A federal farm-loan program is creating farmers who are better at harvesting loans than crops.

The Farmers Home Administration (FmHA) emergency loan program faces the loss of as much as $7.8 billion in uncollectible loans to farmers, many of whm were a poor risk in the first place. The causes of the farm fiasco are bad weather, a poor farm economy, unsound farming and business practices and a government that was too free with its money. That is the conclusion of a recent General Accounting Office investigation.

The FmHA is the credit agency of the Agriculture Department. Its emergency loan program was established to lend money to farers who last crops to a natural disaster such as drought floods, wind or hail.

The emergency loan program has become a disaster itself. For one thing, good money is thrown after bad when farmers already in debt to FmHA are given automatic follow-up loans. For another, big corporations used to be able to get low-interest loans designed for family farms. Finally, collection procedures are hampered by lawsuits, like the one by farmers that stopped FmHA from confiscating their crop subsidy checks.

Put another way, farmers can now collect money from one government office while defaulting on loans to another.

"Historically, this has been a terrible program for the farmers and the government," FmHA Administrator Vance L. Clark told our reporter Frank Byrt.

As of June 1986, 50,000 farmers were behind in loan payments amounting to $4.1 billion. The GAO report predicts that $7.8 billion of the FmHA's $28 billion loan portfolio is uncollectible. And that assumes the administration can sell the property ther farmers put up as collateral.

Once they were in the program, farmers were automatically eligible for five subsequent annual emergency loans even if they didn't experience another disaster.

In 1975, the FmHA expanded the emergency loan program to farmers who just wanted to expand their operations or who merely had a poor crop year.

Legislation passed in 1985 tightened qualifications for loans, capped the total amount for each disaster, limited the loans to family farms and not corporations, and required that farmers prove a real loss.

But last year, Congress reinstated the policy of automatic loans for five years to delinquent farmers. This "will likely result in increased loan losses," the GAO report concludes.

Collections have not been going well. North Dakota farmers won a class action suit against the FmHA for foreclosing without giving the farmers other options such as rescheduled or deferred payment programs. The North Dakota farmers sued again when the FmHA tried to seize their crop subsidy payments. The FmHA backed down.

The report concludes that "borrowers over three years delinquent have little chance of becoming current on their payments and will most likely fail." Forty-seven percent of emergency loans fits in that category.