The Department of Agriculture has denied low-interest emergency disaster loans illegally to thousands of farmers who have suffered crop losses in the last two years, Sen. Thomas F. Eagleton (D-Mo.) charged yesterday.
Eagleton, calling on Secretary John R. Block to change the department's policy immediately, offered no figures, but he said the loan denials were a key factor in whether farmers already pressed by the economy could continue operations.
Eagleton said that thousands of farmers in more than 500 counties in 33 states were denied access to the disaster loan program wrongfully in 1981 and 1982 as a result of policy changes put in place by Block.
An official of the Farmers Home Administration, which oversees the loan program, said there would be no reaction to Eagleton's charges until department attorneys review his letter to Block.
Eagleton cited a General Accounting Office study of the program, which concluded that the department was ignoring 1978 amendments adopted by Congress directing that farmers' disaster loan applications be reviewed individually.
"We agree that the administration is conducting the program in a manner which is inconsistent with congressional intent and in violation of the act," the GAO said, referring to the Consolidated Farm and Rural Development Act.
Under present policy, which USDA officials told the GAO they believed was legal, farmers are not eligible for the disaster loans unless there has been a 30 percent dollar loss to all cash crops in their county.
But Eagleton, an author of the disaster-loan amendment, differed. He told Block it was clear that Congress intended farmers to be considered for the federal assistance on a case-by-case basis.
The GAO study found that the policy had denied farmers access to the program in more than two-thirds of the states. Georgia was the leader, with 86 counties denied disaster eligibility during the last two years. Other leaders: Indiana (50), Michigan (33), Kansas (34) and Iowa and Nebraska (32 each).
"It is unquestionable that in some cases the emergency loan program and its reduced rates of interest can make the difference between a farmer staying in business or losing his farm," Eagleton said. "To illegally deny farmers even the opportunity to apply for an emergency loan is unconscionable."
Eagleton urged Block to reverse the policy and then make an effort to identify farmers wrongfully denied the loans and, if it is not too late, make the assistance available to them now.