May 22, 2009
The Honorable Tom Harkin The Honorable Saxby Chambliss
Chairman Ranking Member
Committee on Agriculture, Nutrition, and Forestry Committee on Agriculture, Nutrition, and Forestry
328A Senate Russell Office Building 328A Senate Russell Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chairman Harkin and Ranking Member Chambliss:
The National Association of State Departments of Agriculture (NASDA) is a nonprofit, nonpartisan association that represents the secretaries, commissioners and directors of the 50 state and 4 territories. NASDA encourages Congress to take swift action to improve the utility of the USDA Business and Industry (B&I) Guaranteed Loan Program. Agricultural businesses across rural America are not immune to the financial crisis currently shocking our economy. Excessive and rapid capital losses have quickly translated into bankruptcies that are costing our economy in terms of loss of significant job numbers, community tax base, and value-added opportunities for our agricultural products.
In the American Recovery and Reinvestment Act of 2009, Congress took an incredible step forward in improving the state of rural businesses by authorizing nearly $3 billion in loan guarantees through the B&I program. Utilizing that infusion of funding, we can make the program stronger and more beneficial for rural America. Nevertheless, to continue to ensure the B&I program is viable and dynamic, Congress must provide sufficient funds through the annual appropriations process.
NASDA also recommends that Congress modify the restrictions on when loan guarantees are available. Currently, loan guarantees are only permitted once a facility is completely constructed, or when specific stages are completed. This is counter productive because in many instances loan guarantees are needed to obtain adequate financing. It is important for commercially-viable rural projects to be provided loan guarantees in the early stages of the project’s development.
To further improve upon the B&I program, NASDA believes that the program’s loan limits should be raised to $300 million per borrower. Meanwhile, the population limits should be waived for applicants to the program who can demonstrate they provide a direct value-added service to American agriculture.
Thank you for Congress’ leadership on the unique challenges rural America and our agricultural sector face. The vision in creating USDA Rural Development programs as tools to address these unique challenges was laudable, and today this vision needs to be modernized to continue the programs’ success.
Sincerely,
Ron Sparks
NASDA President
Commissioner, Alabama Department of Agriculture & Industries
CC: Senate Majority Leader Harry Reid
Senate Minority Leader Mitch McConnell
Senate Committee on Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Chairman Herb Kohl
Committee on Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Ranking Member Sam Brownback