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Farmers say loans offer little relief

August 25, 1999|By JULIE E. GREENE

Already hit hard by a year-long drought and low market prices, some Washington County farmers say programs set up to help them, such as one that provides government loans, don't offer much relief.

Jim Harp, 52, of Paradise Church Road, has over the years borrowed several hundred thousand dollars through four different emergency loans available because of droughts.

"You just get in so deep to the government with the emergency loan that you can't ever pay it back," said Harp, who has paid off one of the loans.

"We're still struggling to pay it back, but are we struggling? You're right," said Harp, who's been farming for 25 years.

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Washington County has been declared a federal drought disaster area seven times in the last 16 years. The designation enables farmers to apply for low-interest emergency loans.

County farmers also could apply for the loans in 1998 because the county is adjacent to areas of West Virginia that were declared a disaster area, said Colleen Cashell, county executive director for the Farm Service Agency.

Facing drought conditions so many time in such a short period can, and in some cases did, compound farmers' problems, leaving them with growing debts from declining crop insurance payouts and mounting loans.

Harp said he hasn't borrowed money from the Farm Service Agency during the last four years and won't know whether he'll need to do so this year until his crop season is over.

"Do we want to go in and borrow more money? No, that's not the solution here," Harp said.

Low-interest loans aren't always a solution, said John Herbst, 76, whose family operates Misty Meadow Farm east of Ringgold.

"It sounds good to the public, but to most farmers it's just digging a hole deeper unless they have the ability to repay it. Taking out a low-interest loan might prolong the agony," Herbst said.

"Even if it's cheap interest, it still adds up," said Ralph Hamby, who hasn't taken advantage of the emergency loan program in the last 10 years because doing so would increase his debt.

People think one good year will enable farmers to pay back such loans, but they forget other costs, such as for equipment repairs and maintenance, were deferred during drought years, said Hamby, 39, who has a farm on Kemps Mill Road.

The county was declared a federal drought disaster area in 1984, 1986, 1988, 1991, 1993, 1997 and 1999, Cashell said.

No one has applied for a loan yet this year because farmers wait until their crop season is over, Cashell said. Figures weren't available on the number of farmers who have applied in the past.

Farmers can apply to have their annual emergency loan payments deferred until the end of the loan period during drought years, but the result is a balloon payment at the end, said Hamby, who said he knows from experience.

While Pennsylvania Gov. Tom Ridge advocates grants, not loans, to help farmers, Hamby said he's not sure that's the answer.

"I don't know what the real answer is," Hamby said.

If Congress can hand out billions of dollars in aid to help other countries during crises, then it should be able to help this country's farmers, he said.

"It's not just a job they're doing. It's a way of life," Hamby said.

Washington County Farm Bureau President Gerald Ditto said emergency loans can be of benefit, especially in drought situations, but there are strings attached.

"It boils down to the fact that the taxpayer is going to pay one way or the other - for food or for assisting farmers," Ditto said.

Increased crop prices would help, Ditto said. He said lower prices related to overproduction suggest we're preserving too much farmland.

"Apparently that's what the market signals are telling us. I hate to say that, but there are too many farms."

Harp said he's dedicated to farming and will try to stick it out another year, but doesn't feel the federal assistance available is enough.

Adding to the problem is federal crop insurance that calculates payouts based on past crop yields.

With drought after drought, yields have been low, leaving farmers with smaller payouts, Harp said.

Harp said he'd like crop insurance to be mandatory, with every farmer contributing to a nationwide pool from which eligible farmers could draw when affected by a drought.

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