The Farmers Home Administration (FmHA), under pressure to provide more loan money to help farmers through spring planting, has used up about a sixth of the additional $750 million that President Reagan released for loans two weeks ago.
FmHA administrator Vance L. Clark said that about 15 states that ran out of direct operating loan allocations have tapped the new fund for $123 million. Other states are expected to seek aid as the planting season moves north and demand for financing intensifies.
Clark acknowledged that FmHA "could have some shortages" of money before the lending season ends. But he said that his policy of "spoon-feeding" funds to states as they require it will assure that areas with the greatest needs get first crack at the money.
He warned, however, that there is little chance that more money will be made available after the $750 million is gone, even if some eligible farmers have not received loan funds.
"In the past, when we ran short, the spigot was simply opened and more money was made available. The Gramm-Rudman-Hollings budget-reduction act makes it a different ball game now. The spigot can't be turned on or off," Clark said.
Reagan authorized FmHA to transfer $700 million from its third- and fourth-quarter budget and $50 million from an FmHA business and industrial loan account for lending to farmers this spring. At the same time, the White House resisted congressional efforts to force the administration to spend an additional $1 billion on direct loans.
FmHA holds about 12 percent of the nation's farm debt, which is distributed among more than 240,000 borrowers who cannot get credit through commercial channels.
Clark has been criticized by some members of Congress and farm advocacy groups for controlling the new funds from Washington, rather than allocating shares to all of the states on a prorated basis, as had been the practice.
Clark noted differences. He said that while Iowa so far has received an extra $8.4 million, with more funds likely to be allocated as need arises, the state would have been entitled to $60 million had FmHA handed out shares on a state-by-state basis.
Kathleen W. Lawrence, deputy undersecretary for small community and rural development, said that she and other Agriculture Department officials agreed that the new policy was the best way to deal with the neediest areas and avoid the controversy that could ensue if FmHA later had to revoke some states' unspent shares.
Although FmHA has less money available this year for direct loans, Lawrence and Clark said they expect that much of the demand for financing will be met through another program in which the government guarantees commercial bank loans to qualified FmHA borrowers.
Clark said that more than half of the $1.5 billion available for direct loans to farmers has been obligated, but that a large amount of the guarantee money remains available. He said that about $324 million worth of guarantees have been made, with more than $1.3 billion remaining in the pot.
Commercial bankers have resisted the guarantee program in some states, even though FmHA's paperwork requirements, which have drawn complaints in the past, have been liberalized. Clark said that lenders who continue to use the paperwork argument are "copping out."
"The only real problem," Lawrence said, "is that commercial bankers don't understand the guarantee program. It has worked where state FmHA directors and congressional delegations have gotten with bankers and helped them understand it."