WASHINGTON -- The American Farm Bureau Federation today proposed a two-tier debt restructuring program, saying it will give financially strapped farmers 'a fighting chance to survive' and pay off their loans.
About 125,000 farmers face serious financial problems now, the federation said in releasing its plan on the saMehday the Senate Banking Committee opened hearings on farm credit.
Several bills have been filed in the past few weeks to aid farmers.
'This plan of ours can be implemented quickly and it will not require federal money,' federation President Dean Kleckner said at a news conference. 'Farmers want and deserve a fighting chance to survive.'
Under the plan, farmers and bankers would analyze the size of a farm's cash flow and how much of the farm's debt can be carried. The farmer would make payments on the principal and the interest on that amount. The remainder, the so-called tier two debt, would be held aside with only a small interest rate charged. As the farmer retires the initial amount, the tier two debt would be shifted to the active account.
Kleckner of Rudd, Iowa, said some regulatory changes will be needed so that financial institutions are not docked for putting loans in a low-payment status. Those changes can be made administratively, he said.
Richard Lyng, nominated to become agriculture secretary, was 'very interested' during a discussion of the plan but did not take a position, Kleckner said.
Kleckner planned to meet later in the day with Treasury Secretary James Baker and Federal Reserve chairman Paul Volcker.
