farm policy.  Any future policy must support the important role
that the Farm Credit System plays in helping farmers succeed.  It must also
provide USDA with the resources it needs to be the lender of last resort. 
Last fiscal year, we provided over 37,000 loans and loan guarantees   the most
since 1985   worth nearly $4 billion.  And we've been able to meet surging
demand, even as we've streamlined the application and cut down on loan
processing time. 

  "I'm particularly proud of the strides we've made in lending to minority
and socially disadvantaged farmers, as part of our increased commitment to
civil rights at the Department. From 1997 to 1999, we increased our total loan
dollars to women and minority farmers by 81 percent.  We are also now the
single largest creditor for African-American farmers.  

  "Conservation is another principle that we must continue to emphasize. 
The preservation of our land and soil must be a centerpiece of farm policy,
not an afterthought.  By creating incentives for all farmers to be
environmentally responsible, we can increase farm income at the same time that
we protect our natural resources.  The land is not something that can be
replaced like a piece of machinery.  We need to respect it above and beyond
its crop-producing capability; we must recognize it for what it is: our most
valuable commodity of all. 

  "For many farmers, the days of making ends meet simply by bringing bulk
commodities to market are over.  So a new farm policy must do more to help
farmers capture a greater share of the consumer dollar.  That means promoting
farmer cooperatives, direct marketing and farmers markets.  It means
encouraging the use of crops in the production of renewable energy sources. 
It means providing greater opportunities for farmers in value-added, consumer-
ready goods, organic agriculture and so on.  

  "I also believe we need to expand our definition of farm policy to
include rural development.  The honest truth is that many people in rural
America cannot make a decent living in production agriculture alone.  I wish
they could, but the fact is that many farmers are forced to seek off-farm job
opportunities; often that's the only way for them to stay on the land at all. 
So we need a diversified rural economy, one where entrepreneurship can
flourish, one with sound physical and information infrastructure.  

  "A new farm policy must go beyond just the wheat program, the rice
program, the cotton program and so on to address the more fundamental
question: how can we help preserve the nation's agrarian tradition by
providing more rural economic opportunity, whether it's in farming, retail,
tourism or Internet start-ups?  

  "There will be times when emergency assistance becomes necessary.  And
during those times, we should, of course, respond.  But we must do everything
in our power to avoid getting to that point.  We mustn't let emergency relief
substitute for an effective farm policy.  

  "Instead of waiting for a crisis to hit before rushing to the rescue,
let's help our farmers position themselves to cope with economic uncertainty. 
Instead of taking the easy way out, let's attack the underlying problem. 
Instead of being timid, let's be ambitious and creative.  Instead of doing the
expedient thing   instead of arbitrarily throwing money at the problem -- it's
time for a fundamental reevaluation of the principles that guide our farm
policy.  Thank you very much."

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