Lawmakers bail out farmers hurt by Nevada company’s bankruptcy

David Espo

Tuesday, June 20, 2000 | 10:55 a.m.

WASHINGTON -- Take a bankrupt Nevada seed company and add 14,000 troubled farmers and an election-year Congress mindful of their votes. It totals up to $35 million worth of no-interest loans from the federal government.

All part of the process in Congress, where lawmakers, Republican and Democrat, recently seized on a crop insurance bill to send $7.1 billion in aid to the economically distressed Farm Belt.

Some of the funds are targeted narrowly at favored constituencies, ranging from sheep and angora goat ranchers to tobacco farmers and cotton growers and ginners. Millions more are set aside for research on items as diverse as livestock waste streams and plant genetics, much of it directed to the states of lawmakers who wrote the bill.

"The cost of agriculture just doesn't seem to stop," grumbled Sen. Connie Mack of Florida, one of only four lawmakers -- all Republicans -- who opposed the bill when it sailed through the House and Senate.

"I could go on and on and on" about the problems in the bill, said Sen. Don Nickles, R-Okla., the Senate GOP whip. Among the items he cited disapprovingly is $14 million to complete construction of an ethanol research pilot plant at Southern Illinois University, money inserted at the behest of House Speaker Dennis Hastert, R-Ill.

Sen. Larry Craig, R-Idaho, was point man on the effort to arrange no-interest loans for farmers who are creditors of AgriBioTech, a forage and turfgrass seed company headquartered in Henderson, Nev., that filed Chapter 11 papers earlier this year.

Aides to Craig say he contacted the Department of Agriculture, where officials said they lacked authority to loan money to the affected farmers. The solution: a provision making $35 million available for no-interest loans good for 18 months. If the bankruptcy proceedings aren't settled by then, the farmers will become eligible for the USDA loans currently denied them.

The loans are to be repaid from the proceeds farmers receive from the bankruptcy settlement. In an interview, Craig said no farmers can receive a loan for more than 65 percent of the money they are owed.

He said his message to the 14,000 farmers involved -- many of them in Idaho and Oregon -- was: "I'm willing to provide you some money short term. But I'm also willing to say that business is business. You're in bankruptcy court."

An $8.2 billion crop insurance bill was months in the making, with the decision to add the $7.1 billion in economic assistance made shortly before final passage. The $7.1 billion was already in the budget -- the third year in a row Congress has helped farmers recover from low prices. With the end of the congressional session approaching, lawmakers needed a legislative engine to carry provisions that might otherwise fail to make it to President Clinton's desk.

To move it quickly, the lawmakers behind the measure made sure there were no public hearings or drafting sessions, and no amendments permitted in either the House or Senate when the bill came up for a vote.

Despite scattered grumbling, the bill sailed through Congress, passing by voice vote in the House, and by 91-4 in the Senate.

The biggest item, $5.5 billion, will give farmers an additional subsidy payment under a formula established in 1996 legislation designed to phase out such support to many of them.

Rep. Charles Stenholm, D-Texas, and other lawmakers noted that meant some farmers would be able to "receive a payment without demonstrating real need. I strongly believe that more fully funding the disaster payments would have been a better method for directing these funds to agriculture producers," he said in floor debate.

At the same time, Stenholm, the senior Democrat on the House Agriculture Committee, and others made sure that wool and mohair producers received $11 million in federal assistance. It marks the first direct payments for sheep and angora goat ranchers since Congress ordered their federal subsidy phased out in 1993.

Tobacco farmers, helped by Sen. Jesse Helms, R-N.C., are in line for $340 million, despite an early 1980s law that says support of their crop is required to have no net cost to the government.

Sen. Thad Cochran, R-Miss., saw to it that $100 million was made available for cotton growers or ginners to offset the impact of depressed prices on ginning. The money effectively extends a subsidy he helped inaugurate a year ago.

Honey producers will qualify for loans for the third year in a row, even though Congress ordered that program ended too.

In addition to such items aimed at easing the burden of low farm prices, the bill is also salted with projects for key lawmakers: