County-level employes of the Farmers Home Administration have been put on notice that their jobs may depend on how well they collect on delinquent operating loans to farmers.
The pressure on FmHA employes is apparently part of a wider effort at the agency to collect delinquent loans, which make up about 20 percent of the agency's portfolio.
FmHA's campaign apparently is producing results. Unpublished data at the Department of Agriculture indicate that through December 2,395 farm foreclosures were "in process" and that 13,318 acceleration letters, warning farmers to pay up or else, had been sent out.
USDA and FmHA officials have insisted that the lending agency is being lenient with farmers, citing 1981 statistics that showed only 300 foreclosures out of 300,000 loans. Since November, however, FmHA has sent out 6,000 acceleration letters.
Charles W. Shuman, FmHA administrator, denies that the aim is to force farmers out of business, but he has threatened to withhold new loan money from states with delinquency rates "higher than deemed appropriate." Each state has been assigned a "goal" for cutting delinquencies. The goal averages about 23 percent.
FmHA, which holds 11 percent of all U.S. farm debt, provides year-to-year operating loans to farmers who cannot get credit through commercial channels.
Secretary John R. Block, although refusing to put a moratorium on foreclosures as some farm leaders had urged, announced two weeks ago that the department would walk an extra mile to help farmers through "these cloudy times."
Falling farm prices, high interest rates and rising production costs have put many FmHA borrowers under severe operating pressure, and the Department of Agriculture insists that FmHA is making extraordinary efforts to help farmers in debt to FmHA get new crop loans for 1982.
But Shuman and Frank Naylor, undersecretary of USDA for small community and rural development, will be pressed to explain seeming discrepancies between FmHA policy and promise when they appear today before a House Agriculture subcommittee on rural credit.
Although less than 1 percent of FmHA's approximately 300,000 borrowers have what Naylor last month called "even potentially a serious problem," concern over a stiffening of the agency's attitude toward beleaguered farmers has rippled through agriculture for months.
"There is no question that there's a squeeze at the top, and something has to pop out at the bottom," said Rep. Byron Dorgan (D-N.D.), a member of the credit subcommittee. "There is tremendous pressure to rein in those delinquencies . . . . The word 'foreclosure' is irrelevant. How many forced liquidations will there be? We're being given tranquilizers while they tighten the noose."
Dorgan said he was not mollified by assurances from Block and Naylor. He said that a standard FmHA letter to delinquent farmers in North Dakota advises them to cut back operations or to consider leaving farming. "The fact is," Dorgan said, "the majority of these farmers are beset with interest and price problems that have nothing to do with their management ability."
Part of the concern about FmHA policy stems from a document circulated by the Center for Rural Affairs, a public interest organization in Nebraska, which expanded data contained in a memo in which Shuman outlined the goals for reducing each state's delinquent accounts by March 31.
The center's analysts concluded that an average national goal of 23 percent had been set for delinquency elimination, although the figure varied from state to state. Shuman's memo to state directors also warned of reductions in loan money if the goals were not met.
Shuman acknowledged that less loan money would be available, but he insisted in an interview that the "goal" is only a goal--not a "quota," as some farmers and legislators suspect. "The English language tells me there is a tremendous difference between goals and quotas," he said. "The goal has not been changed and there is no reason to alter it."
He said the center's tabulation of national percentages was a distortion of his agency's work. "I expect that in the political arena," he said, "but I am appalled at the disservice this does to agriculture, what it does to producers."
The FmHA administrator denied that state and county officials are under new pressure to eliminate delinquencies, either by foreclosure, forced or voluntary liquidations or other methods short of debt repayment.
He conceded, however, that district-level personnel evaluation procedures leave room for judging FmHA county employes' performance at least partly according to the number of delinquent accounts they settle. Districts in Idaho, Montana, New Mexico and Arizona, among others, are known to be using this system.
"Our state director warned last month that those delinquency reduction goals were going to be met without fail," said an FmHA county supervisor in a southwestern state. "They can call it what they like, but if we force a farmer to stop operation the result is the same as foreclosing on him."