Conservation easements: A credit crisis compromise

Excerpt

WHEN President Reagan vetoed the Farm Emergency Credit Bill he said, “I will veto again and again until spending is brought under control.” Unfortunately, such opposition to agriculture credit assistance is not in the taxpayers' best interest. The federal government is involved in 49 percent of farm credit, which happens to include a majority of the bad debt. The decline in the value of farm assets already has eliminated the equity of highly leveraged borrowers, especially in states like Iowa where land values have dropped 37 percent. This loss in equity results in foreclosures as farmers and ranchers are unable to secure credit. Any further decline in property values due to forced sales will simply increase government losses on direct and guaranteed loans.

The U.S. Department of Agriculture estimates 70,000 farms are now financially insolvent and another 73,000 farms could become insolvent within two years.

Federal emergency credit to prevent forced sales and the associated decline in farm asset values could be considerably less expensive than inaction. While political leaders may understand this fact, many remain philosophically opposed to ...